NC S695

Reenacts the child care tax credit under North Carolina law as G.S. 105-153.11, allowing taxpayers to claim a credit against state income tax for a percentage of employment-related expenses that qualify for the federal child care credit under IRC Section 21.

Establishes two percentage tiers based on adjusted gross income and filing status, with "Percentage A" (7%-9%) for expenses for dependents age 7 and older who are not incapable of self-care, and higher "Percentage B" (10%-13%) for expenses for other qualifying individuals.

Caps claimable employment-related expenses at $3,000 for households with one qualifying individual and $6,000 for households with more than one qualifying individual, reduced by any employer-provided dependent care assistance excluded from gross income.

Limits the credit to nonresident or part-year residents by applying a fraction based on North Carolina income allocation formulas and prohibits claims for amounts already deducted from North Carolina taxable income.

Makes the credit effective for taxable years beginning on or after January 1, 2023.