This session, the General Assembly came up with several ways to cut taxes for the people of North Carolina without sacrificing the quality of our public services.
Some of these changes will benefit you this tax season, while others cannot be claimed until next year. I hope this information is of use to you as the deadline for tax filing approaches.
Thank you for your support and for allowing me to share this information with you. Please let me know if I can be of any service.
Individual Income Taxes
Earned Income Tax Credit
We created a 3.5 percent refundable earned income tax credit. This tax credit would lower the tax burden for many of the working people who earn about $40,000 or less. And because it is refundable, they may get tax refunds they may not have otherwise received. North Carolinian taxpayers who are eligible for the federal earned income tax credit are eligible for the state credit. This tax credit will become effective for the 2008 taxable year.
Upper-Income Tax Bracket
Legislators allowed a temporary income tax increase put in place during the economic downturn of 2001 to expire. The change meant that married couples filing jointly with an income over $200,000 were taxed at 8.25 percent, a half-percent higher than the previous level. This change will be effective for the 2008 tax year and returns the rate to 7.75 percent.
Long-term Care Insurance Tax Credit
The General Assembly approved a $7 million a year tax credit for families that purchase long-term care insurance. This tax credit allows a credit of 15 percent of the premiums paid for long-term care insurance during the taxable year and is limited to taxpayers earning less than $100,000 for a married couple. Up to $350 is allowed for each long-term care insurance contract. Please note that this tax credit became effective in 2007 and can be claimed in returns filed this spring.
Adoption Expenses Tax Credit
This year we created a tax credit to benefit those who adopt a child. Taxpayers who are eligible for the federal tax credit for adoption expenses are also eligible for the state tax credit. The state tax credit is equal to 50 percent of the federal tax credit and has a maximum amount of $5,695. This tax credit also became effective in 2007 and can be claimed in returns filed this spring.
Nonprofits and Renewable Energy Property
Legislators approved a credit for individuals and businesses that make donations to tax-exempt charitable organizations so that the organization can invest in renewable energy property. Taxpayers must choose between claiming this credit of taking a deduction for the charitable contribution. This tax credit will be effective for the 2008 taxable year.
Volunteer Firefighter and Rescue Squad Workers
My colleagues and I approved a $250 tax deduction for volunteer firefighters and rescue squad workers who attend 36 hours of drills, training, or meetings during a year. This tax credit is effective for the 2007 tax year and can be claimed in returns filed this year.
Sales Tax
Sales Tax Holiday
North Carolinians benefit from a sales tax holiday each year in the first weekend in August. Previously the sales tax holiday applied to school items that cost less than $100. This year the General Assembly increased the cap to $300 because some college textbooks cost more than $100. This cap increase will become effective for the sales tax holiday in 2008.
Farmers and Manufacturers
The General Assembly approved a phase-out of the sales tax on piped natural gas, electricity, and other fuels (excluding motor fuel) sold to farmers and manufacturers. The taxes will be phased out over the next three years.
Property Taxes
Property Tax Homestead Exclusion
The property tax homestead exclusion helps low-income disabled and elderly people keep their homes. Under previous law, $20,000 or 50 percent (whichever amount is greater) of the value of the homestead was excluded from taxation. This session we increased that amount to $25,000 or 50 percent of the homestead. We also increased the income eligibility limit of the program to $25,000. It was previously capped at $20,500. These changes will become effective for the 2008 tax year.
Property Tax Homestead Circuit Breaker
This year we created a property tax homestead circuit breaker program so that the amount of tax paid on a homestead does not exceed a fixed percentage of the taxpayer’s income. Any taxes on the homestead that exceed the applicable percentage are deferred and become a lien on the property. This program will make more people eligible for some form of property tax relief because the income eligibility limits are 50 percent more than the limits for the property homestead tax exclusion. It will be effective for the 2009 tax year.
Grant Writing Workshop
A grant writing workshop is scheduled for Thursday, April 10, 2008, 10:00 AM-3:00 PM at the Vance-Granville Community College Civic Center in Henderson. Invitations will be mailed on March 14th to Public Officials, Civic Leaders, Law Enforcement, School Personnel and Interested Citizens in the 7th Senatorial District. If you would like to attend the workshop, please RSVP by April 4th to: Rep. Wray (919)733-5662 or email michaelw@ncleg.net
Reminder-House Legislative Intern Program
Undergraduates and Graduate students from Universities and four-year colleges in North Carolina are eligible for legislative session internships in the State House of Representatives or Senate. Applicants may also be subject to their individual school or department qualifications or requirements. Students typically do legislative research, bill tracking and constituent correspondence for Members of the House of Representatives. There are opportunities to attend public meetings, committee hearings and interact with Staff and Legislators. A mutually beneficial working relationship between the legislative offices and interns is a goal of the internship program.
There are a limited number of paid internships. Internship applications will be accepted through March 31 for the Session beginning on May 13, 2008. Please contact the following office for detailed information about the Intern program:
Intern Coordinator, Office of the Speaker
Room 2304 Legislative Building
Raleigh, NC 27601
919-733-3451
Notes
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As I’ve said many times before, I hope you will continue to let me know how you feel about the issues that are being debated by the North Carolina Legislature and the challenges you and your family are facing each day.
By working together, we can make Northampton, Vance and Warren Counties and all regions of North Carolina a better place to live, work and raise a family.
Please remember that you can visit the General Assembly’s website to look up bills, view lawmaker biographies and access other information.