RALEIGH, N.C. — The
House and
Senate released updated versions of their tax reform proposals Thursday morning.
Worth noting: Sens. Dan Clodfelter, D-Mecklenburg, and Fletcher Hartsell, R-Cabarrus, put out a separate Senate proposal, which makes changes in such a way that it looks to be compromise between the House bill and the main Senate bill.
Taxes, ChangesHouse PlanSenate plan (Rucho)Senate Plan
(Clodfelter/Hartsell) SALES TAX RATEDrops from 6.75 to 6.65 percent in most parts of state starting in 2014.Drops from 6.75 to 6.5 percent in Jan. 2015.Drops from 6.75 to 6.5 percent starting Sept. 1, 2014. SALES TAXED ITEMSServices related to physical items, such as warranties and delivery, would be subject to tax.The number of services to which sales tax applies would expand over four years, eventually encompassing more than 130 services not currently taxed.More items, including some services attached to tangeable property, would be subject to sales tax starting July 1, 2014. INDIVIDUAL INCOME TAX RATEStatewide flat 5.9 percent tax rate replaces three-tiered system.Statewide rate of 5.5 percent in 2014. That steps down over three years to 4.5 percent in 2016.Statewide rate of 5.9 percent. INDIVIDUAL INCOME TAX EXEMPTIONSCan exempt first $12,000 of income or itemize deductions up to $25,000.$10,000 of income tax-exempt in 2014. That steps up to $12,500 in 2015. New, deductible housing expense allowance equal to the greater of $5,000 or the mortgage interest on the taxpayer's legal residence, not to exceed $10,000. CORPORATE INCOME TAXRate drops from 6.9 to 5.4 percent over five years.Rate drops from 6.9 to 6 percent over three years.
* The bill also changes how the tax rate is calculated to be friendlier to manufacturers.Rate drops from 6.9 to 5.95 percent.
* Repeals some tax credits.
* Makes corporate income tax more friendly to manufacturers and businesses with lots of equipment. ESTATE TAXRepealed.Repealed.Plan does not show changes to the estate tax. BUDGET IMPACTRequires $221.8 million in cuts over two years.Requires $770 million in cuts over two years.Does not require any reserve. Sets aside extra revenue to repay federal unemployment insurance debt.
