GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 2011

H                                                                                                                                                   D

HOUSE DRH80205-MC-180  (03/28)

Short Title:        Small Business Income Tax Exemption.		(Public)
Sponsors:	Representatives Holloway, McComas, and Folwell (Primary Sponsors).
Referred to:

A BILL TO BE ENTITLED

AN ACT to provide a small business income tax exemption.

The General Assembly of North Carolina enacts:

SECTION 1.  G.S. 105-134.2 reads as rewritten:

"§ 105-134.2.  Individual income tax imposed.

(a)        Tax Rate. - A tax is imposed upon the North Carolina taxable income of every individual. The tax shall be levied, collected, and paid annually and shall annually. Except as otherwise provided in this section, the tax 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:

                                             Over                                  Up To                                            Rate

                                                      0                               $21,250                                           6%

                                           $21,250                             $100,000                                           7%

                                         $100,000                                      NA                                           7.75%

(2)        For heads of households, as defined in section 2(b) of the Code:

                                             Over                                  Up To                                            Rate

                                                      0                               $17,000                                           6%

                                           $17,000                               $80,000                                           7%

                                           $80,000                                      NA                                           7.75%

(3)        For unmarried individuals other than surviving spouses and heads of households:

                                             Over                                  Up To                                            Rate

                                                      0                               $12,750                                           6%

                                           $12,750                               $60,000                                           7%

                                           $60,000                                      NA                                           7.75%

(4)        For married individuals who do not file a joint return under G.S. 105-152:

Over                                  Up To                                            Rate

                                                      0                               $10,625                                           6%

                                           $10,625                               $50,000                                           7%

                                           $50,000                                      NA                                           7.75%

(b)        Tax Tables. - In lieu of the tax imposed by subsection (a) of this section, there is imposed for each taxable year upon the North Carolina taxable income of every individual a tax determined under tables, applicable to the taxable year, which may be prescribed by the Secretary. The amounts of the tax determined under the tables shall be computed on the basis of the rates prescribed by subsection (a) of this section. This subsection does not apply to an individual making a return under section 443(a)(1) of the Code for a period of less than 12 months on account of a change in the individual's annual accounting period, or to an estate or trust. The tax imposed by this subsection shall be treated as the tax imposed by subsection (a) of this section.

(c) Business Entity Exemption. - Before computing the tax in subsection (a) of this section, a qualified business entity may subtract from State net income fifty thousand dollars ($50,000). A qualified business entity is a business entity that is neither a publicly traded corporation nor an affiliate, as defined in G.S. 105-163.010, of a publicly traded corporation."

SECTION 2.  This act becomes effective for taxable years beginning on or after January 1, 2011.