AN ACT to modify the income tax rate reduction trigger.

Whereas, Hurricane Helene was an extremely strong Category 4 hurricane with maximum sustained winds of 140 miles per hour that reached North Carolina on September 27, 2024; and

Whereas, Hurricane Helene caused widespread heavy rainfall in excess of 30 inches in some areas, record flooding, and significant loss of human life and property in North Carolina; and

Whereas, the Office of State Budget and Management estimated that, as of December 13, 2024, Hurricane Helene caused $59.6 billion in damage to the State; and

Whereas, Hurricane Florence was one of the strongest storms to form in the Atlantic Ocean in the history of North Carolina, reaching wind speeds of up to 140 miles per hour, covering 500 miles, and making landfall on September 14, 2018; and

Whereas, Hurricane Florence caused heavy rainfall, record flooding, high storm surge, and dozens of deaths in the State; and

Whereas, the people of Eastern North Carolina are still recovering from the devastation caused by Hurricane Florence; Now, therefore,

The General Assembly of North Carolina enacts:

SECTION 1.(a)  Effective for taxable years beginning on or after January 1, 2025, G.S. 105‑153.7 reads as rewritten:

§ 105‑153.7.  Individual income tax imposed.

(a)        Tax. – A tax is imposed for each taxable year on the North Carolina taxable income of every individual. The tax shall be levied, collected, and paid annually. Except as otherwise provided in subsection (a1) of this section, the The tax is a percentage four and one‑quarter percent (4.25%) of the taxpayer's North Carolina taxable income computed as follows:income.

Taxable Years Beginning                   Tax

In 2022                                    4.99%

In 2023                                    4.75%

In 2024                                    4.5%

In 2025                                    4.25%

After 2025                               3.99%.

(a1)      Rate Reduction Trigger. – Notwithstanding the tax rates set out in subsection (a) of this section, if total General Fund revenue in a fiscal year set out below exceeds the trigger amount indicated for that fiscal year, then the applicable tax rate for the indicated and subsequent tax years shall be equal to the greater of (i) the prior taxable year's rate decreased by one‑half percentage point (0.50%) or (ii) two and forty‑nine hundredths percent (2.49%). For purposes of this subsection, total General Fund revenue is the amount stated in the final accounting of total General Fund Reverting Net Tax and Non‑Tax Revenues for the fiscal year, as reported by the Office of State Controller in August following the end of the fiscal year.

Fiscal Year                     Trigger Amount             Taxable Year Beginning

FY 2025‑2026                $33,042,000,000                         In 2027

FY 2026‑2027                $34,100,000,000                         In 2028

FY 2027‑2028                $34,760,000,000                         In 2029

FY 2028‑2029                $35,750,000,000                         In 2030

FY 2029‑2030                $36,510,000,000                         In 2031

FY 2030‑2031                $38,000,000,000                         In 2032

FY 2031‑2032                $38,500,000,000                         In 2033

FY 2032‑2033                $39,000,000,000                         In 2034

….

SECTION 1.(b)  Effective for taxable years beginning on or after January 1, 2029, G.S. 105‑153.7, as amended by subsection (a) of this section, reads as rewritten:

§ 105‑153.7.  Individual income tax imposed.

(a)        Tax. – A tax is imposed for each taxable year on the North Carolina taxable income of every individual. The tax shall be levied, collected, and paid annually. The Except as otherwise provided in subsection (a1) of this section, the tax is four and one‑quarter percent (4.25%) of the taxpayer's North Carolina taxable income.

(a1)      Rate Reduction Trigger. – Notwithstanding the tax rate set out in subsection (a) of this section, if total General Fund revenue in a fiscal year set out below exceeds the trigger amount indicated for that fiscal year, then the applicable tax rate for the indicated and subsequent tax years shall be equal to the greater of (i) the prior taxable year's rate decreased by one‑half percentage point (0.50%) or (ii) two and forty‑nine hundredths percent (2.49%). For purposes of this subsection, total General Fund revenue is the amount stated in the final accounting of total General Fund Reverting Net Tax and Non‑Tax Revenues for the fiscal year, as reported by the Office of State Controller in August following the end of the fiscal year.

Fiscal Year                     Trigger Amount             Taxable Year Beginning

FY 2027‑2028                $34,760,000,000                         In 2029

FY 2028‑2029                $35,750,000,000                         In 2030

FY 2029‑2030                $36,510,000,000                         In 2031

FY 2030‑2031                $38,000,000,000                         In 2032

FY 2031‑2032                $38,500,000,000                         In 2033

FY 2032‑2033                $39,000,000,000                         In 2034

….

SECTION 2.  Except as otherwise provided, this act is effective when it becomes law.