Bill
HB 1082
Creates a refundable North Carolina EITC equal to 20% of the federal EITC, boosting take-home pay for eligible working families with children.
Title: Tax Relief for Working Families Act
Purpose
- To provide tax relief for working families by reenacting and codifying the Earned Income Tax Credit (EITC) at the state level.
- Mission: ease financial pressures from rising costs (housing, child care, health, education, basic necessities) by increasing take-home income for low- to moderate-income workers with qualifying children.
Key Provisions
1) Reenactment and Scope of the EITC
- G.S. 105-151.31 is reenacted as it existed before its expiration, then recodified as G.S. 105-153.12.
- The state EITC is established as a credit against North Carolina personal income tax.
2) Credit Calculation
- A taxpayer may claim a credit equal to 20% of the amount of the federal EITC to which they qualify under Section 32 of the Internal Revenue Code.
- Nonresident or part-year residents must adjust the credit amount by multiplying by the applicable income fraction (as determined under the relevant nonresident/part-year rules).
3) Credit Amounts by Year
- The statute specifies that for taxable year 2013 the credit percentage is 4.5%, and for all other years it is 5%. Under current text, the intent appears to apply a 5% rate for subsequent years; however, the enacted version in this bill sets the rate at 20% of the federal EITC amount for the taxpayer.
- Note: There is an apparent historical footnote in the text indicating an older set of percentages (4.5% in 2013, 5% otherwise). The operative text in this bill sets a 20% of the federal EITC, which supersedes those older figures for the purpose of the North Carolina credit.
4) Refundability
- The EITC credit is refundable. If the credit exceeds the taxpayer’s liability after other credits, the excess is refunded to the taxpayer.
- The refunds follow standard overpayment refund procedures; the “Advance Payment of Earned Income Credit” provision (Section 3507 of the Code) does not apply to this state credit.
- Nonrefundable credits are applied before refundable credits in computing the tax.
5) Sunset
- The previously existing sunset provision repealed the EITC effective for tax years beginning on or after January 1, 2014. The bill does not introduce a new sunset for the reenacted EITC; rather, it reestablishes the credit with no explicit sunset date in the text presented.
6) Effective Date
- The act is effective for taxable years beginning on or after January 1, 2026.
Sponsors
- Primary sponsor: Representative Longest
- Co-sponsors: Lindsey Prather, Allen Buansi, Dante Pittman
Who is Affected
- North Carolina individual taxpayers who qualify for the federal Earned Income Tax Credit (EITC) and file a NC personal income tax return.
- Nonresident or part-year residents will have their NC EITC credit adjusted proportionally based on residency-related apportionment rules.
Potential Impact
- Increases after-tax income for qualifying working families with children, enhancing financial stability.
- Provides additional funding for health, education, housing, childcare, and basic necessities.
- Could influence labor supply decisions and overall household consumption driven by tax relief.
Notes for Readers
- The bill text indicates a structure intended to mirror the federal EITC benefits at a 20% rate of the federal EITC, with standard reduction for nonresidents/part-year residents.
- Detailed administration will follow existing tax code procedures for refundable credits; the bill explicitly avoids applying the federal Advance EITC program to the NC credit.
Compiled from official sources — confirm details with the bill’s official record.
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