Earned Income Tax Credit (EITC)

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

Latest Legislative Action:

  • A bill was introduced in the 2017 session to restore the state’s EITC.
  • 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

17

Jul 17

News Round-up: July 17, 2017

House Democrats in the Kentucky legislature have pre-filed a tax reform bill, BR 15, which would establish a state-level Earned Income Tax Credit (EITC).
Read More

5

Jun 17

News Round-up: June 5, 2017

After South Carolina passed a bill to create a state-level Earned Income Tax Credit (EITC), the editorial board of North Carolina's Charlotte Observer urged that state's legislature to follow suit and reinstate the credit it eliminated in 2014. The editors wrote that the legislature should learn from South Carolina's bipartisan campaign earlier this year that resulted in an EITC worth 125 percent of the federal credit.
Read More
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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