Advertisement

NC Senate’s tax-cut plan gets initial approval by chamber

Updated: Jun. 9, 2021 at 8:24 PM EDT
Email This Link
Share on Pinterest
Share on LinkedIn

RALEIGH, N.C. (WITN/AP) -A tax-cut proposal by North Carolina Senate Republicans has received initial approval with the support of some Democrats.

Eight Democrats joined all Republicans in voting for the measure Wednesday.

The bill would reduce the individual income tax rate, increase the standard and per-child deductions and phase out the corporate income tax by 2028. And there would be $1 billion in federal aid for businesses and nonprofits that struggled during the pandemic.

Some Democrats opposing the measure say it would still help out-of-state corporations and the highest wage earners.

The tax cut plan slashes the personal income tax rate by 21% for the median North Carolina household.

House Bill 334 slashes the flat income tax rate from 5.25% to 4.99%, and increases the standard deduction (zero-tax bracket) from $21,500 to $25,500 for joint filers. It also increases the child tax deduction by $500, bringing the total deduction to $3,000 per child for families that earn less than $40,000 per year.

Republicans say the result is a family of four earning less than $40,000 will pay zero income tax on the first $31,500 of earnings. Other examples include:

Tax Example 1: Family of four earning 70% median household income ($38,221)

• Income tax due under current law: $615

• Income tax due under proposed cut: $335

• Total cut: 45.6%

Tax Example 2: Family of four earning median household income ($54,602)

• Income tax due under current law: $1,528

• Income tax due under proposed cut: $1,203

• Total cut: 21.2%

Tax Example 3: Family of four earning 400% median household income ($218,408)

• Income tax due under current law: $10,338

• Income tax due under proposed cut: $9,626

• Total cut: 6.9%

The bill passed with a bipartisan vote of 36-14, a veto-proof supermajority. The Senate will vote on the bill a final time on Thursday before the bill goes to the House of Representatives for consideration.

Copyright 2021 WITN. All rights reserved.