I am sure you heard about the debate our elected officials were having over the future of the tax code in North Carolina. On July 24th, Governor Pat McCrory signed the new tax changes into law. Do you know how these changes will affect you starting in 2014?
Here is a summary of the changes:
Personal Income Tax
- Reduces and simplifies the 3-tiered state personal income tax from the current maximum rate of 7.75% and minimum rate of 6% to 5.8% in 2014 and 5.75% in 2015
- Increases the standard deduction for all taxpayers, applied to the first “X” amount of income:
- $15,000 for those married filing jointly
- $12,000 for heads of household
- $7,500 for single filers
- Retains the state child tax credit and increases it for families making less than $40,000
- Offers a $20,000 combined maximum deduction for mortgage interest and property taxes
- Makes charitable contributions fully deductible
- Protects all Social Security income from state taxes
Corporate Income Tax
- Reduces the corporate income tax from 6.9% to 6% in 2014 and then to 5% in 2015
- If the state meets revenue targets (i.e. if tax revenue grows due to a growing economy), the corporate income tax will drop to 4% in 2016 and 3% in 2017
Other Highlights
- Caps the gas tax
- Eliminates the estate tax
The Tax changes will also end the “North Carolina Tax Free Weekend”. The tax free weekends have been a popular time for people to purchase “Back-to-School clothing, schools supplies and computers”. August 2 – 4 will be the last North Carolina Tax Free Weekend.
###
Author
Isaac is a Fee-Only (no products sold) Certified Financial Planner® Practitioner. Isaac founded Stalwart Financial Planning with offices in Fayetteville NC and Durham NC. Isaac provides comprehensive planning and investment management services to individuals from all walks of life. Isaac can be reached by phone at 910-867-8464, or by email (iallen@StalwartPlanning.com). Visit him at Stawart Financial Planning www.StalwartPlanning.com.