FILED SENATE
Mar 23, 2021
GENERAL ASSEMBLY OF NORTH CAROLINA
S.B. 337
SESSION 2021 PRINCIPAL CLERK
S D
SENATE BILL DRS15156-SVf-13
Short Title: Tax Relief and Recovery Act. (Public)
Sponsors: Senators Newton, Daniel, and Rabon (Primary Sponsors).
Referred to:
1 A BILL TO BE ENTITLED
2 AN ACT TO REDUCE STATE INDIVIDUAL INCOME TAX AND FRANCHISE TAX.
3 The General Assembly of North Carolina enacts:
4
5 PART I. INDIVIDUAL INCOME TAX
6 SECTION 1.1.(a) G.S. 105-153.7(a) reads as rewritten:
7 "(a) Tax. – A tax is imposed for each taxable year on the North Carolina taxable income
8 of every individual. The tax shall be levied, collected, and paid annually. The tax is five and
9 one-quarter percent (5.25%) four and ninety-nine hundredths percent (4.99%) of the taxpayer's
10 North Carolina taxable income."
11 SECTION 1.1.(b) G.S. 105-153.5(a)(1) reads as rewritten:
12 "(1) Standard deduction amount. – The standard deduction amount is zero for a
13 person who is not eligible for a standard deduction under section 63 of the
14 Code. For all other taxpayers, the standard deduction amount is equal to the
15 amount listed in the table below based on the taxpayer's filing status:
16 Filing Status Standard Deduction
17 Married, filing jointly/surviving spouse $21,500$25,500
18 Head of Household 16,12519,125
19 Single 10,75012,750
20 Married, filing separately 10,750.12,750."
21 SECTION 1.1.(c) G.S. 105-153.5(a1) reads as rewritten:
22 "(a1) Child Deduction Amount. – A taxpayer who is allowed a federal child tax credit under
23 section 24 of the Code for the taxable year is allowed a deduction under this subsection for each
24 qualifying child for whom the taxpayer is allowed the federal tax credit. The amount of the
25 deduction is equal to the amount listed in the table below based on the taxpayer's adjusted gross
26 income, as calculated under the Code:
27 Filing Status AGI Deduction Amount
28 Married, filing jointly/ Up to $40,000 $2,500.00$3,000
29 surviving spouse Over $40,000
30 Up to $60,000 2,000.002,500
31 Over $60,000
32 Up to $80,000 1,500.002,000
33 Over $80,000
34 Up to $100,000 1,000.001,500
35 Over $100,000
36 Up to $120,000 500.001,000
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 General Assembly Of North Carolina Session 2021
1 Over $120,000 0
2 Up to $140,000 500.00
3 Over $140,000 0
4
5 Head of Household Up to $30,000 $2,500.00$3,000
6 Over $30,000
7 Up to $45,000 2,000.002,500
8 Over $45,000
9 Up to $60,000 1,500.002,000
10 Over $60,000
11 Up to $75,000 1,000.001,500
12 Over $75,000
13 Up to $90,000 500.001,000
14 Over $90,000 0
15 Up to $105,000 500.00
16 Over $105,000 0
17
18 Single Up to $20,000 $2,500.00$3,000
19 Over $20,000
20 Up to $30,000 2,000.002,500
21 Over $30,000
22 Up to $40,000 1,500.002,000
23 Over $40,000
24 Up to $50,000 1,000.001,500
25 Over $50,000
26 Up to $60,000 500.001,000
27 Over $60,000 0
28 Up to $70,000 500.00
29 Over $70,000 0
30
31 Married, filing separately Up to $20,000 $2,500.00$3,000
32 Over $20,000
33 Up to $30,000 2,000.002,500
34 Over $30,000
35 Up to $40,000 1,500.002,000
36 Over $40,000
37 Up to $50,000 1,000.001,500
38 Over $50,000
39 Up to $60,000 500.001,000
40 Over $60,000 0.
41 Up to $70,000 500.00
42 Over $70,000 0."
43 SECTION 1.1.(d) This section is effective for taxable years beginning on or after
44 January 1, 2022.
45
46 PART II. FRANCHISE TAX
47 SECTION 2.1.(a) G.S. 105-122(d) reads as rewritten:
48 "(d) Tax Base. – A corporation's tax base is the greatest of the following:
49 (1) The proportion of its net worth as set out in subsection (c1) of this section.
50 (2) Fifty five percent (55%) of the corporation's appraised value as determined
51 for ad valorem taxation of all the real and tangible personal property in this
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1 State. For purposes of this subdivision, the appraised value of tangible
2 property, including real estate, is the ad valorem valuation for the calendar
3 year next preceding the due date of the franchise tax return.
4 (3) (Effective for taxable years beginning on or after January 1, 2020, and
5 applicable to the calculation of franchise tax reported on the 2019 and later
6 corporate income tax returns) The corporation's total actual investment in
7 tangible property in this State. For purposes of this subdivision, the total actual
8 investment in tangible property in this State is the total original purchase price
9 or consideration to the reporting taxpayer of its tangible properties, including
10 real estate, in this State plus additions and improvements thereto less (i)
11 reserve for depreciation as permitted for income tax purposes and (ii) any
12 indebtedness specifically incurred and existing solely for and as the result of
13 the purchase of any real estate and any permanent improvements made on the
14 real estate."
15 SECTION 2.1.(b) G.S. 105-114.1(b) reads as rewritten:
16 "(b) Controlled Companies. – If a corporation or an affiliated group of corporations owns
17 more than fifty percent (50%) of the capital interests in a noncorporate limited liability company,
18 the corporation or group of corporations must include in its three tax bases base pursuant to
19 G.S. 105-122 the same percentage of (i) the noncorporate limited liability company's net worth;
20 (ii) fifty-five percent (55%) of the noncorporate limited liability company's appraised ad valorem
21 tax value of property; and (iii) the noncorporate limited liability company's actual investment in
22 tangible property in this State, as appropriate.worth."
23 SECTION 2.1.(c) G.S. 105-120.2(b) reads as rewritten:
24 "(b) Tax Rate. – Every corporation taxed under this section shall annually pay to the
25 Secretary of Revenue, at the time the return is due, the greater of the following:
26 (1) A a franchise or privilege tax at the rate of one dollar and fifty cents ($1.50)
27 per one thousand dollars ($1,000) of the amount determined under subsection
28 (a) of this section, but in no case shall the tax be more than one hundred fifty
29 thousand dollars ($150,000) nor less than two hundred dollars ($200.00).
30 (2) If the tax calculated under this subdivision exceeds the tax calculated under
31 subdivision (1) of this subsection, then the tax is levied at the rate of one dollar
32 and fifty cents ($1.50) per one thousand dollars ($1,000) on the greater of the
33 following:
34 a. Fifty-five percent (55%) of the appraised value as determined for ad
35 valorem taxation of all the real and tangible personal property in this
36 State of each such corporation plus the total appraised value of
37 intangible property returned for taxation of intangible personal
38 property as computed under G.S. 105-122(d).
39 b. The total actual investment in tangible property in this State of such
40 corporation as computed under G.S. 105-122(d)."
41 SECTION 2.1.(d) This section is effective for taxable years beginning on or after
42 January 1, 2023, and applicable to the calculation of franchise tax reported on the 2022 and later
43 corporate income tax return.
44
45 PART III. EFFECTIVE DATE
46 SECTION 3.1. Except as otherwise provided, this act is effective when it becomes
47 law.
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Statutes affected:
Filed: 105-153.7, 105-153.5, 105-122, 105-114.1, 105-120.2
Edition 1: 105-153.7, 105-153.5, 105-122, 105-114.1, 105-120.2