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North Carolina businesses will soon no longer have to pay income tax

RALEIGH, NC (WNCN) — You’re probably about to pay your income taxes.

In a few years, businesses in North Carolina won’t have to pay anything.

A provision in the state budget of 25.9 billion dollars signed by Governor Roy Cooper in November understand a steady decline in what was already one of the lowest corporate income tax rates in the country – down to 0%.

And a tax expert from North Carolina State University says we don’t talk enough about what that means.

“One thing that seems to be overshadowed in all of this is that we’re fundamentally changing the way we’re going to tax corporations” in the state, said Nathan Goldman, assistant professor of accounting at NC State’s Poole College of Management.

The budget raises corporate taxes from the current rate of 2.5% to 2% in 2026, and then by another point two years later. By 2030, it disappears completely, making North Carolina one of the few states without such a tax.

“That doesn’t mean they won’t pay any taxes,” Goldman said. “It just means that … the income they have in North Carolina will not be taxed.”

This will make the state one of the most competitive for businesses.

But wasn’t it already?

Forbes magazine three years ago ranked North Carolina as the best state for business. And the situation was attractive enough for tech giants Google and Apple to announce their plans. bringing campuses into the Triangle in the years to come – and for Boom Supersonic to choose the Piedmont Triad earlier this week for a factory where it will build supersonic jets.

“Businesses will now want to come to North Carolina even more than before,” Goldman said.

The Tax Foundation, a tax-conservative Washington-based think tank, estimates North Carolina will rise to No. 1 in the nation in corporate tax collection and No. 5 overall, Goldman said.

But how much money will the state end up losing?

Goldman says the 2.5% rate typically equates to about $1.5 billion a year, or 5% of total state tax revenue.

It’s not an insignificant number, to be sure, but one that will surely be dwarfed by other numbers.

“When a company like Apple brings 3,000 employees into the Triangle, we collect far more taxes on those 3,000 employees than we collect on Apple’s tax revenue in North Carolina,” Goldman said.

Still, it raises questions about whether further reductions will lead to diminishing returns.

“We’ve seen a lot of businesses come to North Carolina. We probably won’t see the exact same increase we had before we went from 2.5 (%) to 0,” Goldman said. “Although I suspect we will continue to grow at a fairly exponential rate.”

And what if companies moved here to take advantage of the tax rate – but allowed their employees to work remotely from other states, meaning North Carolina would miss out on their US income taxes. individuals?

“We are seeing more and more remote working. We’re seeing more and more companies adapt to not having so many staff in the office,” Goldman said. “So people can wonder if it’s going to have the same benefit.”