Tag Archives: North Carolina Tax Incentives

New Tax Deduction for North Carolina Business Owners

A few weeks ago the North Carolina General Assembly passed law G. S. 105-134.6(b)(22).

Why is that important to you? Because if you are a business owner, beginning with the 2012 calendar, you have a new way to save some money.

Here is the verbiage directly from the North Carolina Department of Revenue Directive:

This directive addresses a new deduction available for taxpayers who include net business income in federal adjusted gross income (AGI) as reported on the North Carolina individual income tax return. The law allows a deduction of up to $50,000 of net business income included in AGI that is not considered passive under the Internal Revenue Code (IRC). In the case of a married couple filing a joint return where both spouses report a net business income, the maximum dollar amount applies separately to each spouse’s net business income included in AGI, not to exceed a total of $100,000 (maximum $50,000 each). This deduction is available for tax years beginning on or after January 1, 2012.

Now that you’ve read the official verbiage – here it is broken down in layman’s terms.

–> The deduction can be for both spouses (husband and wife). So if your spouse doesn’t have any ownership in the business – it may be time to reconsider that. If you both are bringing in business income then you can get a deduction of up to $100,000 total.

–> The deduction is not for passive income. It only applies to your business if your are actively participating in the day-to-day workings of the business. If you are an entrepreneur who owns and runs his own company – this deduction is for you. If you own a business, or part of a business, strictly in a financial sense then you won’t receive a deduction.

–> The deduction is for individuals that OWN a business. Businesses owned by individuals include proprietorships, partnerships, LLCs, LLPs and “S” corporations.

–> The deduction is for NET business income. For example, if you have $55,000 of business income but $75,000 of business losses, you have 0 net business income, and therefore no deduction.

–> A $50,000 deduction does not save you $50,000. The full benefit comes from multiplying the net business deduction by your NC tax rate (up to 7.75%). This means that a full deduction at the top tax rate will save you AT MOST $3,875 per taxpayer ($7,750 per married couple).

If you have any additional questions about the new tax deduction and want to know if you qualify, feel free to give us a call at 919.267.6740.

North Carolina Business Tax Incentives You May Not Know About

North Carolina has “iNCcentives” that can give small businesses a competitive advantage. The only problem is that in order to learn about these tax incentives you either need to do the research on your own or make sure you are working with a stellar CPA in 2012. Our great state is actually consistently ranked among the best business climates in the nation by Forbes, CNBC, Chief Executive and Site Selection.

The North Carolina Department of Commerce divides these tax credits and incentives into a few categories to make them easier to understand. We’ll break some of them down and offer up links with additional information to help you make sure you are taking advantage of each and every one you can.

Tax Credits

Article 3J Tax Credits – Qualifying businesses may receive a tax credit for job creation, investment in business property and investment in real property.

Interactive Digital Media Tax Credit – Develop interactive digital media at your video game or digital media company in 2012? A tax credit may be in your future ;)

N.C. Ports Tax Credits – Did you pay income taxes because your small business used North Carolina Ports facilities at Morehead City and Wilmington?

Renewable Energy Tax Credits – A 35% tax credit may be yours thanks to the cost of renewable energy property.

Technology Development (Article 3F) Tax Credits – Qualified North Carolina research expenses during a taxable year may offer you some relief.

Discretionary Programs

Job Development Investment Grant –  Awards a limited number of cash grants directly to new and expanding businesses that will provide economic benefits to the State, and need the grant to carry out the project in North Carolina.

One North Carolina Fund – Awards grants for job creation and/or retention in conjunction with local government matches.

SBIR/STTR Small Business Technology Funding – Awards matching funds to firms who have been awarded a SBIR/STTR Phase I award from the federal government.

Site and Infrastructure Grant Fund – Provides assistance for site development and infrastructure improvements for very high-impact projects.

Cost-Saving Programs

Industrial Revenue Bonds – Provides tax-exempt financing for eligible new or expanded manufacturing facilities, certain solid waste disposal facilities and sewage disposal facilities.

Community Development Block Grants and Industrial Development Fund – Provides grants and loans for infrastructure development to eligible local governments.

Recycling Business Assistance Center – Provides grants, tax credits and loans to businesses involved with recycling in North Carolina.

Film Incentives – Provides tax credits and sales and use tax discounts to encourage film and television production in North Carolina.

Sales and Use Tax Discounts/Exemptions and Refunds

Long list here so check out this LINK to see if anything applies to your business.

Need more information? Feel free to Contact us if you have more detailed questions or download the NC Department of Revenue’s Incentives Chapter PDF.