Senate Bill 583 Summary

• Increases North Carolina standard deduction amounts to $25,500 (married filing jointly), $19,125 (head of household), and $12,750 (single and married filing separately) effective January 1, 2022, with alignment to federal standard deduction amounts effective January 1, 2023.

• Modifies late payment penalties from a flat 10% to a graduated penalty of 2% for failures up to one month, plus an additional 2% for each additional month, capped at 10% aggregate, effective January 1, 2022.

• Allows S Corporations and partnerships to elect to pay income tax at the entity level rather than at the individual shareholder/partner level, effective January 1, 2021.

• Shareholders and partners of taxed pass-through entities receive corresponding deductions and additions to their individual taxable income to prevent double taxation.

• Restricts tax credits for income paid to other states when such income is taxed at the entity level through the pass-through election.