On July 23, 2013 NC Governor Pat McCrory signed the recently passed tax revisions into law.  The changes will take effect January 1, 2014 for tax years 2014 and beyond.  Here are the highlights of what did and did not change (not an all-inclusive list):

 CORPORATE TAXES

(See separate list for changes to Individual taxes)

• Corporate tax rate drops from 6.9% to 6% in 2014 and to 5% in 2015.  Further rate reductions will depend on whether tax revenue targets are met in 2016 and 2017.
•  Tax credits for research & development are extended until 2016.
•  Tax credits for film production will expire in 2015.
•  Various other tax credits will be allowed to expire as scheduled under current law.
•  No change to franchise tax calculation.

OTHER TAXES

• No change to state sales tax rate.
• No change to how food is taxed (sales tax) although some specialized bakery items lose their preferred tax rate status effective July 1, 2014.
• Prescription drugs remain exempt from sales tax.
• Movie tickets and other amusements now subject to full sales tax rate instead of reduced privilege tax rate.
• Tax rate levied on electricity and piped natural gas increases from 3% to 7%.
• Changes made to various other sales tax categories (too numerous to list here but are to very specific sales).
• Back-to-school sales tax “holiday” is eliminated.
• State gasoline tax capped to 37.5 cents through June 30, 2015.

If you have questions about any of these changes, please contact our office.