Income Tax Rate Reduction Trigger Mods.

GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2025
H 1
HOUSE BILL 459

Short Title: Income Tax Rate Reduction Trigger Mods. (Public)
Sponsors: Representatives Butler, Budd, Greenfield, and Harrison (Primary Sponsors).
For a complete list of sponsors, refer to the North Carolina General Assembly web site.
Referred to: Rules, Calendar, and Operations of the House
March 20, 2025
*H459-v-1*
A BILL TO BE ENTITLED 1
AN ACT TO MODIFY THE INCOME TAX RATE REDUCTION TRIGGER. 2
Whereas, Hurricane Helene was an extremely strong Category 4 hurricane with 3
maximum sustained winds of 140 miles per hour that reached North Carolina on September 27, 4
2024; and 5
Whereas, Hurricane Helene caused widespread heavy rainfall in excess of 30 inches 6
in some areas, record flooding, and significant loss of human life and property in North Carolina; 7
and 8
Whereas, the Office of State Budget and Management estimated that, as of December 9
13, 2024, Hurricane Helene caused $59.6 billion in damage to the State; and 10
Whereas, Hurricane Florence was one of the strongest storms to form in the Atlantic 11
Ocean in the history of North Carolina, reaching wind speeds of up to 140 miles per h our, 12
covering 500 miles, and making landfall on September 14, 2018; and 13
Whereas, Hurricane Florence caused heavy rainfall, record flooding, high storm 14
surge, and dozens of deaths in the State; and 15
Whereas, the people of Eastern North Carolina are still rec overing from the 16
devastation caused by Hurricane Florence; Now, therefore, 17
The General Assembly of North Carolina enacts: 18
SECTION 1.(a) Effective for taxable years beginning on or after January 1, 2025, 19
G.S. 105-153.7 reads as rewritten: 20
"§ 105-153.7. Individual income tax imposed. 21
(a) Tax. – A tax is imposed for each taxable year on the North Carolina taxable income 22
of every individual. The tax shall be levied, collected, and paid annually. Except as otherwise 23
provided in subsection (a1) of this sectio n, the The tax is a percentage four and one -quarter 24
percent (4.25%) of the taxpayer's North Carolina taxable income computed as follows:income. 25
Taxable Years Beginning Tax 26
In 2022 4.99% 27
In 2023 4.75% 28
In 2024 4.5% 29
In 2025 4.25% 30
After 2025 3.99%. 31
(a1) Rate Reduction Trigger. – Notwithstanding the tax rates set out in subsection (a) of 32
this section, if total General Fund revenue in a fiscal year set out below exceeds the trigger 33
amount indicated for that fiscal year, then the applicable tax rate for the indicated and subsequent 34
tax years shall be equal to the greater of (i) the prior taxable year's rate decreased by one -half 35
General Assembly Of North Carolina Session 2025
Page 2 House Bill 459-First Edition
percentage point (0.50%) or (ii) two and forty-nine hundredths percent (2.49%). For purposes of 1
this subsection, total General Fund reven ue is the amount stated in the final accounting of total 2
General Fund Reverting Net Tax and Non -Tax Revenues for the fiscal year, as reported by the 3
Office of State Controller in August following the end of the fiscal year. 4
Fiscal Year Trigger Amount Taxable Year Beginning 5
FY 2025-2026 $33,042,000,000 In 2027 6
FY 2026-2027 $34,100,000,000 In 2028 7
FY 2027-2028 $34,760,000,000 In 2029 8
FY 2028-2029 $35,750,000,000 In 2030 9
FY 2029-2030 $36,510,000,000 In 2031 10
FY 2030-2031 $38,000,000,000 In 2032 11
FY 2031-2032 $38,500,000,000 In 2033 12
FY 2032-2033 $39,000,000,000 In 2034 13
…." 14
SECTION 1.(b) Effective for taxable years beginning on or after January 1, 2029, 15
G.S. 105-153.7, as amended by subsection (a) of this section, reads as rewritten: 16
"§ 105-153.7. Individual income tax imposed. 17
(a) Tax. – A tax is imposed for each taxable year on the North Carolina taxable income 18
of every individual. The tax shall be levied, collected, and paid annually. The Except as otherwise 19
provided in subsection (a1) of this section, the tax is four and one-quarter percent (4.25%) of the 20
taxpayer's North Carolina taxable income. 21
(a1) Rate Reduction Trigger. – Notwithstanding the tax rate set out in subsection (a) of 22
this section, if total General Fund revenue in a fiscal year set out below exceeds the trigger 23
amount indicated for that fiscal year, then the applicable tax rate for the indicated and subsequent 24
tax years shall be equal to the greater of (i) the prior taxable year 's rate decreased by one -half 25
percentage point (0.50%) or (ii) two and forty-nine hundredths percent (2.49%). For purposes of 26
this subsection, total General Fund revenue is the amount stated in the final accounting of total 27
General Fund Reverting Net Tax and Non -Tax Revenues for the fiscal year, as reported by the 28
Office of State Controller in August following the end of the fiscal year. 29
Fiscal Year Trigger Amount Taxable Year Beginning 30
FY 2027-2028 $34,760,000,000 In 2029 31
FY 2028-2029 $35,750,000,000 In 2030 32
FY 2029-2030 $36,510,000,000 In 2031 33
FY 2030-2031 $38,000,000,000 In 2032 34
FY 2031-2032 $38,500,000,000 In 2033 35
FY 2032-2033 $39,000,000,000 In 2034 36
…." 37
SECTION 2. Except as otherwise provided, this act is effective when it becomes 38
law. 39