A BILL TO BE ENTITLED AN ACT TO SIMPLIFY THE NORTH CAROLINA TAX STRUCTURE AND TO REDUCE INDIVIDUAL AND BUSINESS TAX RATES.
House committee substitute makes the following changes to the 2nd editiion.
Part II. Simple Flat Tax Rate for Individual Income Tax
Repeals GS 105-134.6(b)(22), which provided for a deduction from taxable income in an amount not to exceed $25,000 of net business income the taxpayer receives during the taxable year. Effective for taxable years beginning on or after January 1, 2013.
Amends GS 105-134.6 to make organizational changes. Makes a technical correction. Clarifies that in determining North Carolina taxable income, a taxpayer may either deduct the standard deduction amount as indicated in this actor the itemized deductions amount. Sets a maximum limit on the itemized deductions amount based on the taxpayer's filing status as follows: (1) married, filing jointly--maximum itemized deductions, $25,000; (2) head of household--maximum itemized deductions, $20,000; (3) single--maximum itemized deductions, $12,500; and (4) married, filing separately--maximum itemized deductions $12,500. Effective for taxable years beginning on or after January 1, 2014.
Part IV. Expand Sales Tax Base to Include Services Commonly Taxed in Other States
Amends new subdivisions (61) and (62) to GS 105-164.13 (providing exemptions from the retail sales and use tax for certain tangible personal property, digital property, and services). Exempts from the retail and sales use tax an item or service to maintain orrepair tangible personal property under a service contract, a manufacturer's warranty, or a dealer's warranty if the purchaser of the contract is not charged for the item or the service (was, applied the exemption to an item or service to maintain or repair tangible personal property under a service agreement).Also exempts a service on tangible personal property provided for a transmission, distribution, or other network asset contained on utility-owned land, right-of-way, or easement (was, exempted service on tangible personal property provided for a right-of-way or utility easement). Effective July 1, 2014, and applies to sales made on or after that date.
Part V. Effective Date
Deletes the appropriation of $4.5 millionfrom the General Fund to the Department of Revenue for fiscal year 2013-14 for use in implementing the tax reform provisions of this act.Amends section labelsto reflect the deletion.
Provides that except as otherwise provided, this act is effective when it becomes law.
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