Earned Income Tax Credit (EITC)

North Carolina does not currently offer a state-level EITC.

Latest Legislative Action: During the 2016 legislative session, multiple bills to restore the state’s EITC were held in committee for further consideration in 2017. HB 1076 would have reinstated the credit at 10% of the federal EITC, which would be 5% higher than it stood before its elimination in 2013; SB 757 would incrementally revive the state credit to 5% over two years.

Notes:

  • The state enacted a refundable EITC in 2007 at 3.5% of the federal credit and increased the rate to 5% in 2008. The legislature moved to expand it again in 2009 but followed up the failed attempt with a proposal to erase the credit’s refundable portion in 2011.
  • After a brief one-year extension in 2012, the EITC was eliminated completely for tax years 2014 and beyond, while the rate for tax year 2013 was cut to 4.5%.

Child Tax Credit (CTC)

Rate (Non-Refundable):1

  • For spouses filing jointly with a combined adjusted gross income of up to $40,000: $125/qualifying child
  • For spouses filing jointly with a combined adjusted gross income between $40,000 and $100,000: $100/qualifying child
  • Income thresholds are 20% lower for individuals filing as head of household and 50% lower for both single taxpayers and spouses filing separately.

Eligibility: All North Carolina taxpayers who qualify for the federal CTC are eligible as long as adjusted gross income does not exceed $100,000 for spouses filing jointly, $80,000 for individuals filing as head of household, or $50,000 for single filers and spouses filing separately.

Child and Dependent Care Tax Credit (CDCTC)

North Carolina does not currently offer a state-level CDCTC.

Latest Legislative Action: During the 2016 legislative session, lawmakers considered a bill that would reenact the state’s CDCTC, but the measure currently rests in committee for further consideration in 2017.

Notes: North Carolina used to have a CDCTC that varied between 7% and 13% of the expenses eligible for the federal credit, depending on filing status, income, and type of dependent. The credit was limited to $390 per dependent, not to exceed $780 total. In 2013, however, the credit was eliminated.

North Carolina Tax Credits In The News

14

Feb 17

News Round-up: February 14, 2017

Members of the House Committee on Ways and Means introduced bills to improve tax credits for workers and families. Rep. Richard Neal (D-Mass.) proposed a bill that would lower the Earned Income Tax Credit’s (EITC’s) age requirement from 25 to 21 and expand the EITC for workers not raising children. Rep. Rose DeLauro (D-Conn.) announced her bill to index the Child Tax Credit (CTC) for inflation and expand the credit for parents raising children under the age of six.
Read More

14

Nov 16

News Round-up: November 14, 2016

Last Tuesday, Donald J. Trump (R) was elected president, but little is known of how his administration will handle refundable tax credits. Tax advocates – including TCWF – encouraged Trump to outline his platform on tax credits like the Earned Income Tax Credit (EITC) during the campaign, but he took no clear position on tax reform or these programs.
Read More
For More State Information:

Cedric Johnson
North Carolina Justice and Community Development Center
www.ncjustice.org
919 856 3192
cedric@ncjustice.org

Sources:
  1. Credit for Children, North Carolina Department of Revenue