News: Quick Takes

Tax reforms will remove nearly a quarter-million from income tax rolls, memo says

UPDATE, July 21, 11:50 a.m. New projections from the Department of Revenue estimate 241,536 more people will fall into the “zero-tax bracket” in 2019, according to a press release issued Friday by House Speaker Tim Moore. This is higher than the Fiscal Research Division’s first prediction.

State income tax reforms have removed thousands of North Carolinians from the income tax rolls.

And many more should not have to file a state tax return in 2019, says a memo from legislative researchers.

The Fiscal Research Division projects by 2019, 230,000 North Carolinians who would have paid income taxes under the 2012 tax code will no longer be on the tax rolls.

These taxpayers will benefit most recently from a 2017 increase in the standard income tax deduction for married couples who file jointly, from $17,500 to $20,000, and other tax code revisions.

“Since 2013, the General Assembly has made significant changes to the state’s individual income tax including: rate reductions; changes to tax credits, exemptions and deductions; and increases in the standard deduction,” the memo from Fiscal Research stated. “Due to these tax law changes, especially those enacted in [the state budget], we expect that for tax year 2019 the number of tax returns with no tax liability will be higher than otherwise expected.”

The memo, summarizing the data, was sent Monday to House Speaker Tim Moore, R-Cleveland.

The speaker said in a statement he considers the news a sign of Republican-led fiscal progress.

“Helping hundreds of thousands of North Carolinians no longer owe any income tax is an outstanding achievement that proves Republican tax reforms are providing relief to citizens who need it most,” Moore, said.  

Moore said the income tax revisions will help people who make less than $20,000.

“Hundreds of thousands of hard-working North Carolina parents and young people, long-time residents and newcomers, will get a break from owing any income tax because we put average people first with relief that works for the work force and helps low-income families keep more of their earnings,” he said.

Joseph Kyzer, communications director for Moore, doubled down on his boss’ take, saying the income tax relief will allow people to invest their money how they want, helping the economy grow.

Kyzer added the new forecast resulted from Republican reforms coming after Democrats raised taxes and left the state in debt during the 2000s.  

Kyzer said the GOP has not based its tax strategy on opposing income taxes as a matter of principle. Instead, the party’s goal is to endorse policies that boost the state’s economy.

“I think the goal is to continue the process of tax reform and showing the people of North Carolina how good it is,” Kyzer said, “The goal is to continue this proven approach. They’re focused on a results-based approach, rather than a particular [philosophical] approach.”

The state personal income tax rate will drop from 5.499 percent to 5.25 percent beginning in 2019.