GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2001
H	1
HOUSE BILL 1417
     

 
Short Title:	Earned Income Tax Credit/Increase Upper Rates.	()	
Sponsors:	Representatives Insko and Luebke (Primary Sponsors).	
Referred to:	Finance.	
April 26, 2001

A BILL TO BE ENTITLED
AN ACT to create a state-earned income tax credit and offset the costs of that credit by increasing the marginal tax rate on the highest individual incomes.

The General Assembly of North Carolina enacts:
SECTION 1.  Part 2 of Article 4 of Chapter 105 of the General Statutes is amended by adding a new section to read:
"§ 105-151.29.  Earned income tax credit.
(a)	Credit. – An individual who claims for the taxable year an earned income tax credit under section 32 of the Code is allowed a credit against the tax imposed by this Part equal to ten percent (10%) of the amount of credit the individual qualified for under section 32 of the Code. A nonresident or part-year resident who claims the credit allowed by this section must reduce the amount of the credit by multiplying it by the fraction calculated under G.S. 105-134.5(b) or (c), as appropriate.
(b)	Credit Refundable. – If the credit allowed by this section exceeds the amount of tax imposed by this Part for the taxable year reduced by the sum of all credits allowable, the Secretary must refund the excess to the taxpayer. The refundable excess is governed by the provisions governing a refund of an overpayment by the taxpayer of the tax imposed in this Part. Section 3507 of the Code, Advance Payment of Earned Income Credit, does not apply to the credit allowed by this section. In computing the amount of tax against which multiple credits are allowed, nonrefundable credits are subtracted before refundable credits."
SECTION 2.  G.S. 105‑134.2(a) reads as rewritten:
"(a)	A tax is imposed upon the North Carolina taxable income of every individual. The tax shall be levied, collected, and paid annually and shall be computed at the following percentages of the taxpayer's North Carolina taxable income.
(1)	For married individuals who file a joint return under G.S. 105‑152 and for surviving spouses, as defined in section 2(a) of the Code:
On the North Carolina taxable income up to twenty‑one thousand two hundred fifty dollars ($21,250), six percent (6%).
On the amount over twenty‑one thousand two hundred fifty dollars ($21,250) and up to one hundred thousand dollars ($100,000), seven percent (7%).
On the amount over one hundred thousand dollars ($100,000), eight percent (8%).
(2)	For heads of households, as defined in section 2(b) of the Code:
On the North Carolina taxable income up to seventeen thousand dollars ($17,000), six percent (6%).
On the amount over seventeen thousand dollars ($17,000) and up to eighty thousand dollars ($80,000), seven percent (7%).
On the amount over eighty thousand dollars ($80,000), eight percent (8%).
(3)	For unmarried individuals other than surviving spouses and heads of households:
On the North Carolina taxable income up to twelve thousand seven hundred fifty dollars ($12,750), six percent (6%).
On the amount over twelve thousand seven hundred fifty dollars ($12,750) and up to sixty thousand dollars ($60,000), seven percent (7%).
On the amount over sixty thousand dollars ($60,000), eight percent (8%).
(4)	For married individuals who do not file a joint return under G.S. 105‑152:
On the North Carolina taxable income up to ten thousand six hundred twenty‑five dollars ($10,625), six percent (6%).
On the amount over ten thousand six hundred twenty‑five dollars ($10,625) and up to fifty thousand dollars ($50,000), seven percent (7%).
On the amount over fifty thousand dollars ($50,000), eight percent (8%)."
SECTION 3.  This act is effective for taxable years beginning on or after January 1, 2002.