When North Carolinians bring home a paycheck, it’s likely a portion of it has already been deducted for federal and state income taxes. To keep more wages in the hardworking hands of North Carolinians, members of the North Carolina General Assembly seek to cap the state income tax rate at 3.5%. Concerned critics say that lowering income taxes will harm North Carolina’s economy. Let’s look at how income tax reductions have historically affected North Carolina and North Carolinians.
In 2018, the General Assembly passed Senate Bill 75, a ballot measure to amend the State Constitution Article V Section 2(6) income tax rate cap from 10% to 7%. While Senator Jay Chaudhari (D-Wake) was concerned that North Carolina would lose a valuable revenue source by cutting income taxes, Senator Tom Tucker (R-Union) said that lowering income taxes will force the General Assembly to “watch their spending.” Senator Ralph Hise (R-Mitchell) considered that when “people are given the choice of what their tax rate can be … they’ll generally always choose the lower number.”At that time, Wake Forest residents’ median annual income was about $74,000 (equivalent to $99,000 today*). In November of 2018, voters approved the State Constitutional amendment to cap income tax at 7%.
Prior to November 2018, the North Carolina Justice Center warned that lowering income taxes burdens the middle-class and poor while benefiting the wealthy, as governments adjust for the lost revenue by raising property and other taxes. However, by 2019, with an income tax rate of 5.25%, the state GDP had risen to 576,267 and the average resident of Wake Forest earned $85,000 a year (equivalent to $112,000 today*).
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Following this positive trend, the General Assembly passed H259, the 2023 Appropriations Act, implementing further income tax reductions with a gradual decline from 4.99% in 2022 to 3.99% by 2025. Representative Tim Moore (R-Cleveland) said, “[This bill is] going to lower taxes. It’s going to invest in our infrastructure from one end of the state to the other and make a wise use of North Carolina’s resources that we have to see our state continue to grow and prosper.”
Now, nearly eight years after voter approval of the 2018 State Constitutional amendment and after six years of lower income tax rates, how has this affected the state economy?
Taking into consideration influencer bias, while also aggregating the general consensus of actual proven data, in 2021, the American Enterprise Institute named North Carolina one of the top 10 performing states nationwide for net domestic migration — where people want to live more than any other. The Institute found that common factors between the top 10 states included state and legislative leadership, lower tax burdens, Forbes rankings, and lower unemployment rates.
CNBC designates North Carolina the, if not one of, the most friendly states for businesses, and among the best states nationwide in regards to education, growing workforce, and economy since 2022. Similarly, B2B Reviews marked North Carolina as the best state to start a business.
In 2025, US News identified that North Carolina is in the top 5 states people want to live because of the state’s low cost of living.
Also in 2025, the Bureau of Economic Analysis under the US Department of Commerce saw that North Carolina’s GDP was 689,942, 70% higher than it was in 2012.
More locally, Wake Forest is ranked #10 as the best city in the state, according to USA Today, due to the average median income of residents, cost of housing, and low unemployment rate, despite housing costs everywhere being so high. The Town of Wake Forest estimates that the average resident earns $121,000 a year — This is nearly 71% more than the median household income across the entire state, and 60% more than what Wake Forest residents earned in 2012.
On March 25, 2026, Governor Stein stated that he is against further decreasing the North Carolina state income tax. “Even if these cuts were a good idea when they were enacted, they are now irresponsible. … [F]ully half of the [income tax] money goes to the top 8% of earners. People already making $764,000 or more will see an average cut of more than $8,000. Meanwhile, about 40% of our state will see a benefit of less than $100 a year. Basically, we’re asking everyday North Carolinians to sacrifice key services to put more money in the pockets of folks who are already doing well.”
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Yet, while, logically, people who earn more receive a larger benefit, the overall record appears to disagree with Governor Stein. Because North Carolina’s state tax rates are lower than other states’, people want to move to North Carolina where they see more of their wages. Additionally, people who earn more spend more, which bolsters the economy. People who earn more engage more, which supports businesses, charities, and community events. People who earn more save more, which increases personal fiscal stability. Therefore, as North Carolinians keep more of their wages, more North Carolinians become wealthier.
While tax cuts decrease a state’s spending powers, the reduced revenues incentivize tighter, wiser budgets. Side effects of fiscally responsible budgets include a smaller, more Constitutionally-run government, decreased bloat, grift, and waste, and identification of areas of need versus want. Meanwhile, the state economy is supported by more private investments of consumer choice.
Should Senate Bill 1080 pass the North Carolina General Assembly, it will come before voters on November 3, 2026. You can learn more about S1080 here. I would highly encourage everyone to contact your district representatives in the General Assembly with respectful thoughts and comments. You can find their contact information at this link.
* The inflation was found using the US Bureau of Labor Statistics calculator for April 2026.
Abby has lived in Wake Forest all of her life, and has learned a great
deal about solving problems and serving others growing up in her
family’s Wake Forest business. She was the Co-Chair of the Town of Wake
Forest Urban Forestry Advisory Board, regularly speaks before the Town’s
Commissioners on topics that deeply matter to the community, and is a
member of a Raleigh-area women's writers' group. Abby’s weekly “LIFTing
North Carolina” radio segment on Blue Ridge Liberty Radio continues to
gain new audiences, informing listeners about bills and legislative
updates in the NC General Assembly, and other impactful news across the
state. Abby is a Patriot Academy Constitution Coach State Mentor for
North Carolina, coaching Constitution classes, both in person and
online, to people from across the country. She is deeply passionate
about educating others about the extraordinary circumstances leading up
to our nation’s founding and the historical landscape which gave rise to
inspire our courageous heroes. Abby takes students through the lens of
freedom, liberty, and the equal pursuit of happiness by going straight
to the source documents that have been the blueprint and cornerstone of
the United States of America. She punctuates that America has the
longest continuously governing Constitution in the world, and
strengthening others to seek the value of understanding history in
context, and then applying that knowledge to cultivate serving and
engagement in their own communities, is paramount to what makes this
country unique, free, and prosperous. Professionally, Abby is a State Lead Researcher with a focus on
legislation, transparency, and accountability. She balances those
responsibilities while also working in her family’s business as an
Account Manager, Private Cloud Systems Administrator, Book Editor, and
Illustrator/Animator. She began writing books at age 16, and is the
author and illustrator of a young adult science fiction adventure
trilogy titled, “The Antediluvians.” She is currently writing on her
fourth science fiction adventure novel, which is largely based during
the American Civil War.Abby’s hobbies include reading copious amounts of literature,
non-fiction, and the 1828 Webster's Dictionary, finding great used book
stores, collecting antique books, traveling to historically significant
places across the country, animation, baking, herb gardening,
chicken-keeping, and osteology, which is the processing, study, and
articulation of animal bones.
