NC income tax cut signed into law

Posted November 8, 2019 5:35 p.m. EST
Updated November 9, 2019 12:37 a.m. EST

State budget

— North Carolinians will get a state income tax cut next year but might pay more sales tax for online purchases

Gov. Roy Cooper signed a bill Friday that increases the state's standard deduction, which will reduce most people's income taxes. The deduction will go from $20,000 to $21,500 for a married couple filing jointly and from $10,000 to $10,750 for a single person, starting with the 2020 tax year.

Senate Bill 557 will also require Amazon.com and other online retailers to charge sales tax on third-party transactions that they broker. Internet retailers generally already collect state sales tax on direct sales, but for many sales where the platform is merely a broker for someone else, the tax isn't collected.

Taxpayers are supposed to note how much they would have owed, though, and pay it with their income taxes. Many do not, and the state expects a revenue boost from the bill's sales tax portion.

These measures were originally joined with a business tax cut that was a priority for legislative Republicans. But Cooper, a Democrat, vetoed that legislation, and the Republican majority split the tax language into a couple of bills. Cooper vetoed the business tax cut, which would have rolled back the state's franchise tax, Friday morning.

Cooper said in a Friday afternoon press release that the bill he signed will help level the playing field between North Carolina retailers and out-of-state companies.

"When North Carolina cuts taxes, they should benefit middle-class and lower-income people, not corporations," he said in the statement.

The bill also includes a tax break for R.J. Reynolds, a change state officials say will cure a double-tax the state has charged because of the way the company is structured.

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