Tax News

CCH (cch.taxgroup.com) reports:

  North Carolina Gov. Bev Perdue proposed numerous tax increases and various incentives in her budget that was released on March 17, 2009, that if enacted would:

  -- exempt from personal income and corporate income taxes the first $25,000 of a business's net income if the business has less than $100,000 of profits and the first $15,000 of a business's net income for businesses with profits of between $100,000 and $200,000, beginning with the 2010 tax year;

  -- establish a founder's credit that would exclude initial stock investments from capital gains, beginning with the 2010 tax year;

  -- increase the earned income credit from 5% to 6.5% of the federal credit, beginning with the 2010 taxable year;

  -- establish a caregiver's credit for certain caregiving expenses for qualified family members;

  -- update the Internal Revenue Code conformity date for personal income and corporate income tax purposes to specifically conform to amendments made by (1) the Heartland, Habitat, Harvest, and Horticulture Act of 2008 that allow an endangered species deduction and extend the conservation easements deduction, (2) the Heroes Earnings and Tax Relief Act of 2008 that exempt state and local bonus payments to combat veterans and allow military death benefit contributions to Roth individual retirement accounts (IRAs) and Coverdell education savings accounts; and (3) the Economic Stabilization Act of 2008 that extend deductions for tuition and certain teacher expenses;

  -- expand the current energy star appliance sales tax holiday to include purchases of products with the WaterSense label;

  -- increase the cigarette tax from 35¢ per pack to $1.35 per pack and the tobacco products tax from 10% to 28% of the wholesale price, effective September 1, 2009;

  -- impose a new 5% surcharge on all sales of alcoholic beverages, effective September 1, 2009; and

  -- increase the annual license fee on professionals from $50 to $200.

  The full budget proposal can be found on the governor's Web site at:
http://www.governor.state.nc.us/budget.aspx.

2009-11 Governor's Recommended Budget , Gov. Bev Perdue's Office, March 17, 2009