Summary of North Carolina S.B. 1029 (Session 2025)
Title: Tax Relief on Essentials for Working Families
Sponsor: Senator Mujtaba Mohammed (Primary); also co-sponsored by Senator Natalie Murdock
Purpose (intent)
- The bill aims to provide tax relief by exempting certain everyday essentials from the sales tax.
- Specifically, it seeks to exempt feminine hygiene products, diapers, and groceries from state sales tax, and to allocate funds to educate the public about these tax-relief measures.
Key Provisions and Changes
1) Expanded sales tax exemptions (G.S. 105-164.3; new definitions)
- Adds two new subdivisions:
- (88) Feminine hygiene products: Includes tampons, panty liners, menstrual cups, sanitary napkins, and similar items designed for feminine hygiene related to the menstrual cycle. Excludes “grooming and hygiene products.”
- (94) Grooming and hygiene products: Includes soaps and cleaning solutions, shampoo, toothpaste, mouthwash, antiperspirants, suntan lotions, and sunscreens. Excludes items that meet the definition of “over-the-counter drugs” only by virtue of their labeling, if applicable.
- These amendments are intended to broaden the categories exempt from the sales tax.
2) Clarifications to sales tax exemptions for medical and related items (G.S. 105-164.13)
- Adds/relocates: Feminine hygiene products listed under an exempt category in the state sales tax framework, with related indexing in the statute governing exemptions and use of Medicaid/health programs (sections 13d–13e reference feminine hygiene products).
3) Food tax exemption framework and applicability (G.S. 105-164.13B)
- Reiterates and/or clarifies state exemption for food and how state/local taxes for food are administered in relation to the local tax regime.
- Maintains existing exemptions and rules for food, with specific references to how local taxes are handled and how refunds are processed.
4) Scope of sales tax and exemptions (G.S. 105-467)
- Confirms the scope of the sales tax and outlines exemptions/refunds framework for certain bundled transactions, with thresholds and administrative details.
- Ensures that local taxes on food conform to state rules and that refunds are administered consistently with state law.
5) Other definitions (G.S. 105-164.3(15))
- Updates the definition of “Amenity” to cover features that increase value or attractiveness of entertainment events, including parking privileges and merchandise discounts, while excluding food-related charges.
6) Appropriation for education about tax relief (Section 6)
- Appropriates $1,600,000 in nonrecurring funds from the General Fund for the 2026–2027 fiscal year.
- Amount is to be distributed equally to each regional council of government (COG) to educate constituents about the availability of tax relief.
7) Effective dates and timeline (Section 7)
- Sections 1–5 become effective October 1, 2026, and apply to sales made on or after that date.
- Section 6 (the appropriation) becomes effective July 1, 2026.
- The remainder of the act becomes law upon passage.
Affected Parties and Impacts
Consumers in North Carolina:
- Potential immediate relief on the cost of feminine hygiene products, diapers, and groceries (groceries?), due to sales tax exemptions.
- Expanded access to basic essentials at lower after-tax prices starting October 1, 2026.
Retailers and local tax administration:
- Must apply the new exemptions to applicable items and ensure correct tax collection.
- Local government entities/COGs will engage in public education funded by a statewide appropriation.
State government:
- Administers new exemptions and maintains consistency with existing food tax structure and refunds.
Notes on Scope
- The bill distinguishes between “feminine hygiene products” and “grooming and hygiene products,” adding explicit items under each category.
- It also features an education funding component to inform the public about the changes.
Overall assessment
- The legislation seeks to reduce the after-tax cost of essential items for working families by broadening sales tax exemptions to select personal care products and groceries, while providing targeted funding for public awareness and education about these changes. The changes are scheduled to take effect in late 2026, with an accompanying one-time education appropriation to regional councils of government.
