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Bill Summary · SB 967

Summary of North Carolina Senate Bill 967 (Session 2025)

Short Title

Budget Requirement for Tax Triggers

Purpose and Intent

SB 967 would modify how state tax rates may be changed in response to revenue performance, tying any tax rate reductions to the existence of a comprehensive state budget spending plan. Specifically, it restricts rate reductions unless the General Assembly has ratified a Current Operations Appropriations Act and total General Fund revenue for the relevant fiscal year exceeds a defined “trigger” amount. The bill aims to ensure that tax rate changes are contingent on a comprehensive budget and sound revenue performance.

Key Provisions

  • Tax Rate Trigger Mechanism (new language in G.S. 105-153.7(a1))

    • Even if tax rates are listed in subsection (a), a rate reduction can occur only if: 1) The General Assembly has ratified a Current Operations Appropriations Act (as defined in G.S. 143C-1-1) by July 1 of the applicable fiscal year, and 2) Total General Fund revenue for that fiscal year exceeds the specified trigger amount.
    • When triggered, the applicable tax rate for the indicated and subsequent tax years shall be the greater of:
    • (i) the prior year’s tax rate reduced by 0.50 percentage points, or
    • (ii) 2.49%.
    • “Total General Fund revenue” is defined as the amount reported in the final accounting of total General Fund Reverting Net Tax and Non-Tax Revenues, as reported by the Office of the State Controller in August following the end of the fiscal year.

  • Fiscal Year Trigger Amounts and Corresponding Tax Years

    • The bill sets a schedule of trigger amounts (in dollars) and the tax years that would begin using the adjusted rates if the trigger is met:
    • FY 2025-2026: Trigger $33,042,000,000 → Tax Year Beginning 2027
    • FY 2026-2027: Trigger $34,100,000,000 → Tax Year Beginning 2028
    • FY 2027-2028: Trigger $34,760,000,000 → Tax Year Beginning 2029
    • FY 2028-2029: Trigger $35,750,000,000 → Tax Year Beginning 2030
    • FY 2029-2030: Trigger $36,510,000,000 → Tax Year Beginning 2031
    • FY 2030-2031: Trigger $38,000,000,000 → Tax Year Beginning 2032
    • FY 2031-2032: Trigger $38,500,000,000 → Tax Year Beginning 2033
    • FY 2032-2033: Trigger $39,000,000,000 → Tax Year Beginning 2034

  • Effective Date

    • The act becomes effective upon becoming law.

Who Would Be Affected

  • Taxpayers with Tax Rates Subject to Trigger: Individuals and entities subject to state tax rates that could be reduced under current law would face potential rate reductions only if the budget is enacted and revenue meets the trigger thresholds.
  • State Government and Agencies: Administrative processes tied to approving Current Operations Appropriations Acts and reporting General Fund revenues would be impacted by the requirement for a budget bill to be ratified before tax rate changes.
  • Budget and Revenue Officials: The Act relies on official revenue reporting (Office of the State Controller) to determine trigger performance, tying fiscal outcomes to formal reporting timelines.

Procedural and Timeline Considerations

  • Budget Act Dependency: Any tax rate reduction depends on the General Assembly ratifying a Current Operations Appropriations Act by July 1 of the fiscal year in question.
  • Revenue Verification: The trigger uses the total General Fund revenue amount from the final August accounting, as reported by the State Controller.
  • Scheduled Triggers: The bill specifies a multi-year ramp of trigger amounts and the corresponding future tax years, implying a staged approach to potential rate reductions based on budget enactment and revenue performance.

Notes

  • The bill is filed in April 2026 and lists Senators Grafstein and Garson as sponsors, with Grafstein as a co-sponsor.
  • The language uses terms defined in existing budget and fiscal law (e.g., Current Operations Appropriations Act, General Fund revenues) to anchor the trigger mechanism to the state’s budget process and revenue outcomes.

If you’d like, I can provide a comparison to current NC tax-rate rules or a simple example showing how the trigger would apply under hypothetical revenue outcomes.

Compiled from official sources — confirm details with the bill’s official record.

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