In North Carolina, the passage of a Constitutional amendment requires a supermajority (three-fifths) of votes in the House and Senate before going to the ballot for a simple majority vote by the people. In the 2024 election, Senate Republicans successfully defended their supermajority; however, Republicans in the House were not so lucky.

Income Tax Cap

In the 2018 election, the state’s voters demonstrated their support for lower taxes by approving a Constitutional amendment that reduced the cap on income taxes from 10 percent to 7 percent by a substantial 14.7 percent margin. This action did not adjust tax rates but lowered the maximum rate that personal and corporate income taxes cannot exceed.

In June of this year, the North Carolina Senate advanced a bill that included two Constitutional amendments: one aimed at tightening voter identification and another that would further decrease the maximum allowable income tax rate from 7 percent to 5 percent. Unfortunately, the bill did not have enough energy to go through the House. If the House had passed the bill back in June, voters would have had the opportunity to approve the Constitutional amendment in the November election.

Not deterred, less than a month before the end of the House Republicans’ supermajority, the Senate introduced and passed Senate Bill 920, which aimed exclusively to reduce the income tax cap from 7 percent to 5 percent. Woefully, yet again, the House failed to act when they were in special session this week. This time, the Constitutional amendment would have been on the 2026 election ballot.

The House should have passed Senate Bill 920 for the following reasons:  

  • Voters should have the discretion to limit the extent to which the government can extract the fruits of their labor.
  • Safeguards that protect lower income taxes attract productive individuals and innovative businesses to the state.
  • Reductions to the cap benefit everyone who pays income taxes, not just the wealthy.
  • A lower cap increases stability and predictability for businesses and individuals.
  • Since income tax reductions began in 2014, the state has effectively grown the Savings Reserve and consistently generated budget surpluses.
  • Critics of lower taxes have warned that cuts or caps will produce budget deficits for nearly a dozen years – reality has shown the opposite to be true.
  • House Republicans are losing their supermajority. It is unlikely that an income tax cap reduction will be politically viable again in the foreseeable future.