Investing in North Carolina Act.

GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2025
S 1
SENATE BILL 659

Short Title: Investing in North Carolina Act. (Public)
Sponsors: Senators Applewhite, Grafstein, and Bradley (Primary Sponsors).
Referred to: Rules and Operations of the Senate
March 26, 2025
*S659-v-1*
A BILL TO BE ENTITLED 1
AN ACT TO APPROPRIAT E FUNDS TO RAISE SAL ARIES FOR TEACHERS, STATE 2
EMPLOYEES, COMMUNITY COLLEGE EMPLOYEES, AND EMPLOYEES OF THE 3
UNIVERSITY OF NORTH CAROLINA; TO PROVIDE A COST-OF-LIVING INCREASE 4
FOR RETIREES; TO EXP AND THE WAGE$ PROGRAM STATEWIDE; A ND TO 5
CREATE A TAX CREDIT FOR QUALIFYING EMPLOYERS EQUAL TO THE LESSER 6
OF FIVE PERCENT OF W AGES PAID TO EMPLOYE ES DURING THE TAXABL E 7
YEAR OR TEN THOUSAND DOLLARS. 8
The General Assembly of North Carolina enacts: 9
10
PART I. RAISE TEACHER SALARIES 11
SECTION 1.(a) The following monthly teacher salary schedule shall apply for the 12
2025-2026 fiscal year to licensed personnel of the public schools who are classified as teachers. 13
The salary schedule is based on years of teaching experience. 14
2025-2026 Teacher Monthly Salary Schedule 15
Years of Experience "A" Teachers 16
0 $4,600 17
1 $4,685 18
2 $4,770 19
3 $4,855 20
4 $4,940 21
5 $5,025 22
6 $5,110 23
7 $5,195 24
8 $5,280 25
9 $5,365 26
10 $5,450 27
11 $5,535 28
12 $5,620 29
13 $5,705 30
14 $5,790 31
15 $5,875 32
16 $5,950 33
17-19 $6,070 34
20-22 $6,135 35
23-25 $6,200 36
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Page 2 Senate Bill 659-First Edition
26-28 $6,295 1
29+ $6,370 2
SECTION 1.(b) Salary Supplements for Teachers Paid on This Salary Schedule. – 3
(1) Licensed teachers who have NBPTS certification shall receive a salary 4
supplement each month of twelve percent (12%) of their monthly sal ary on 5
the "A" salary schedule. 6
(2) Licensed teachers who are classified as "M" teachers shall receive a salary 7
supplement each month of ten percent (10%) of their monthly salary on the 8
"A" salary schedule. 9
(3) Licensed teachers with licensure based on aca demic preparation at the 10
six-year degree level shall receive a salary supplement of one hundred 11
twenty-six dollars ($126.00) per month in addition to the supplement provided 12
to them as "M" teachers. 13
(4) Licensed teachers with licensure based on academic pr eparation at the 14
doctoral degree level shall receive a salary supplement of two hundred 15
fifty-three dollars ($253.00) per month in addition to the supplement provided 16
to them as "M" teachers. 17
(5) Certified school nurses shall receive a salary supplement ea ch month of ten 18
percent (10%) of their monthly salary on the "A" salary schedule. 19
(6) School counselors who are licensed as counselors at the master's degree level 20
or higher shall receive a salary supplement of one hundred dollars ($100.00) 21
per month. 22
SECTION 1.(c) For school psychologists, school speech pathologists who are 23
licensed as speech pathologists at the master's degree level or higher, and school audiologists 24
who are licensed as audiologists at the master's degree level or higher, the following shall apply: 25
(1) The first step of the salary schedule shall be equivalent to the sixth step of the 26
"A" salary schedule. 27
(2) These employees shall receive the following salary supplements each month: 28
a. Ten percent (10%) of their monthly salary, excluding t he supplement 29
provided pursuant to sub-subdivision b. of this subdivision. 30
b. Five hundred dollars ($500.00). 31
(3) These employees are eligible to receive salary supplements equivalent to those 32
of teachers for academic preparation at the six -year degree lev el or the 33
doctoral degree level. 34
(4) The twenty -sixth step of the salary schedule shall be seven and one -half 35
percent (7.5%) higher than the salary received by these same employees on 36
the twenty-fifth step of the salary schedule. 37
SECTION 1.(d) Beginning w ith the 2014 -2015 fiscal year, in lieu of providing 38
annual longevity payments to teachers paid on the teacher salary schedule, the amounts of those 39
longevity payments are included in the monthly amounts under the teacher salary schedule. 40
SECTION 1.(e) A teacher compensated in accordance with this salary schedule for 41
the 2025-2026 school year shall receive an amount equal to the greater of the following: 42
(1) The applicable amount on the salary schedule for the applicable school year. 43
(2) For teachers who we re eligible for longevity for the 2013 -2014 school year, 44
the sum of the following: 45
a. The salary the teacher received in the 2013-2014 school year pursuant 46
to Section 35.11 of S.L. 2013-360. 47
b. The longevity that the teacher would have received under the longevity 48
system in effect for the 2013 -2014 school year provided in Section 49
35.11 of S.L. 2013-360 based on the teacher's current years of service. 50
c. The annual bonus provided in Section 9.1(e) of S.L. 2014-100. 51
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Senate Bill 659-First Edition Page 3
(3) For teachers who were not eligible for longevity for the 2013 -2014 school 1
year, the sum of the salary and annual bonus the teacher received in the 2
2014-2015 school year pursuant to Section 9.1 of S.L. 2014-100. 3
SECTION 1.(f) As used in this section, the term "teacher" shall also include 4
instructional support personnel. 5
SECTION 1.(g) There is appropriated from the General Fund to the Department of 6
Public Instruction for the 2025 -2026 fiscal year the sum of eight hundred seventy -two million 7
six hundred forty-two thousand three hundred thirty-six dollars ($872,642,336) in recurring funds 8
to implement the teacher raises provided in this section. 9
10
PART II. PAY RAISES FOR STATE EMPLOYEES/ COMMUNITY 11
COLLEGES/UNIVERSITY OF NORTH CAROLINA AN D COST -OF-LIVING 12
INCREASES FOR RETIREES 13
14
ELIGIBLE STATE -FUNDED EMPLOYEES AWARDED COST -OF-LIVING 15
ADJUSTMENT/LEGISLATIVE SALARY INCREASES 16
SECTION 2.1.(a) Effective July 1, 2025, except as provided by subsection (c) of 17
this section, a person (i) whose salary is set by this Part, pursuant to the North Carolina Human 18
Resources Act or as otherwise authorized in this act, and (ii) who is employed in a State-funded 19
position on June 30, 2025, is awarded a compensation adjustment as follows: 20
(1) Three percent (3%) effective July 1, 2025. 21
(2) As otherwise allowed or provided by law. 22
SECTION 2.1.(a1) Except as provided by subsection (c) of this section, a person (i) 23
whose salary is set by this Part, pursuant to the North Carolina Human Resources Act or as 24
otherwise authorized in this act, and (ii) who is employed in a State-funded position on June 30, 25
2026, is awarded a cost-of-living adjustment as follows: 26
(1) Three percent (3%) effective July 1, 2026. 27
(2) As otherwise allowed or provided by law. 28
SECTION 2.1.(b) For the 2025-2027 fiscal biennium, the following persons are not 29
eligible to receive the legislative salary increases provided by subsections (a) and (a1) of this 30
section: 31
(1) Employees of local boards of education. 32
(2) Local community college employees. 33
(3) Employees of The University of North Carolina. 34
(4) Clerks of superior court compensated under G.S. 7A-101. 35
(5) Officers and employees of the Department of Adult Correction to which 36
Section 2.7 or 2.8 of this Part applies. 37
(6) State law enforcement officers to which Section 2.9 of this Part applies. 38
(7) Employees of the State Highway Patrol to whi ch Section 2.9A of this Part 39
applies. 40
(8) Employees of schools operated by the Department of Health and Human 41
Services, the Department of Public Safety, the Department of Adult 42
Correction, and the State Board of Education who are paid based on the 43
Teacher Salary Schedule. 44
SECTION 2.1.(c) Permanent part -time employees shall receive the increase 45
authorized by this section on a prorated and equitable basis. 46
SECTION 2.1.(d) No eligible State -funded employee shall be prohibited from 47
receiving the full salary increase provided in this section solely because the employee's salary 48
after applying the legislative increase is above the maximum of the salary range prescribed by 49
the State Human Resources Commission. 50
51
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RECEIPT-SUPPORTED COST-OF-LIVING ADJUSTMENT RESERVE 1
SECTION 2.2. State Agencies are authorized to use the funding allotted to them 2
from the Receipt-Supported Cost-of-Living Adjustment Reserve to fundshift a limited number 3
of receipt-supported positions in the General Fund to net appropriation funding. 4
5
RETENTION PAY FOR STATE EMPLOYEES 6
SECTION 2.3.(a) All references to "longevity" pay in Chapter 126 of the General 7
Statutes shall be replaced with "retention" pay. 8
SECTION 2.3.(b) The amount of retention pay provided to employees who are 9
full-time or over half-time and have a permanent, time-limited, or probationary appointment and 10
who are in pay status for one -half of the regularly scheduled workdays and holidays in a pay 11
period shall be increased to the following amounts: 12
Years of Total Service Retention Pay Percentage 13
2 but less than 5 years 1.0% 14
5 but less than 10 years 1.5% 15
10 but less than 15 years 2.0% 16
15 but less than 20 years 2.5% 17
20 but less than 25 years 3.5% 18
25 or more years 4.5% 19
20
RETENTION BONUS AWARDED FOR FISCAL YEAR 21
SECTION 2.4.(a) Any person (i) whose salary is set by Section 1 of this act or this 22
Part, pursuant to the North Carolina Human Resources Act, or as otherwise authorized in this act 23
and (ii) who is continuously employed by the State or a public school unit from July 1, 2025, to 24
October 31, 2025, shall be awarded a retention bonus for the 2025-2026 fiscal year in the amount 25
of five hundred dollars ($500.00), payable during the month of November 2025. For otherwise 26
eligible local education employees, eligibility for the bonus shall be measured beginning not on 27
July 1, 2025, but on the first day when staff report for the 2025-2026 school year. 28
SECTION 2.4.(b) Any person (i) whose salary is set by Section 1 of this act or this 29
Part, pursuant to the North Carolina Human Resources Act, or as otherwise authorized in this act 30
and (ii) who is continuously employed by the State or a public school unit from November 1, 31
2025, to March 31, 2026, shall be awarded an additional retention bonus for the 2025-2026 fiscal 32
year in the amount of five hundred dollars ($500.00), payable during the month of April 2026. 33
SECTION 2.4.(c) Employers of State employees and local education employees 34
shall provide an additional retention bonus of two hundred fifty dollars ($250.00), payable 35
during the month of Nove mber 2025, to all permanent full -time State employees and local 36
education employees who are continuously employed by the State or a public school unit from 37
July 1, 2025, to October 31, 2025 , and who earn an annual salary that does not exceed 38
seventy-five thousand dollars ($75,000). 39
SECTION 2.4.(d) Employers of State employees and local education employees 40
shall provide an additional retention bonus of two hundred fifty dollars ($250.00), payable 41
during the month of April 2026, to all permanent full-time State employees and local education 42
employees who are employed by the State or a public school unit from November 1, 2025, to 43
March 31, 2026, and who earn an annual salary that does not exceed seventy -five thousand 44
dollars ($75,000). 45
SECTION 2.4.(e) The funds appropriated for retention bonuses in excess of the 46
amounts required to implement these bonuses shall revert and not be credited to the Pay Plan 47
Reserve. 48
SECTION 2.4.(f) Notwithstanding G.S. 135-1(7a), the compensation bonuses 49
awarded by this section are not compensation under Article 1 of Chapter 135 of the General 50
Statutes, the Teachers' and State Employees' Retirement System. 51
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SECTION 2.4.(g) The compensation bonuses awarded by this section are not part 1
of annual salary and shall be paid out separately. The compensation bonus shall be awarded to 2
eligible permanent employees without regard to an employee's placement within the salary range, 3
including employees at the top of the salary range. The compensation bonus shall be adjusted pro 4
rata for permanent part-time employees. 5
6
COMMUNITY COLLEGES 7
SECTION 2.5.(a) Community college personnel shall receive the following 8
cost-of-living adjustments: 9
(1) Effective July 1, 2025, the State Board of Community Colleges shall provide 10
community college faculty and non -faculty personnel with an 11
across-the-board salary increase in the amount of three percent (3%). 12
(2) Effective July 1, 2026, the State Board of Community Colleges shall provide 13
community college faculty and non -faculty personnel with an 14
across-the-board salary increase in the amount of three percent (3%). 15
SECTION 2.5.(b) The minimum salaries for nine -month, full -time curriculum 16
community college faculty for the 2025-2027 fiscal biennium are as follows: 17
Education Level FY 2025-26 FY 2026-27 18
Vocational Diploma/Certificate or Less $44,414 $45,746 19
Associate Degree or Equivalent 45,032 46,383 20
Bachelor's Degree 47,411 49,142 21
Master's Degree or Education Specialist 50,088 51,591 22
Doctoral Degree 53,515 55,120 23
SECTION 2.5.(c) No full-time faculty member shall earn less than the minimum 24
salary for his or her education level. The pro rata hourly rate of the minimum salary for each 25
education level shall be used to determine the minimum salary for part-time faculty members. 26
27
UNIVERSITY OF NORTH CAROLINA SYSTEM 28
SECTION 2.6.(a) Effective for the 2025 -2027 fiscal biennium, the annual salaries 29
of The University of North Carolina SHRA employees shall be increased as provided by Section 30
2.1 of this act. 31
SECTION 2.6.(b) For the 2025 -2027 fiscal biennium, the Board of Governors of 32
The University of North Carolina may provide EHRA employees a salary increase pursuant to 33
the policies adopted by the Board. Funds for EHRA compensation increases may be used for any 34
one or more of the following purposes: (i) merit p ay, (ii) across -the-board increases, (iii) 35
recruitment bonuses, (iv) retention increases, and (v) any other compensation increase pursuant 36
to those policies. 37
SECTION 2.6.(c) The Board of Governors of The University of North Carolina shall 38
make a report on the use of compensation increase and bonus funds to the General Assembly by 39
no later than March 1 of each year of the biennium. 40
41
CORRECTIONAL OFFICER SALARY SCHEDULE 42
SECTION 2.7.(a) State employees serving as correctional officers in the Department 43
of Adult Correction shall be compensated at a specific pay rate on the basis of a salary schedule 44
determined according to the duration of the employee's correctional officer work experience. 45
SECTION 2.7.(a1) State employees serving in the Department of Adult Correction, 46
Division of Juvenile Justice and Delinquency Prevention, shall be compensated at a specific pay 47
rate set on the basis of a salary schedule determined according to the duration of the employee's 48
work experience, as follows: 49
(1) Youth Counselor Te chnicians shall be paid under the Correctional Officer I 50
salary schedule. 51
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(2) Youth Services Behavioral Specialists shall be paid under the Correctional 1
Officer II salary schedule. 2
(3) Youth Counselors shall be paid under the Correctional Officer III salary 3
schedule. 4
SECTION 2.7.(b) The following annual salary schedule applies under this section 5
for the 2025 -2027 fiscal biennium, effective for each year on July 1, 2025, and July 1, 2026, 6
respectively: 7
8
FY 2025-26 FY 2026-27 9
Experience COI COII COIII COI COII COIII 10
0 $38,750 $40,025 $42,805 $39,913 $41,226 $44,089 11
1 $41,461 $42,825 $45,802 $42,705 $44,110 $47,176 12
2 $43,950 $45,441 $48,551 $45,269 $46,804 $50,008 13
3 $46,147 $47,665 $50,979 $47,531 $49,095 $52,508 14
4 $47,992 $49,572 $53,017 $49,432 $51,059 $54,608 15
5 $49,433 $51,058 $54,608 $50,916 $52,590 $56,246 16
6+ $50,422 $52,080 $55,700 $51,935 $53,642 $57,371 17
18
PROBATION AND PAROLE OFFICER/JUVENILE COURT COUNSELORS – 19
SALARY SCHEDULE 20
SECTION 2.8.(a) Probation and parole officers shall be compensated pursu ant to 21
the experience -based salary schedule based on the officer's respective work experience, as 22
established in subsection (b) of this section. 23
SECTION 2.8.(a1) State employees serving in the Department of Adult Correction, 24
Division of Juvenile Justice and Delinquency Prevention, as Juvenile Court Counselors shall be 25
compensated under the probation and parole officer salary schedule. 26
SECTION 2.8.(b) The following annual salary schedule applies under subsections 27
(a) and (a1) of this section for the 2025-2027 fiscal biennium, effective July 1, 2025, and July 1, 28
2026, for each respective fiscal year: 29
30
Years of Experience FY 2025-26 FY 2026-27 31
0 $46,785 $48,189 32
1 49,825 51,320 33
2 53,066 54,658 34
3 56,514 58,209 35
4 60,188 61,994 36
5 64,100 66,023 37
6+ 68,266 70,314 38
39
STATE LAW ENFORCEMENT OFFICER SALARY SCHEDULE 40
SECTION 2.9.(a) Law enforcement officers of the Alcohol Law Enforcement and 41
the State Bureau of Investigation compensated pursuant to an experience -based salary schedule 42
shall be compensated based on the offic er's respective work experience pursuant to the salary 43
schedule in subsection (b) of this section. 44
SECTION 2.9.(b) The following annual salary schedule applies under subsection 45
(a) of this section for the 2025-2027 fiscal biennium, effective July 1, 2025, and July 1, 2026, for 46
each respective fiscal year: 47
48
Years of Experience FY 2025-26 FY 2026-27 49
0 $55,081 $56,733 50
1 58,663 60,423 51
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Senate Bill 659-First Edition Page 7
2 62,476 64,350 1
3 66,537 68,533 2
4 70,862 72,988 3
5 75,468 77,732 4
6+ 80,374 82,785 5
6
STATE HIGHWAY PATROL/SALARY SCHEDULE 7
SECTION 2.9A.(a) Law enforcement officers of the State Highway Patrol 8
compensated pursuant to an experience-based salary schedule shall be compensated based on the 9
officer's respective work experience pursuant to the salary schedule in subsection (b) of this 10
section. 11
SECTION 2.9A.(b) The following annual salary schedule applies under subsection 12
(a) of this section for the 2025-2027 fiscal biennium, effective July 1, 2025, and July 1, 2026, for 13
each respective fiscal year: 14
15
Years of Experience FY 2025-26 FY 2026-27 16
0 $56,650 $58,350 17
1 60,332 62,142 18
2 64,253 66,181 19
3 68,430 70,483 20
4 72,878 75,064 21
5 77,615 79,943 22
6+ 82,660 85,140 23
24
STATE AGENCY TEACHERS 25
SECTION 2.10.(a) Employees of schools operated by the Department of Health and 26
Human Services, the Department of Public Safety, the Department of Adult Correction, and the 27
State Board of Education who are paid on the Teacher Salary Schedule shall be paid as authorized 28
in this act. 29
SECTION 2.10.(b) Employees of the School of Science and Mathematics of The 30
University of North Carolina who are paid pursuant to a salary schedule adopted by the North 31
Carolina School of Science and Mathematics Board of Trustees shall be paid in accordance with 32
the schedule adopted by the Board. 33
34
ALL STATE -SUPPORTED PERSONNEL/FLEXIBLE ADMINISTRATION OF 35
COST-OF-LIVING ADJUSTMENTS 36
SECTION 2.11.(a) The cost-of-living adjustments authorized by this act: 37
(1) For the 2025-2026 fiscal year, shall be paid effective on July 1, 2025, and do 38
not apply to persons separated from service due to resignation, dismissal, 39
reduction in force, death, or retirement or whose last workday is prior to June 40
30, 2025. 41
(2) For the 2026-2027 fiscal year, shall be paid effective on July 1, 2026, and do 42
not apply to persons separated from service due to resignation, dismissal, 43
reduction in force, death, or retirement or whose last workday is prior to June 44
30, 2026. 45
SECTION 2.11.(b) The Director of the Budget is grante d flexibility to administer 46
the compensation increases enacted by this act. 47
SECTION 2.11.(c) The State employer contribution rates enacted by this act for 48
retirement and related benefits may be deemed by the Director of the Budget for administrative 49
purposes to become effective after July 1 of the applicable fiscal year to provide flexibility in the 50
collection and reconciliation of salary -related contributions as required by law, provided the 51
General Assembly Of North Carolina Session 2025
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estimated amount contributed to any affected employee benefit tr ust equals the amount that 1
would have been contributed to the employee benefit trust if the enacted employer contribution 2
rates had been effective on July 1 of the applicable fiscal year. 3
SECTION 2.11.(d) This section applies to all employees paid from St ate funds, 4
whether or not subject to or exempt from the North Carolina Human Resources Act, including 5
employees of public schools, community colleges, and The University of North Carolina. 6
7
MOST STATE EMPLOYEES 8
SECTION 2.12. Unless otherwise expressly provided by this Part, the annual salaries 9
in effect for the following persons on June 30, 2025, and June 30, 2026, shall be legislatively 10
increased as provided by Section 2.1 of this act: 11
(1) Permanent, full -time State officia ls and persons whose salaries are set in 12
accordance with the State Human Resources Act. 13
(2) Permanent, full-time State officials and persons in positions exempt from the 14
State Human Resources Act. 15
(3) Permanent, part-time State employees. 16
(4) Temporary and permanent hourly State employees. 17
18
USE OF FUNDS APPROPRIATED FOR COST -OF-LIVING ADJUSTMENT/BENEFIT 19
INCREASES 20
SECTION 2.13.(a) The Office of State Budget and Management shall ensure that 21
the appropriations made in this act for cost-of-living adjustments and employee benefits are used 22
only for these purposes. 23
SECTION 2.13.(b) If the Director of the Budget determines that funds appropriated 24
to a State agency for mandated salary increases and employee benefits exceed the amount 25
required by that agency for those purposes, the Director may reallocate those funds to other State 26
agencies that received insufficient funds for required cost-of-living and benefit increases. 27
SECTION 2.13.(c) Funds appropriated for cost-of-living adjustments and employee 28
benefit increases may not be used to adjust the budgeted salaries of vacant positions or to provide 29
salary increases in excess of those required by the General Assembly except to increase the 30
budgeted salary of any position to the minimum of the position's salary range and to meet 31
retention pay needs. 32
SECTION 2.13.(d) Any funds appropriated for cost -of-living adjustment and 33
employee benefit increases in excess of the amounts required to implement the increases pursuant 34
to subsection (c) of this section shall be credited to the Pay Plan Reserve. 35
SECTION 2.13.(e) No later than March 1 of each year of the biennium, the Office 36
of State Budget and Management shall report to the Fiscal Research Division on the expenditure 37
of funds for legislatively mandated salary increases and employee benefits. This report shall 38
include at least the following information for each State agency: 39
(1) The total amount of funds that the agency received for legislatively mandated 40
salary increases and employee benefits. 41
(2) The total amount of funds transferred from the agency to other State agencies 42
pursuant to subsection (b) of this section. This section of the report shall 43
identify the amounts transferred to each recipient State agency. 44
(3) The total amount of funds used by the agency for legislatively mandated salary 45
increases and employee benefits. 46
(4) The amount of funds used pursuant to subsection (c) of this section. 47
48
MITIGATE BONUS LEAVE 49
SECTION 2.14. During the 2025-2027 fiscal biennium, State agencies, departments, 50
institutions, the Nort h Carolina Community College System, and The University of North 51
General Assembly Of North Carolina Session 2025
Senate Bill 659-First Edition Page 9
Carolina may offer State employees the opportunity to use or to cash in special bonus leave 1
benefits that have accrued pursuant to Section 28.3A of S.L. 2002-126, Section 30.12B(a) of S.L. 2
2003-284, Section 29.14A of S.L. 2005 -276, and Section 35.10A of S.L. 2014 -100, but only if 3
all of the following requirements are met: 4
(1) Employee participation in the program must be voluntary. 5
(2) Special leave that is liquidated for cash payment to an em ployee must be 6
valued at the amount based on the employee's current annual salary rate. 7
(3) By September 1, 2025, and September 1, 2026, a report on the demographic 8
information shall be submitted to the respective agency head or employing 9
agency and to the Fiscal Research Division. 10
11
PROVIDE COST-OF-LIVING ADJUSTMENT FOR RETIREES OF THE TEACHERS' 12
AND STATE EMPLOYEES' RETIREMENT SYSTEM, THE CONSOLIDATED 13
JUDICIAL RETIREMENT SYSTEM, AND THE LEGISLATIVE RETIREMENT 14
SYSTEM 15
SECTION 2.15.(a) G.S. 135-5 is amended by adding the following new subsections 16
to read: 17
"(aaaa) Effective July 1, 202 5, the retirement allowance payable to, or on account of, 18
beneficiaries whose retirement commenced on or before July 1, 2024, is increased by two percent 19
(2%) of the allowance payable on June 1, 2024, in accordance with subsection (o) of this section. 20
Effective July 1, 2025, the retirement allowance payable to, or on account of, beneficiaries whose 21
retirement commenced after July 1, 202 4, but before June 30, 20 25, is increased by a prorated 22
amount of two percent (2%), as determined by the Board of Trustees based upon the number of 23
months that a retirement allowance was paid between July 1, 2024, and June 30, 2025. 24
(bbbb) After September 1, 2025, but on or before October 31, 2025, a one time cost of living 25
supplement payment shall be made to, or on account of, beneficiaries who are living as of 26
September 1, 202 5, and whose retirement commenced on or before September 1, 202 5. The 27
payment shall be two percent (2%) of the benefic iary's annual retirement allowance payable as 28
of September 1, 202 5, and shall not be prorated for date of retirement commencement. If the 29
beneficiary dies before the payment is made, then the payment shall be payable to the member's 30
legal representative. No beneficiary shall have a vested right to any future supplemental payments 31
under this Article. 32
(cccc) After September 1, 2026, but on or before October 31, 2026, a one time cost of living 33
supplement payment shall be made to, or on account of, beneficiaries who are living as of 34
September 1, 202 6, and whose retirement commenced on or before September 1, 202 6. The 35
payment shall be one percent (1%) of the beneficiary 's annual retirement allowance payable as 36
of September 1, 202 6, and shall not be pr orated for date of retirement commencement. If the 37
beneficiary dies before the payment is made, then the payment shall be payable to the member's 38
legal representative. No beneficiary shall have a vested right to any future supplemental payments 39
under this Article." 40
SECTION 2.15.(b) G.S. 135-65 is amended by adding the following new 41
subsections to read: 42
"(ll) Effective July 1, 202 5, the retirement allowance payable to, or on account of, 43
beneficiaries whose retirement commenced on or before July 1, 2024, is increased by two percent 44
(2%) of the allowance payable on June 1, 2024. Effective July 1, 2025, the retirement allowance 45
payable to, or on account of, beneficiaries whose retirement commenced after July 1, 202 4, but 46
before June 30, 2025, is increased by a prorated amount of two percent (2%), as determined by 47
the Board of Trustees based upon the number of months that a retirement allowance was paid 48
between July 1, 2024, and June 30, 2025. 49
(mm) After September 1, 2025, but on or before October 31, 2025, a one-time cost-of-living 50
supplement payment shall be made to, or on account of, beneficiaries who are living as of 51
General Assembly Of North Carolina Session 2025
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September 1, 202 5, and whose retirement commenced on or before September 1, 202 5. The 1
payment shall be two percent (2%) of the beneficiary's annual retirement allowance payable as 2
of September 1, 2025, and shall not be prorated for date of retirement commencement. If the 3
beneficiary dies before the payment is made, then the payment shall be payable to the member's 4
legal representative. No beneficiary shall have a vested right to any future supplemental payments 5
under this Article. 6
(nn) After September 1, 2026, but on or before October 31, 2026, a one-time cost-of-living 7
supplement payment shall be made to, or on account of, beneficiaries who are living as of 8
September 1, 202 6, and whose retirement commenced on or before September 1, 202 6. The 9
payment shall be one percent (1%) of the beneficiary 's annual retirement allowance payable as 10
of September 1, 202 6, and shall not be prorated for date of ret irement commencement. If the 11
beneficiary dies before the payment is made, then the payment shall be payable to the member's 12
legal representative. No beneficiary shall have a vested right to any future supplemental payments 13
under this Article." 14
SECTION 2.15 .(c) G.S. 120-4.22A is amended by adding the following new 15
subsections to read: 16
"(ff) In accordance with subsection (a) of this section, effective July 1, 2025, the retirement 17
allowance payable to, or on account of, beneficiaries whose retirement commenced on or before 18
January 1, 202 5, is increased by two percent (2%) of the allowance payable on June 1, 202 5. 19
Effective July 1, 2025, the retirement allowance payable to, or on account of, beneficiaries whose 20
retirement commenced after January 1, 2025, but before June 30, 2025, is increased by a prorated 21
amount of two percent (2%), as determined by the Board of Trustees based upon the number of 22
months that a retirement allowance was paid between January 1, 2025, and June 30, 2025. 23
(gg) In accordance with subsection (a) of this section, after September 1, 2025, but on or 24
before October 31, 2025, a one-time cost-of-living supplement payment shall be made to, or on 25
account of, beneficiaries who are living as of September 1, 202 5, and whose retirement 26
commenced on or before September 1, 202 5. The payment shall be two percent (2%) of the 27
beneficiary's annual retirement allowance payable as of September 1, 202 5, and shall not be 28
prorated for date of retirement commencement. If the beneficiary dies before the paym ent is 29
made, then the payment shall be payable to the member 's legal representative. No beneficiary 30
shall have a vested right to any future supplemental payments under this Article. 31
(hh) In accordance with subsection (a) of this section, after September 1, 2026, but on or 32
before October 31, 2026, a one-time cost-of-living supplement payment shall be made to, or on 33
account of, beneficiaries who are living as of September 1, 202 6, and whose retirement 34
commenced on or before September 1, 202 6. The payment shal l be one percent (1%) of the 35
beneficiary's annual retirement allowance payable as of September 1, 202 6, and shall not be 36
prorated for date of retirement commencement. If the beneficiary dies before the payment is 37
made, then the payment shall be payable to the member's legal representative. No beneficiary 38
shall have a vested right to any future supplemental payments under this Article." 39
40
APPROPRIATION FOR PAY RAISES FOR STATE EMPLOYEES/COMMUNITY 41
COLLEGES/UNIVERSITY OF NORTH CAROLINA AND COST -OF-LIVING 42
INCREASES FOR RETIREES 43
SECTION 2.16. To fund the pay increases and cost -of-living adjustments awarded 44
in this Part, all of the following apply: 45
(1) Effective July 1, 2025, there is appropriated from the General Fund to the 46
Reserve for Compensation Increas es the sum of four hundred eight million 47
forty thousand dollars ($408,040,000) in recurring funds for the 2025 -2026 48
fiscal year. 49
(2) Effective July 1, 2025, there is appropriated from the General Fund to the 50
Reserve for Compensation Increases the sum of fi ve hundred forty -three 51
General Assembly Of North Carolina Session 2025
Senate Bill 659-First Edition Page 11
million five hundred eleven thousand dollars ($543,511,000) in nonrecurring 1
funds for the 2025-2026 fiscal year. 2
(3) Effective July 1, 2026, there is appropriated from the General Fund to the 3
Reserve for Compensation Increases the su m of seven hundred one million 4
one hundred thousand dollars ($701,100,000) in recurring funds for the 5
2026-2027 fiscal year. 6
(4) Effective July 1, 2026, there is appropriated from the General Fund to the 7
Reserve for Compensation Increases the sum of forty million dollars 8
($40,000,000) in nonrecurring funds for the 2026-2027 fiscal year. 9
10
PART III. EXPAND THE WAGE$ PROGRAM STATEWIDE 11
SECTION 3. There is appropriated from the General Fund to the Department of 12
Health and Human Services, Division of Child Development and Early Education (Division), the 13
sum of twenty-two million seven hundred thousand dollars ($22,700,000) in recurring funds for 14
the 2025 -2026 fiscal year and the sum of thirty -six million three hundred thousand dollars 15
($36,300,000) in recurring funds for the 2026-2027 fiscal year to expand the Child Care WAGE$ 16
program, which provides salary supplements for early childhood educators. The funds shall be 17
used to provide education-based supplements to low-wage educators and expand the program to 18
all 100 counties in this State. The Division shall administer the WAGE$ program in the same 19
manner as the Infant-Toddler Educator AWARD$ program. 20
21
PART IV. SMALL BUSINESS TAX CREDIT 22
SECTION 4.(a) Article 4A of Subchapter I of Chapter 105 of the General Statute s 23
is amended by adding a new section to read: 24
"§ 105-163.6B. Credit to employers for wages paid. 25
(a) Credit. – A qualifying taxpayer is allowed a credit against the tax imposed by Part 1 26
or Part 1A of Article 4 of this Chapter, as appropriate, equal to the lesser of (i) ten thousand 27
dollars ($10,000) or (ii) five percent (5%) of the wages paid by the qualifying taxpayer during 28
the taxable year. 29
(b) Credit Refundable. – If the credit allowed by this section exceeds the tax imposed on 30
the qualifying taxpa yer for the taxable year reduced by the sum of all credits allowable, the 31
Secretary must refund the excess to the qualifying taxpayer. The refundable excess is governed 32
by the provisions governing a refund of an overpayment by the taxpayer of the tax imposed by 33
Article 4 of this Chapter . In computing the amount of tax against which multiple credits are 34
allowed, nonrefundable credits are subtracted before refundable credits. 35
(c) Substantiation. – To claim a credit allowed by this section, the qualifying taxpayer 36
must provide any information required by the Secretary. Each qualifying taxpayer claiming a 37
credit under this section must maint ain and make available for inspection by the Secretary any 38
records the Secretary considers necessary to determine and verify the amount of the credit to 39
which the qualifying taxpayer is entitled. The burden of proving eligibility for a credit and the 40
amount of the credit rests upon the qualifying taxpayer , and no credit may be allowed to a 41
qualifying taxpayer that fails to maintain adequate records or to make them available for 42
inspection. 43
(d) Sunset. – This section is repealed effective for taxable years beginning on or after 44
January 1, 2028." 45
SECTION 4.(b) G.S. 105-163.1 is amended by adding a new subdivision to read: 46
"(11c) Qualifying taxpayer. – An employer or payer subject to income tax under 47
Article 4 of this Chapter that has annual receipts for the most recent previous 48
tax year of eight million dollars ($8,000,000) or less." 49
SECTION 4.(c) This section is effective for taxable years beginning on or after 50
January 1, 2025. 51
General Assembly Of North Carolina Session 2025
Page 12 Senate Bill 659-First Edition
1
PART V. EFFECTIVE DATE 2
SECTION 5. Except as otherwise provided, this act becomes effective July 1, 2025. 3