Senate Bill 351, titled the “Right to Start Act,” creates a temporary tax deferral for certain newly formed businesses in North Carolina. Under the bill, corporations, taxed S corporations, and certain business entities such as LLCs and partnerships may defer payment of State income tax for one year if they have been in existence for less than five years and report less than $5,000 in State net income for the taxable year. The bill applies this same basic startup-focused deferral across several tax provisions in Chapter 105, including corporate income tax, taxed S corporation income tax, and business entity tax provisions.
The bill also expands State procurement policy to explicitly encourage the use of contractors that have been in operation for less than five years, alongside existing preferences for small, minority, physically handicapped, and women contractors. It requires the Department of Administration to collect and report data on State contracts awarded to these newer contractors, including the number and dollar amount of contracts, demographic and geographic breakdowns, and their share of total awards. Similar reporting language is added to construction and information technology procurement statutes to track participation by these newer businesses.
Impact
The bill would amend multiple sections of North Carolina tax law in Chapter 105 to allow qualifying young, low-income businesses to postpone State tax liability for one taxable year, beginning with tax years on or after January 1, 2026. It would also revise State procurement statutes in Chapters 143 and 143B to add contractors in operation for less than five years to the list of businesses the State should encourage and promote in goods-and-services, construction, and information technology contracting. The Department of Administration would gain new reporting duties to measure contract participation by these newer firms, with the first procurement-related changes effective October 1, 2025 and applying to contracts awarded on or after that date.
Sentiment
No committee transcripts or recorded votes were provided, so there is no direct evidence of debate or formal support/opposition in the available record. Based on the bill text alone, the measure appears pro-business and pro-startup, aiming to ease early-stage tax burdens and improve access to State contracting opportunities for newer firms. The overall framing suggests a favorable policy intent toward entrepreneurship and small business development.
Contention
The main policy questions likely concern the revenue impact of allowing tax deferrals and whether the eligibility threshold—businesses under five years old with less than $5,000 in State net income—appropriately targets genuinely struggling startups. Another possible point of contention is whether adding newer contractors to procurement preferences could affect competition, administrative burden, or procurement efficiency. The bill also creates new reporting obligations for the Department of Administration, which may raise questions about implementation and data collection costs, though no specific objections are documented in the provided materials.