For years North Carolina has earned accolades for being among the nation’s most business friendly climates by notable publications like Forbes, CNBC, and Chief Executive. The most recent achievement comes from Site Selection magazine, which named the Tar Heel State the #1 Competitive State for new plants in 2014. While there are many reasons North Carolina is an attractive business location, the changes implemented in 2013 to personal and corporate taxes has had a sizable impact.
The tax reform legislation proposed by Governor Pat McCrory and enacted in 2013 was designed to simplify the tax structure, cap income tax rates for all North Carolinians, and to reduce corporate taxes. The philosophy of this sweeping legislation was simple: put more money in people’s pockets and they’ll spend more here in North Carolina. Put more money in business owners’ pockets, and they’ll invest in their businesses, grow, and ultimately contribute more to the state’s revenues. It appears to be working.
Corporate taxes were also cut from 6.9% in 2013 to 6% in 2014, and then down to 5% in 2015. The 1% drop from 2014 - 2015 is predicated on FY’15 budget revenues, and with a reported $455 million surplus, it appears the corporate tax rate this year will indeed be 5%.
According to the office of Governor Pat McCrory, tax revenues in April 2015 were up 15 - 20% from last year, “which was largely driven by increased business income and capital gains.”
“The surplus is evidence that reforming the tax code and increasing competitiveness are strengthening North Carolina’s economy and putting more money into the budget of working families,” McCrory says.
Compare Business Tax Rates by State to see how these benefits add up for in favor of your business in North Carolina.
Personal income tax rates were also slashed from 2013 levels, a maximum of 7.75% and minimum of 7%, to a flat rate of 6% in 2013, 5.8% in 2014, and 5.75% in 2015. In addition, the standard deduction for single filers was $3,000, and $6,000 for married filing jointly. The new standard deduction for 2014 is $7,500 for filing singly and $15,000 for married filing jointly.
While low personal and corporate taxes are clearly benefitting the state’s bottom line, for business owners it is another key reason to consider locating in North Carolina. Some others:
According to state officials, the most recent indications are that state revenues are on pace to trigger an even further cut to corporate taxes to 4% in 2016, with 3% on the horizon for 2017. The math is simple. Add it all up, and it is clear there is no better time to locate your business to North Carolina than right now.
Moving your business across the state line could save you a bundle in taxes. Download our free guide to moving your business to North Carolina to see if relocation might be a good choice for your business.