NC H1989

Caps the tax rate on small business income at 6.8% regardless of business entity type (sole proprietorships, partnerships, S-corporations, or C-corporations).

Defines a small business as any business with cumulative gross receipts not exceeding $850,000 in a taxable year.

For individual taxpayers with small business income, allows subtraction of net business income from taxable income when determining their individual tax bracket, preventing stacking with other income.

Establishes separate tax rates for large C-corporations (6.9%) and small C-corporations (6.8%), while small business income from other entity types is taxed at the 6.8% rate.

Effective for taxable years beginning on or after January 1, 2010.