North Carolina voters are being asked to decide whether the state’s income tax system should face a new constitutional limit. The proposal has divided lawmakers and campaigners, with supporters saying it would protect taxpayers and opponents warning about its effect on future state finances.
Proposal Would Cap The Income Tax At 3.5%
A constitutional amendment backed by Republican Senator Michael V. Lee would cap North Carolina’s income tax rate at 3.5%. The current rate is 7%, meaning the proposal could cut the maximum rate by half if approved and applied as intended.
The state would also be prevented from raising the rate above the constitutional limit without voter approval. The amendment has already passed both the North Carolina Senate and House of Representatives and now requires voter approval.
North Carolina Has Already Cut Its Tax Rate
The proposal follows a long period of income tax reductions in the state. North Carolina lowered its income tax rate from 10% in 2018 to its current level.
Lee argues that previous tax changes have supported revenue growth while leaving residents with more of their earnings. He is urging voters to approve the constitutional amendment in November.
Republicans And Democrats Are Divided
Support for the proposal has largely followed party lines, with most Republican lawmakers backing it and Democrats opposing it.
Lee said the amendment would create lasting protection for taxpayers by placing the limit directly into the state constitution. Democratic Governor Josh Stein has taken the opposite position.
Governor Calls The Proposal A “Con”
Stein has described the amendment as a “con” and a “millionaire protection cap”. He argues that the change would not necessarily put more money into the pockets of average residents.
The governor also warned that lower income tax revenue could leave the state with fewer options when it needs to balance its budget.
Debate Centres On Future State Revenue
The disagreement is largely about what could happen to North Carolina’s finances if the income tax ceiling becomes part of the constitution.
Supporters say a lower cap would protect taxpayers from future rate increases. Opponents argue that limiting income tax revenue could create pressure elsewhere, including through sales taxes paid by consumers.
Stein said ordinary residents could ultimately face the consequences if the state needs additional revenue in future years.
Voters Will Have The Final Say
The amendment has cleared the state legislature, but the proposal cannot become part of North Carolina’s constitution without approval from voters.
The November vote will therefore decide whether the state places a 3.5% constitutional ceiling on its income tax rate.
The outcome could shape North Carolina’s tax policy for years to come, while the debate highlights the wider question of how states balance lower taxes with future spending needs.
