North Carolina ~ Corporate, Personal Income Taxes: Appropriations Act Increases Standard Deduction Amounts; Enacts Other Changes

CCH Tax Day Report

The 2016 Appropriations Act amends a number of North Carolina corporate and personal income tax provisions.

Standard Deduction Amounts

Effective for tax years beginning on or after January 1, 2016, the personal income tax standard deduction amounts are increased. The standard deduction for married filing joint and surviving spouse is $16,500 (currently, $15,500); head of household is $13,200 (currently $12,400); and single and married filing separate is $8,250 (currently $7,750).

Effective for tax years beginning on or after January 1, 2017, the standard deduction amounts are increased again. The standard deduction for married filing joint and surviving spouse is increased from $16,500 to $17,500; head of household is increased from $13,200 to $14,000; and single and married filing separate is increased from $8,250 to $8,750.

The North Carolina Department of Revenue is not required to adjust the withholding tables applicable for the 2016 taxable year.

Job Development Investment Grant Program

Effective January 1, 2017, and applicable to awards made on or after that date, if a project in the Job Development Investment Grant Program will be located in more than one development tier, the location with the highest area designation determines the standards applicable to the project for North Carolina corporate income tax purposes.

Market-Based Sourcing

Effective July 14, 2016, the North Carolina Department of Revenue is required, on or before January 20, 2017, to adopt and submit rules to the Rules Review Commission regarding the implementation and administration of market-based sourcing principles as if the proposed statutory changes indicated in the legislation were enacted. The proposed statutory changes are in regard to the sales factor in the allocation and apportionment of income for corporations, and what would be a new statute regarding market-based sourcing for banks.

Sales and use tax (TAXDAY, 2016/07/19, S.22), property tax, and insurance provisions (TAXDAY, 2016/07/19, S.20), are discussed in separate stories.

Ch. 94 (H.B. 1030), Laws 2016, effective July 1, 2016, except as otherwise provided

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