2014 Tax Preview for NC Residents

Sept. 9, 2013: For those clients living in North Carolina, 2014 will bring a host of income tax changes.  The Tax Simplification and Reduction Act of 2013 was signed into law July 24, 2013 and takes effect January 2014.  1.  Individual Tax Rates  The current graduated income tax rates in NC of 6%, 7% and 7.75% will be replaced with a flat tax of 5.8% during 2014 and 5.75% for 2015 and beyond. Eliminates the personal exemption Eliminates the child tax credit for those earning over $100,000; retained at $100 per child for earnings between $40,000 and $100,000; increased to $125 per child for earnings < $40,000. Eliminates both the exclusion of $2,000 for qualified private pension income and $4,000 for federal/state/local pension income.  However, NC does retain the “Bailey” settlement exemption for taxation of retirement benefits.  This settlement specifically applies to Federal/NC retirees who had 5+ years of creditable service as of 8/12/1989. Raises the standard deduction to $15,000 for Joint; $12,000 for Head of Household and $7,500 for Single filers. Limits itemized deductions for personal residence interest and Read on! →