NC H985

Reduces individual income tax rates to a flat 6% on the first bracket and 7% on higher brackets, eliminating the previous 7.75% top rate, effective for taxable years beginning January 1, 2013.

Reduces corporate income tax rate to 5.9% effective January 1, 2015, down from 6.9%, and replaces the franchise tax with a business privilege tax of $1.25 per $1,000 of net worth or investment value with a $200 minimum and $75,000 maximum for holding companies.

Expands sales tax base to include service contracts, repair services, and short-term rentals of storage facilities, while eliminating exemptions for certain amusements and movies as of July 1, 2014.

Reduces state sales tax rate from 4.75% to 4.5% effective July 1, 2014, then to 4.25% effective July 1, 2015.

Eliminates annual report filing fees for corporations and limited liability companies while establishing a distribution of business privilege tax revenue to cities based on population categories.