House Bill 181, titled the Tax Relief for Working Families Act, would reinstate North Carolina’s earned income tax credit (EITC) for taxable years beginning on or after January 1, 2025. The bill repeals and recodifies the prior EITC statute, allowing eligible taxpayers who claim the federal earned income tax credit under section 32 of the Internal Revenue Code to claim a state credit equal to 20% of the federal credit amount. The bill also preserves the existing rule that the credit is refundable, meaning taxpayers can receive a refund if the credit exceeds their state tax liability.
The measure is framed as relief for working families facing higher costs for housing, child care, food, and other essentials. The bill’s stated purpose is to increase financial security and self-sufficiency for low- and moderate-income workers, especially families with children, by putting more money back into household budgets. It would apply to resident, nonresident, and part-year resident taxpayers, with the credit prorated for nonresidents and part-year residents under existing state tax formulas.
HB181 would amend North Carolina income tax law by reenacting a state earned income tax credit that had previously expired, moving the provision into a new code section, G.S. 105-153.12. If enacted, it would create a refundable state tax credit tied to the federal EITC, affecting individual income taxpayers who qualify under federal law. The bill would also require the Department of Revenue to administer refunds for any excess credit and would apply beginning with tax years starting January 1, 2025.
The bill’s overall sentiment appears strongly supportive, at least from the text of the measure itself, which emphasizes relief for working families and cites rising costs as the reason for action. The framing suggests the sponsors view the EITC as a targeted, pro-work policy that helps families meet basic needs and improve financial stability. No committee debate or recorded votes were provided, so there is no evidence of formal opposition or amendment activity in the available materials.
The main policy issue is whether North Carolina should restore a refundable earned income tax credit and, if so, at what cost to state revenues. Supporters are likely to argue that the credit helps low-income working families, especially those with children, while critics may focus on fiscal impact, the size of the credit, and whether the benefit is sufficiently targeted. Because no committee transcripts or votes are included, no specific legislator or stakeholder objections are documented in the available record.