For more than a decade, North Carolina’s flat tax has fueled growth and prosperity. By ensuring everyone pays the same tax rate regardless of how much they earn, this uniform income tax has given taxpayers and businesses a simple, predictable framework. This November, North Carolinians can protect this stability by capping the income tax rate at 3.5% in the state constitution.
North Carolina transitioned from a progressive, multi-bracket income tax system to a flat tax in 2013. Since then, state lawmakers have gradually lowered the flat income tax to 3.99%. Under current law, this rate is scheduled to fall further to 3.49% in 2027. However, as it stands, North Carolina’s constitution still allows the state legislature to impose an income tax rate as high as 7%. The 3.5% income tax cap amendment takes the prospect of future tax hikes by spendthrift lawmakers off the table and ensures that voters have the final say over lifting the income tax cap.
Senate Bill 1080 may seem like a technocratic measure, but protecting North Carolina’s flat tax with a constitutional amendment is vital for the state’s economy. Flat taxes offer numerous benefits. First, taxing every additional dollar of income at the same rate removes the disincentive to earn more. This allows entrepreneurs and workers to make professional decisions without having to consider the impact on their tax liabilities.
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