If North Carolina is on your short list of retirement/ relocation destinations, here is another argument for the Tar Heel State. Starting this year our tax rate is dropping.
In late 2023 North Carolina lawmakers reached a three year budget agreement that will slash the state’s flat state income tax rate that is paid by individuals and small businesses. Starting on January 1, 2024, the personal income tax rate from the previous rate of 4.75% to 4.5% . The legislation calls for the rate to drop again in 2025 down to 4.25% . And then finally in 2026, and for every year thereafter, the rate will stand at 4.99%
The move places North Carolina on list of the ten states with the lowest tax rates.
| RANK | State | Tax rate as of January 1, 2024 |
| 1 | Arizona | 2.5% flat rate |
| 2 | North Dakota | 2.9% flat rate |
| 3 | Pennsylvania | 3.07% flat rate |
| 4 | Indiana | 3.15% flat rate |
| 5 | Ohio | 2.76% to 3.99% |
| 6 | Louisiana | 1.86% to 4.25% |
| 7 | Michigan | 4.25% flat rate |
| 8 | Colorado | 4.4% |
| 9 tied | North Carolina | 4.5% flat rate |
| 9 Tied
|
Kentucky | 4.5% flate rate |
In addition to being an incentive to moving to North Carolina, lawmakers also believe the tax cut will cause a ripple effect. The believe that the tax breaks will create a pull for businesses and talent. Imagine you’re a skilled professional or a business owner contemplating a move. Suddenly, North Carolina becomes an even more appealing option. It’s not just about the beautiful landscapes and vibrant cities – it’s about an economic environment that encourages growth and prosperity.