WeVote
Log In

Bill

Bill

HB 459

Income Tax Rate Reduction Trigger Modifications.

2025-2026 Session Introduced by Eric Ager and 6 co-sponsors

HB 459 changes NC income tax rate-reduction triggers: higher thresholds, 0.50-point cuts per trigger, floor of 2.49%, applying to specific future tax years and all filers.

Passed 1st Reading
#individualincome #public;taxation;taxes
0
WeVote Research Nonpartisan
Bill Summary · HB 459

HB 459 — Income Tax Rate Reduction Trigger Modifications (NC)

Status: Passed 1st Reading
Introduced: November 12, 2024
Primary sponsor(s): Rep. Butler (others listed among sponsors)
Subject: Individual income tax; taxation

Purpose / Intent

HB 459 revises North Carolina’s mechanism that reduces the individual income tax rate when General Fund revenue exceeds specified thresholds (“rate reduction trigger”). The bill updates the trigger amounts, the years in which they are evaluated, and confirms the statutory procedure that reduces the tax rate by fixed steps (subject to a statutory floor).

The bill’s preamble cites recent major hurricanes and associated fiscal impacts as legislative context for changing how and when rate reductions occur.

Key provisions

  • Rate reduction mechanism (subsection a1):

    • If total General Fund revenue in a specified fiscal year exceeds a listed trigger amount, then the individual income tax rate applicable for the indicated and subsequent tax years is set to the greater of:
    • the prior taxable year’s rate decreased by 0.50 percentage point, or
    • a floor rate of 2.49%.
    • “Total General Fund revenue” is defined as the amount shown in the final accounting of total General Fund Reverting Net Tax and Non‑Tax Revenues for the fiscal year, as reported by the Office of State Controller in August following the end of the fiscal year.

  • Trigger schedule and amounts (as written in the bill):

    • FY 2025–26 — trigger $33,042,000,000 → affects taxable year beginning 2027
    • FY 2026–27 — trigger $34,100,000,000 → affects taxable year beginning 2028
    • FY 2027–28 — trigger $34,760,000,000 → affects taxable year beginning 2029
    • FY 2028–29 — trigger $35,750,000,000 → affects taxable year beginning 2030
    • FY 2029–30 — trigger $36,510,000,000 → affects taxable year beginning 2031
    • FY 2030–31 — trigger $38,000,000,000 → affects taxable year beginning 2032
    • FY 2031–32 — trigger $38,500,000,000 → affects taxable year beginning 2033
    • FY 2032–33 — trigger $39,000,000,000 → affects taxable year beginning 2034

  • A further, related version of the statute (effective for taxable years beginning on or after Jan. 1, 2029) restates a comparable trigger schedule beginning with FY 2027–28 (same dollar thresholds for later years).

  • Baseline statutory tax language in the bill references the individual income tax rate levels in recent years (4.99% in 2022; 4.75% in 2023; 4.50% in 2024; 4.25% in 2025) and indicates the trigger-driven reductions operate from those baselines.

Who is affected

  • All individual taxpayers subject to North Carolina individual income tax (state residents and nonresidents with NC taxable income), because the bill changes when and how the statewide individual income tax rate may be lowered.
  • State budget and fiscal planners, because trigger determinations use final General Fund revenue accounting and affect future revenue availability.

Fiscal and timing implications

  • If one or more triggers are met, the statutory mechanism would reduce the individual income tax rate by 0.50 percentage point per qualifying trigger application (but not below 2.49%), which would reduce General Fund revenues for the affected tax years.
  • The bill sets effective dates in two parts:
    • Section 1(a) provisions apply to taxable years beginning on or after January 1, 2025.
    • Section 1(b) provisions apply to taxable years beginning on or after January 1, 2029.
    • Unless another date is specified, the act is effective when it becomes law.

Procedural status (selected)

  • Filed: Nov 12, 2024
  • Passed 1st Reading (House): March 20, 2025
  • Referred to Rules, Calendar, and Operations of the House (as of March 20, 2025)

Notes / caveats

  • The bill text links the trigger mechanism to the Office of State Controller’s “final accounting” reported in August after the fiscal year end; that timing determines when a trigger is confirmed.
  • The bill does not itself provide a fiscal estimate in the materials supplied here; actual revenue impacts depend on future General Fund collections relative to the numeric thresholds and on how many successive reductions occur.

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

Sign in to ask a question.