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@NCCapitol

NC tax changes take effect Wednesday

Posted December 30, 2013
Updated January 1, 2014

— An overhaul of North Carolina's tax code that lawmakers passed in July takes effect with the new year, bringing a raft of changes to people's paychecks and, starting next year, their annual income tax returns.

The existing graduated income tax system will be replaced with a flat tax. Instead of paying 6 percent on the first $13,000 in earnings, 7 percent on everything over that up to $60,000 and 7.75 percent on anything above that, all income will be taxed at 5.8 percent.

Lawmakers also more than doubled the standard deduction. Single filers earning $40,000 a year will pay $2,464 in state income tax this year, not counting other deductions or any credits. Next year, the tax bill for the same person would be $1,885, or $579 less.

Because the new tax is flat, people who make more money will get a bigger break than those who make less.

For example, someone making $100,000 a year owes $6,940 in state income tax this year, not counting deductions or credits. Next year, it will be $5,365, or $1,575 less.

Some people may end up paying more overall in state taxes however, because lawmakers expanded the state sales tax to more items and eliminated a number of deductions and credits. Some of those changes include repealing the deduction for some retirement income – Social Security income remains exempt to state tax – as well as the exemption for the first $50,000 in earnings for a small business and ending credits for child care or educational expenses.

Also, the earned-income tax credit for low-income families has been eliminated.

Another change that takes effect Wednesday seeks to make electric car owners pay more in highway taxes.

North Carolina pays for its road construction and maintenance mostly through gas taxes. People who drive plug-in electric vehicles aren't paying any gas tax even though they're using the roads.

So, as of Jan. 1, registering an electric car in North Carolina will cost an extra $100 fee in lieu of the gas tax to support the State Highway Trust Fund.

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  • Atheistinafoxhole Jan 9, 2014

    " PanthersFan45 Jan 3, 6:25 p.m.

    yes... the "liberal ideology" supported by folks like Thomas Jefferson and Adam Smith (the dude who literally wrote the book on capitalism)

    THEY understood the rich ought pay more... why don't you? - junkmail5

    What they understood and believed in the 1700's may be their view for that time period, but it isn't mine as it applies in 2014."

    Hmmm, do you feel the same way about the Constitution?

  • ConservativeVoter Jan 8, 2014

    This tax plan gives everybody some skin in the game. It discourages government spending and wealth transfer programs. Since everybody has a tax rate of 5.8%, the takers have an incentive to not support wealth transfer programs and higher taxes.

  • ConservativeVoter Jan 8, 2014

    WRAL's liberal spin artists are at it again.

    They said people who make more will pay less.

    They should said those that pay more in taxes will get a saving on their excessively high state taxes.

  • PanthersFan45 Jan 3, 2014

    yes... the "liberal ideology" supported by folks like Thomas Jefferson and Adam Smith (the dude who literally wrote the book on capitalism)

    THEY understood the rich ought pay more... why don't you? - junkmail5

    What they understood and believed in the 1700's may be their view for that time period, but it isn't mine as it applies in 2014. Its a much different time period today and there are MANY more programs in place that BOTH sides use for wedge issues (some social, some fiscal). Maybe you don't see that and you can adhere to what you believe, I'll do the same, that's what makes this country great. . What I see is 2 parties using the classic "divide and conquer" politics today. I believe it was Jefferson (who you point out here) that made references to a class of "sheep and wolves" and cited England as an example. Our democracy isn't perfect but I'd take it over the way things are in Europe any day ... ANY DAY.

  • sixnitepkg Jan 3, 2014

    "...It is actually pretty simple math..." thefensk

    Actually the REAL math looks like this: given a family of 4 with a food bill of $800/mo for basic necessities

    Making $30k x 5.8% = $1740 income tax + food tax of $770/yr (800 x 12 x 8% = 770) = $2510 which is about 8.5% of total income

    now, making $100k x 5.8% = $5800 income tax + food tax of $770/yr (same food bill as above, remember) = $6570, or 6.5% of income

    get it now?

    that's just income tax & taxes on basic foodstuffs, add to that the other taxes for everything else - utilities, medicine etc. & this only gets WORSE for the middle & working class.

    Plus people will stop going to movies, concerts & sporting events - they'll be too darned broke to go - then the concerts will stop booking here, say bye-bye NASCAR, Panthers & Canes. because they'll go where they can fill a stadium!
    where will our state get the $$ to provide basic services like Schools then? (remember free education is a RIGHT according the N.C. Constitution)

  • PanthersFan45 Jan 3, 2014

    Prior to the change those making more paid a higher, graduated rate. Now they don't.

    Hence they are paying less in taxes. - junkmail5

    Thanks for posting ... at least you correctly stated the "graduated tax". That's the liberal ideology of treating everyone differently and it tells everyone on this board how theres a strong belief in division. The GOP does it with social issues, the DNC with fiscal issues. Nothing like divide and conquer and pit groups against one another, both do it quite efectively and its won them many elections. Personally I think that's pretty poor, but that's my opinion.

  • thefensk Jan 3, 2014

    Where do people get the idea that with a flat tax people making more money are paying less in taxes? All this "less of a break" stuff only clouds the facts. Under the new plan, everybody pays the same RATE. The more you make, the more you pay. It is actually pretty simple math.
    Of course the increase in personal deduction has more benefit, percentage-wise, to those making less.

  • junkmail5 Jan 3, 2014

    then have the company you work for take more out for you

    ...... you lose....
    ETG

    Uh... what?

    if you overpay in withholdings they refund that BACK to you at the end of the year.

    have you ever even paid taxes before? If so you'd know basic stuff like that.

  • RunsWithWolves Jan 3, 2014

    A tax specialist that came to explain the new tax laws at my company summed it down to this fact: If you make more than $85,000/year, your overall taxes will go down. If you make less than $85,000/year, your overall taxes will go up. No surprise how we got to this state with McCrory & Company, who are actively punishing the poor to benefit the rich.

  • rushbot Jan 3, 2014

    "just like everyone pays the same sales tax rate they're paying the same income tax rate. This is just and fair.

    The only reason the "rich" are getting a bigger tax cut is because they've been overpaying to begin with. The "poor" already got their tax cut.

    It's time everyone pay their fair share, the fair share is the same rate
    Click to view my profile ThePunisher
    January 2, 2014 7:17 p.m." .. ..you sir or ma'am have a moniker that is perfectly appropriate for describing the political desires of the regressive, con servative republicons towards the middle and lower classes here in our nation....

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