Main Street Resilience Act
Senate Bill 455, titled the Main Street Resilience Act, would create a new North Carolina individual income tax deduction for net business income earned by qualifying small business owners. The deduction would allow a taxpayer to subtract up to $75,000 of net business income from North Carolina taxable income each year, with a special rule for married couples filing jointly that allows up to $150,000 total when both spouses have qualifying business income. The bill excludes passive income from the deduction and defines a small business as an independently owned and operated business with no more than 50 employees, including employees of related persons, and less than $5 million in annual revenue.
The bill is framed as tax relief for small businesses and is designed to reduce state income tax liability for owners actively earning business income. It would amend G.S. 105-153.5(b), which governs deductions in calculating North Carolina taxable income, and would apply beginning with taxable years on or after January 1, 2026. Because the deduction is tied to individual income tax returns rather than a corporate tax change, its primary beneficiaries would be sole proprietors, partners, and other pass-through business owners who meet the size and revenue limits.
The general sentiment reflected by the bill’s title and sponsorship is supportive of small business growth and resilience, with the measure presented as a targeted tax cut for Main Street businesses. No committee transcripts or recorded votes were provided, so there is no direct evidence of debate, amendments, or formal opposition in the available materials. Based on the bill text alone, the proposal appears to be a pro-business tax relief measure with a clear economic development rationale.
Potential points of contention would likely center on the size of the tax benefit, the revenue cost to the state, and whether the eligibility thresholds are appropriately targeted. Some policymakers may question whether the deduction favors certain business structures or higher-income owners, while others may support it as a way to help small employers retain capital and reinvest in operations. The exclusion of passive income and the employee/revenue caps suggest an effort to limit the benefit to active operating businesses, which may reduce but not eliminate concerns about fairness and fiscal impact.
The bill would amend North Carolina’s individual income tax deduction statute, G.S. 105-153.5(b), by adding a new deduction for qualifying small business net income. It would lower taxable income for eligible taxpayers, thereby reducing state income tax collections beginning in tax year 2026. The measure would primarily affect owners of pass-through and other individually taxed businesses that meet the bill’s employee and revenue thresholds, while excluding passive income and businesses above the specified size limits.
The available record suggests a generally favorable, pro-small-business sentiment around the bill. Its title, sponsors, and stated purpose indicate support for tax relief and economic resilience for smaller employers. However, because no committee discussion or votes are included, there is no direct evidence of formal support or opposition beyond the bill’s text and framing.
The main likely areas of contention are fiscal cost, distributional fairness, and eligibility design. Critics may argue that a deduction of up to $75,000 per taxpayer could reduce state revenue and disproportionately benefit owners with substantial business income, while supporters would likely emphasize that the cap and business-size limits keep the benefit focused on genuinely small, active businesses. The treatment of married joint filers, the exclusion of passive income, and the definition of related persons could also raise technical questions about administration and who qualifies.