Bill
HB 711
HB 711 keeps North Carolina's corporate tax at 2.25% for C corporations, stopping planned rate reductions and preserving revenue for recovery needs.
Status
- Introduced: November 12, 2024
- First reading (House): March 4, 2025 (subsequent procedural activity in April 2025)
- Effective date (if enacted): applies to taxable years beginning on or after January 1, 2026.
Purpose / Intent
- To halt the scheduled phaseout of North Carolina’s corporate income tax so the State retains corporate income tax revenue needed to support recovery from Hurricane Helene and related public needs while preserving a low corporate tax rate.
Key provisions
- Amends G.S. 105‑130.3 (corporate income tax statute) to maintain a corporate income tax at 2.25% for C corporations doing business in North Carolina.
- Repeals the preexisting scheduled reductions that would have lowered the rate over time (the schedule shown in the bill text would otherwise have reduced rates as follows: 2025 — 2.25%; 2026 — 2.00%; 2028 — 1.00%; after 2029 — 0%). HB 711 removes that phaseout so the tax remains at 2.25%.
- Clarifies that S corporations are not subject to the corporate-level tax (consistent with current law).
- Effective for taxable years beginning on or after January 1, 2026.
Who or what is affected
- Primary: C corporations (i.e., entities subject to the State corporate income tax) doing business in North Carolina — they would continue to pay corporate tax at the retained 2.25% rate rather than benefiting from later scheduled rate reductions or elimination.
- Secondary: State budget and disaster/recovery programs that would use the retained revenue; businesses and taxpayers whose overall tax burden or competitiveness could be influenced by corporate tax policy.
Fiscal and policy implications
- Revenue: Retaining the 2.25% corporate tax prevents the revenue loss that would occur under the previously scheduled phaseout. The bill’s sponsors frame the change as necessary to fund hurricane recovery and related public needs. The bill text does not include a formal fiscal estimate; actual revenue impact depends on corporate income levels and any behavioral responses.
- Business climate: North Carolina would remain a low-rate corporate-tax state (2.25%); however, preventing the phaseout may be viewed differently by businesses and economic development stakeholders depending on priorities for tax reduction versus public spending for recovery.
- Implementation: No special administrative changes are identified beyond applying the statutory tax rate; normal corporate tax filing and collection processes would continue.
Procedural / sponsors
- Primary sponsor(s) (per submitted versions): Representative Lopez (and, in some drafts/versions, co-sponsors including Rubin, T. Brown, Ager).
- At the time of the latest filing information, the bill had completed an initial reading and been referred to committee for further consideration.
Notes
- The bill’s preamble emphasizes the need to preserve revenue in light of Hurricane Helene’s impacts on the State, particularly western North Carolina.
- For final status (passage, veto, or enactment) and any official fiscal analyses, consult the North Carolina General Assembly docket and the State’s fiscal office.
Compiled from official sources — confirm details with the bill’s official record.
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