A few more nice tax changes for NC
Hello clients and friends ! I hope your 2022 year is starting off nicely....
Continuing from my last post (NC Senate Bill 105 signed in November), here are a few more positive changes for us NC residents:
1. NC's individual tax rate is going down. For 2021 (this current tax season) it is still going to be the current 5.25%. For 2022, the rate is going down to 4.99%. There will be further reductions to 4.75% in 2023, 4.6% in 2024, 4.5% in 2025, 4.25% in 2026, and finally 3.99% in years 2027 and later. This really isn't going to translate into TOO much savings for most, but hey, every little bit counts
2. NC standard deduction - Currently, NC's standard deduction lags behind the federal. For example, for 2021 the standard deduction for a married filing joint couple is $25,100. For NC it is only $21,500. This has been a thorn in tax preparers' sides because we can quickly eyeball if someone will use the standard deduction for federal as opposed to itemizing deductions using Schedule A. But then for NC, we couldn't assume the same thing and had to "eyeball" this once again. Pretty annoying. Beginning with 2022, the NC standard deduction is increasing to be very close to the federal ($25,500 for a married filing joint couple). Nice - a change that makes sense ! All filing statuses will have similar increases that will closely align with the federal.
3. NC corporate income tax phaseout - Although it is going to happen gradually over about 10 years, by the year 2030 there will be no NC corporate income tax. This is good news for C-corporations (which tend to be larger companies with a bigger NC tax bill). I'm curious what, if anything, NC will add in its place. We shall see.
That's it for now....SB 105 added many more new changes, but I think small doses is the more enjoyable way to digest them. Take care !!