Hundreds of thousands of hardworking North Carolinians will no longer pay any state income tax by 2019, thanks to several rounds of tax relief provided by the legislature’s Republican majority.
A recent memo from the head economist at the non-partisan Fiscal Research Division notes that “of the nearly 4 million tax returns anticipated for tax year 2019, we estimate the number of returns will decrease an estimated 230,000 when compared with the expected number if the 2012 tax laws were still in effect. The increase in these no-tax-liability returns will be due primarily to the increase in the standard deduction.”
When you do your taxes each year, the “standard deduction” is the dollar amount that reduces the amount of income on which you’re taxed. Put another way, any income you make below the “standard deduction” is protected on the front-end from being taxed by the government. A higher standard deduction is nice for everyone, of course, but it especially benefits hard-working taxpayers at the lower-end of the wage scale. The higher the standard deduction, the less of your income is taxed; sometimes it’s referred to as “the zero tax bracket.”
Republicans have tripled the standard deduction for married families filing jointly since 2013, an approach to tax relief that helps those who earn the least by significantly reducing or altogether eliminating the percentage of their income paid to the state.
Governor Roy Cooper’s Department of Revenue believes that even more folks will be helped under the Republican plan, projecting that 241,536 low-income families and individuals will no longer pay any income tax by 2019.
When the legislature was last under Democrat control, the standard deduction was a mere $3,000 for individual taxpayers and just $6,000 for married couples (filing jointly). Democrats taxed all your income over that amount; the latest round of Republican tax reform more than tripled the state’s zero tax bracket — effectively freeing nearly a quarter of a million of lower-income people from having to pay any income tax.
“Helping hundreds of thousands of low-income North Carolinians no longer owe any income tax is an outstanding achievement that proves Republican tax reforms are providing relief to citizens who need it most,” said House Speaker Tim Moore. “These include parents and young people, long-time residents and newcomers who will get a break from owing any income tax because we put average people first with relief that works for the workforce and helps low-income families keep more of their earnings.”