Budget & Taxes (Income Tax)

HB 384 would allow enlisted members of the North Carolina National Guard (ranks E-1 to E-5) who live in North Carolina to deduct their federal basic military pay from their state income tax. This policy change applies only to their federal service pay, not other income, and would take effect for taxes filed in 2025 and later. The bill amends North Carolina’s tax code to include this deduction for qualifying National Guard members. It does not alter federal tax treatment or apply to higher ranks or other military personnel.

SB 233, titled "Make Corporations Pay What They Owe," would repeal a specific provision (Section 42.2) from a 2021 law (S.L. 2021-180) that was phasing out North Carolina's corporate income tax. This bill does not create new taxes but stops the planned reduction of corporate tax rates, meaning corporations would continue paying the current rate instead of a lower rate scheduled to take effect. It directly affects corporations subject to North Carolina's corporate income tax, as the repeal prevents the phaseout from proceeding. The bill is purely procedural, with no additional provisions or mechanisms beyond this repeal.

House Bill 663, known as the Living Donor Protection Act, aims to support individuals who donate organs or bone marrow. The bill prohibits insurance companies from discriminating against individuals solely based on their status as a living organ donor in various insurance policies. It also establishes a state income tax credit of up to $5,000 for unreimbursed expenses, such as lost wages and travel, incurred by living donors. Furthermore, the act provides state employees and state-supported personnel with up to 30 days of paid leave for organ donation and seven days for bone marrow donation.

HB 387 would exempt retirement income from North Carolina state income tax for retirees receiving payments from North Carolina state or local government retirement plans, or from federal government retirement plans (excluding certain federal plans covered elsewhere). The bill amends tax law to allow these retirees to deduct this income when calculating their taxable income, aligning with existing court rulings on the issue. This change would take effect for tax years beginning January 1, 2026.

HB 14 allows North Carolina taxpayers who itemize deductions to claim a state income tax deduction for gambling losses, aligning with federal tax treatment. It directly affects individual taxpayers who itemize deductions on their North Carolina state tax returns and have wagering losses exceeding winnings. The bill amends state tax code to explicitly permit deducting gambling losses under Section 165(d) of the federal tax code, subject to federal rules. This change takes effect for taxable years beginning January 1, 2024. The bill does not alter federal tax rules or affect taxpayers using the standard deduction.