Archives for July 2013

August 2 – 4, North Carolina will observe its final sales tax holiday weekend. Kelly Roberts gives all the info you’ll need to maximize sales tax savings this weekend in an article published in the Carolina Business Connection.  Read more HERE.

On July 17, 2013, North Carolina lawmakers came to an agreement on a state tax reform policy.  The new policy, known as the Tax Simplification and Reduction Act of 2013, reduces income taxes for corporations and individuals, eliminates the estate taxes and broadens the scope of the sales and use tax.   Unless otherwise noted, the provisions of the Act are effective January 1, 2014.

The highlights of the Act are as follows:

Individual Income Taxes

• Replaces current tax structure with a 5.8% flat tax rate beginning January 1, 2014 and a  5.75% flat tax rate for subsequent years
• Eliminates personal exemptions but increases some of the standard deductions (standard deduction for married filing jointly remains at $15,000):

• Eliminates retirement income deduction, however, retains the tax exemption for social security income.
• Eliminates severance wages deduction and the $50,000 business income deduction.
• Sets the maximum itemized deduction for real estate taxes and mortgage interest at $20,000, but retains the unlimited deductibility of charitable contributions.
• Eliminates or changes many of the current tax credits including the child care credit, child tax credit (increases if you make less than $40,000), disability credit and education expenses credit.  The long-term care insurance credit, refundable earned income tax credit and adoption expenses credit will all expire at the end of 2013.

Corporate Income Taxes

• Reduces the corporate income tax rate to 6% in 2014 and 5% in 2015
• Includes provisions to potentially reduce the corporate income tax rate to 4% in 2016 and 3% in 2017
• Maintains current franchise tax rate

Sales and Use Taxes

• Caps excise tax on motor fuel at 37.5 cents through June 30, 2015
• Expands the current sales tax rates to movies, live entertainment and museums
• Requires sales tax to be assessed on warranty agreements, maintenance agreements, repair contracts and other contracts for maintaining and repairing tangible personal property.  Previously, these types of service contracts were exempt from sales tax.
• Eliminates the sales tax holidays in 2014 for school supplies, computers, clothing and Energy Star appliances

Estate Taxes

• Eliminates the North Carolina estate tax effective January 1, 2013.

Please do not hesitate to contact us with your questions or concerns about these changes and how they may affect you or your business.

Are you traveling this summer to do volunteer work for your house of worship or other charitable organization? Some travel expenses may help lower your taxes if you itemize deductions when you file next year. To find out if you qualify and what deductions you can take, read more HERE.

North Carolinians will enjoy another “Sales Tax Holiday” August 2 – 4 on certain items related to back-to-school shopping. For the official list of items exempt from sales tax from the NC Department of Revenue, click HERE.

For more information and answers to questions from a retail perspective, click HERE.

In a significant setback for President Obama’s signature health care reform bill, the administration has announced a one-year delay, until 2015, regarding the law’s mandate that larger employers provide coverage for their workers or pay penalties. Read more HERE.

Congress will be back in Washington this week trying to find a way to retroactively fix the highly-publicized doubling of some federal student loan rates. On July 1 the rate for new subsidized loans skyrocketed from 3.4 percent to 6.8 percent after Congress failed to reach an agreement. Read more HERE.