North Carolina ranks 10th in nation for positive tax climate
North Carolina places 10th in the nation for its tax environment, according to new rankings from the Washington, D.C.-based Tax Foundation.
The Tar Heel State’s 2.5% corporate income tax helped the state achieve its better score, coming in fifth best nationally. North Carolina placed 17th for the individual income tax rate, 20th for the sales tax rate, 13th for the property tax rate, and 10th for the unemployment insurance tax rate.
“Just 10 years ago, North Carolina ranked 44th on this index. Thanks to restrained spending under fiscally conservative leadership over the past decade, North Carolina has been able to lead on tax reform,” said Paige Terryberry, senior analyst for fiscal policy with the John Locke Foundation. “North Carolina now holds 10th place. Once the latest reforms are fully phased in, North Carolina will earn an even higher ranking from the Tax Foundation’s annual index.”
During the 2021 long session of the General Assembly, Republican lawmakers spearheaded an effort to further cut taxes for individuals, households, small businesses, and corporations. The plan reduced North Carolina’s flat income tax from 5.25% to 4.99%. It also raised the standard deduction from $21,500 for joint filters to match the federal standard deduction, which stood at $25,900 for the 2022 tax year.
The plan also slashed the corporate income tax to 2.5% before phasing it out completely by 2030.