HB 1042 updates North Carolina's property tax exemptions for nonprofit organizations that provide housing for low- or moderate-income individuals. The bill clarifies that land held by nonprofits for future affordable housing projects can remain tax-exempt for up to five years, with unpaid taxes deferred until the project is completed or the land is no longer used for this purpose. Additionally, the legislation establishes a new specific exemption for affordable rental housing, defining it as developments where more than half the units are rented to tenants earning at or below 80% of the area median income. These changes aim to provide clearer tax incentives for nonprofits developing and operating affordable rental properties.
This bill expands sales tax exemptions in North Carolina for specific nonprofit organizations and adds a new exemption for diapers and incontinence underpads prescribed by Medicaid providers. It clarifies which types of nonprofits, such as hospitals and certain 501(c)(3) groups, qualify for tax-free purchases of goods and services needed for their operations, while explicitly excluding certain utility services and liquor. The legislation also establishes a formal application process requiring nonprofits to obtain an exemption number from the state and imposes liability for back taxes if the exemption number is misused. Additionally, the bill modifies ownership rules for property used by charities and sets annual dollar limits on the total tax exemptions and refunds available to eligible entities.
This bill expands the property tax exemption for disabled veterans and their surviving spouses in North Carolina by increasing the excluded home value from $45,000 to the entire appraised value of the primary residence. To offset the resulting loss in local tax revenue, the state will reimburse counties and cities for the taxes they no longer collect from these exempt properties. The legislation also allocates $100,000 to cover administrative costs and sets the changes to take effect for tax years beginning on or after July 1, 2027.
This bill creates a tax incentive for small businesses in North Carolina by allowing them to deduct contributions made to a special savings account designated for property improvements. To qualify, a business must have gross receipts under $10 million and deposit funds into a federally insured bank account specifically for projects that add value to real estate, extend its useful life by at least 10 years, or adapt it for new uses. The deduction is calculated as a percentage of the business's income, ranging from 5% for deposits up to $1 million down to 1% for amounts up to $3 million, and the benefit is only available for taxable years starting on or after January 1, 2026. If any money withdrawn from this account is not used for the specified improvements, the amount must be added back to the business's taxable income in the year of withdrawal.
This bill modifies tax exemptions for nonprofit hospitals in North Carolina by linking property tax relief directly to the cost of charity care provided to low-income patients. Under the new rules, a hospital's property tax exemption is calculated based on the actual cost of services given to uninsured or underinsured individuals with family incomes at or below 300% of the federal poverty level. Additionally, the legislation expands sales tax refunds for nonprofit hospitals, allowing them to recover taxes on over-the-counter drugs and capping the total refund at the lesser of a fixed dollar amount or the hospital's verified charity care costs. These changes are designed to ensure that tax benefits are tied to specific charitable activities rather than general operations. The provisions will take effect for tax years beginning on or after July 1, 2027.
This North Carolina bill proposes exempting menstrual products from state sales tax. It defines the exempted items to include tampons, panty liners, menstrual cups, and sanitary napkins. The legislation amends existing tax codes to remove these items from taxable retail sales and use tax. The tax exemption will take effect on October 1, 2026, applying to purchases made on or after that date.
HB 552 establishes the Agricultural Manufacturing Investment Grant Account within North Carolina's One North Carolina Fund, allocating up to $5 million for new economic development incentives. This account provides competitive grants to eligible agricultural manufacturers in the state. The Department of Commerce will administer these grants, prioritizing projects in less developed areas, those using advanced agricultural technologies, or those with significant research and development. To qualify, recipients must commit to investing at least $5 million of private funds, employ a minimum of 25 full-time employees, and meet specific wage requirements. Grants are capped at $100,000 annually per recipient for up to five years.
HB 131 reinstates a 35% tax credit for businesses and homeowners who install solar energy systems in North Carolina. Businesses can claim the credit over five years (with a $2.5 million maximum per installation), while homeowners receive capped credits based on system type (e.g., $1,400 for water heating, $3,500 for space heating). The credit applies to equipment placed in service in the state and expires for new installations after 2017, though projects meeting 2015 construction milestones qualify for extension. This bill renews a previously expired tax incentive program for solar energy adoption.
SB 424 broadens how North Carolina can use its megasite funding by expanding eligibility for grants to local governments. It allows the state economic development agency to provide grants covering up to 85% of a megasite's purchase price or tax value (whichever is lower) for acquiring land. To qualify, sites must have binding purchase options, completed due diligence (including surveys and environmental reviews), and local governments must demonstrate their financial commitment. This directly affects local governments seeking to develop industrial sites for major employers in advanced manufacturing.
HB 532 creates special districts in North Carolina called "Research and Production Service Districts" (for research parks) and "Urban Research Service Districts" (URSDs). It allows counties to establish these districts to provide services like utilities, parks, or transportation - beyond standard county offerings - financed through local taxes. Key provisions require counties to form advisory committees (with at least 10 members, including a developer representative), clarify multi-county district rules, and let developers act as agents to contract for services within the district. This directly affects counties, developers of research parks, and property owners in these designated zones.
