FILED SENATE
Apr 6, 2023
GENERAL ASSEMBLY OF NORTH CAROLINA
S.B. 695
SESSION 2023 PRINCIPAL CLERK
S D
SENATE BILL DRS45300-NIf-121
Short Title: Reenact Child Care Tax Credit. (Public)
Sponsors: Senator Mohammed (Primary Sponsor).
Referred to:
1 A BILL TO BE ENTITLED
2 AN ACT TO REENACT THE CHILD CARE TAX CREDIT.
3 The General Assembly of North Carolina enacts:
4 SECTION 1. G.S. 105-151.11 is reenacted as it existed immediately before its
5 expiration, is recodified as G.S. 105-153.11, and reads as rewritten:
6 "§ 105-153.11. Credit for child care and certain employment-related expenses.
7 (a) Credit. – A person who is allowed a credit against federal income tax for a percentage
8 of employment-related expenses under section 21 of the Code shall be allowed as a credit against
9 the tax imposed by this Part an amount equal to the applicable percentage of the
10 employment-related expenses as defined in section 21(b)(2) of the Code. In order to claim the
11 credit allowed by this section, the taxpayer must provide with the tax return the information
12 required by the Secretary.
13 (a1) Applicable Percentage. – For employment-related expenses that are incurred only
14 with respect to one or more dependents who are seven years old or older and are not physically
15 or mentally incapable of caring for themselves, the applicable percentage is the appropriate
16 percentage in the column labeled "Percentage A" in the table below, based on the taxpayer's
17 adjusted gross income determined under the Code. For employment-related expenses with
18 respect to any other qualifying individual, the applicable percentage is the appropriate percentage
19 in the column labeled "Percentage B" in the table below, based on the taxpayer's adjusted gross
20 income determined under the Code.
21 Filing Status Adjusted Gross Percentage A Percentage B
22 Income
23
24 Head of Up to $20,000 9% 13%
25 Household
26 Over $20,000
27 up to $32,000 8% 11.5%
28
29 Over $32,000 7% 10%
30
31 Surviving
32 Spouse or
33 Joint Return Up to $25,000 9% 13%
34
35 Over $25,000
36 up to $40,000 8% 11.5%
*DRS45300-NIf-121*
 General Assembly Of North Carolina Session 2023
1
2 Over $40,000 7% 10%
3
4 Single Up to $15,000 9% 13%
5
6 Over $15,000
7 up to $24,000 8% 11.5%
8
9 Over $24,000 7% 10%
10
11 Married
12 Filing
13 Separately Up to $12,500 9% 13%
14
15 Over $12,500
16 up to $20,000 8% 11.5%
17
18 Over $20,000 7% 10%
19 (b) Employment Related Expenses. – The amount of employment-related expenses for
20 which a credit may be claimed may not exceed three thousand dollars ($3,000) if the taxpayer's
21 household includes one qualifying individual, as defined in section 21(b)(1) of the Code, and
22 may not exceed six thousand dollars ($6,000) if the taxpayer's household includes more than one
23 qualifying individual. The amount of employment-related expenses for which a credit may be
24 claimed is reduced by the amount of employer-provided dependent care assistance excluded from
25 gross income.
26 (c) Limitations. – A nonresident or part-year resident who claims the credit allowed by
27 this section shall reduce the amount of the credit by multiplying it by the fraction calculated under
28 G.S. 105-134.5(b) or (c), G.S. 105-153.4(b) or (c), as appropriate. No credit shall be allowed
29 under this section for amounts deducted in calculating North Carolina taxable income. The credit
30 allowed by this section may not exceed the amount of tax imposed by this Part for the taxable
31 year reduced by the sum of all credits allowable, except for payments of tax made by or on behalf
32 of the taxpayer."
33 SECTION 2. This act is effective for taxable years beginning on or after January 1,
34 2023.
Page 2 DRS45300-NIf-121


Statutes affected:
Filed: 105-153.11
Edition 1: 105-153.11