By collecting $21.3 billion in General Fund revenues during the 2015-16 fiscal year, the corporate income tax rate will drop to 3 percent in January. That trigger was included in the budget that was adopted in September 2015.
“Even in an environment of historic tax cuts saving taxpayers more than $4.4 billion over five years, state revenues continue to grow due to our tremendous job growth, economic expansion, and responsible fiscal management,” GOP Gov. Pat McCrory said Tuesday in a statement announcing the revenue surplus and tax cut. “Today’s news that the state has met the threshold for further tax cuts for businesses will help spur job creation and continue to make North Carolina one of the best states for business.”
State Sen. Bob Rucho, R-Mecklenburg, who has championed many of the state’s recent tax reforms and cuts, said the corporate tax cut will be good for North Carolina and help more people share in the state’s prosperity.
“This is all part of our tax reform package with the ultimate goal of making North Carolina the most competitive economy not just in the Southeast but also in the country,” Rucho said. The lower tax rate would make the state more attractive for corporations to move to North Carolina and spur capital investments, leading to more job creation, he said.
“We’re seeing the surpluses that our critics said would never happen when we did our tax cuts,” Rucho said. “The plan that we put into place is working perfectly.”
The biennial budget adopted last September included a provision that would lower the corporate tax rate from the current 4 percent to 3 percent once revenue collections exceeded $20.975 billion. The 2015-16 collections beat that target by $300 million.
With the January tax cut, the state’s corporate tax rate will have dropped by more than half since 2013, when it was 6.9 percent. Also in January, the personal income tax rate will drop from 5.75 percent to 5.499 percent.