House Bill 711 would repeal North Carolina’s scheduled corporate income tax phaseout and replace it with a new rate schedule that keeps the tax in place for several more years before eliminating it. Under the bill, the corporate income tax rate would remain 2.25% for tax year 2025, drop to 2% in 2026, fall to 1% in 2028, and then be reduced to 0% after 2029. The bill is framed as a revenue-stabilization measure tied to the state’s recovery from Hurricane Helene, with the stated goal of preserving funds for long-term recovery while maintaining North Carolina’s low-tax business climate.
In practical terms, the bill would amend G.S. 105-130.3, the statute governing the corporate income tax imposed on C corporations doing business in North Carolina. S corporations would remain exempt, as under current law. The main legal effect is to slow the existing phaseout schedule and extend corporate tax collections for additional years, which would affect corporate taxpayers and state revenue planning. Because the bill is effective for taxable years beginning on or after January 1, 2026, it would not change the 2025 rate but would alter the future trajectory of the tax.
The overall sentiment reflected in the bill text is supportive of both business competitiveness and disaster recovery. The findings section emphasizes that North Carolina is already a top state for business and has the lowest corporate income tax among states that levy one, while also stressing the need for sufficient revenue to support recovery in western North Carolina after Hurricane Helene. No committee transcripts or recorded votes were provided, so there is no additional evidence of debate, amendments, or formal support/opposition from legislative proceedings.
The main point of contention is the tradeoff between tax reduction and revenue retention. Supporters are likely to view the bill as a way to preserve state resources for recovery without abandoning North Carolina’s low-tax reputation, while opponents may argue that repealing the phaseout delays promised tax relief and keeps corporate taxes higher for longer. The bill’s title and findings suggest the central policy tension is whether disaster recovery needs justify slowing the corporate tax cut schedule.
Impact
The bill would amend North Carolina’s corporate income tax statute, G.S. 105-130.3, by replacing the existing phaseout with a revised schedule that keeps the tax in place through 2029 before eliminating it. This would affect C corporations subject to the tax, while S corporations would continue to be exempt. The change would likely increase state revenue relative to the current phaseout path and alter fiscal projections for the Department of Revenue and state budget planners.
Sentiment
The bill’s stated purpose reflects a generally pro-business but revenue-conscious approach: it preserves North Carolina’s identity as a low corporate tax state while prioritizing funding for Hurricane Helene recovery. Based on the bill text alone, the measure appears framed positively toward both economic development and disaster response. No committee discussion or vote history was provided, so there is no recorded legislative sentiment beyond the sponsor’s stated rationale.
Contention
The likely controversy is whether North Carolina should continue reducing the corporate income tax as scheduled or pause that policy to support recovery spending. Supporters of the bill would emphasize the need for stable revenue after Hurricane Helene and the fact that the state would still be moving toward a zero corporate tax rate. Critics would likely object that the bill delays tax relief for businesses and undermines the existing phaseout commitment. The tension is between fiscal capacity for recovery and maintaining a predictable tax-cut trajectory.
Provides relative to the disposition of certain state revenues through repeal of the Revenue Stabilization Trust Fund and dedication of certain revenues to the Budget Stabilization Fund. (EG SEE FISC NOTE GF RV See Note)