NCJOBSPAC’s primary mission is to ensure that conservative pro-business candidates are elected to ensure North Carolina maintains its pro-business, pro-growth agenda.
Over the last 15 years, the Republican leadership in the North Carolina General Assembly has created one of the most favorable business environments in the Country. Their efforts to (1) lower tax costs, (2) implement regulatory reform, (3) use performance-based incentive tools to win competitive projects, (4) increase workforce training capacity, and (5) expand broadband and related infrastructure have made North Carolina a national economic powerhouse.
Republicans pursued a sustained “regulatory reform” agenda starting early in their tenure, including the Regulatory Reform Act of 2011 (S.L. 2011-398), which tightened rulemaking requirements and established processes intended to reduce or streamline regulations.
The most significant state tax reform law enacted in North Carolina over the past 15 years was the 2013 Tax Simplification and Reduction Act (House Bill 998), passed by the Republican-led General Assembly and signed into law in July 2013. This legislation fundamentally restructured the state’s tax code and has had enduring impacts on the state’s tax climate and economic competitiveness.
Key Features of the 2013 Tax Reform Law
1. Flattening and lowering personal income tax rates
The law replaced North Carolina’s graduated personal income tax (which ranged up to about 7.75%) with a single flat income tax rate (initially set at 5.8% for 2014 and 5.75% thereafter), simplifying the tax structure and lowering marginal rates for many taxpayers.
2. Cutting corporate income taxes
It significantly reduced the corporate income tax rate, with plans to lower it from 6.9% to much lower levels in subsequent years, thereby improving the state’s relative competitiveness for business investment.
3. Broadened tax base
To help offset revenue losses from rate cuts, the reform broadened the sales tax base by extending the sales and use tax to certain previously untaxed services.
4. Repeals and consolidation
The law repealed the estate tax and eliminated or capped many deductions and credits, narrowing exemptions and simplifying compliance.
5. Broader structural changes
It included adjustments to other elements, such as personal exemptions and certain sales tax components, to improve uniformity and simplify tax administration.
Long-term economic strategy: The law set in motion a multi-year program of rate reductions and base reforms that has continued to unfold through subsequent legislation. Its architects and many analysts described it as a pro-growth restructuring designed to make North Carolina more competitive with other states for jobs and investment.
Impact on business tax climate rankings: The changes improved North Carolina’s ranking on measures like the State Business Tax Climate Index, moving the state significantly ahead in national and regional comparisons and making it more attractive for business location decisions.
Policy influence: Tax reform in North Carolina after 2013 has been widely cited by other states and policy analysts as a model for comprehensive tax restructuring, indicating its role beyond mere rate changes.
Although enacted in 2013, this reform laid the foundation for subsequent tax rate reductions and structural reforms, including continued income tax rate cuts and moves toward lowering or phasing out the corporate income tax entirely, as part of more recent legislative agendas.