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Lower taxes, police mental health focus begin in NC in 2022

North Carolina Legislative Building

Lower state income taxes and stronger mandates addressing the mental health of law enforcement officers in North Carolina take effect with the new year.

Among the roughly 20 laws going into effect in whole or in part starting Saturday are the start of a multiyear reduction in the individual income tax rate and another round of higher income deductions.

The two-year state budget billwritten by Republican legislators and signed by Democratic Gov. Roy Cooper in November reduces the current 5.25% individual rate to 4.99% for 2022. The law directs that the rate fall incrementally until it reaches 3.99% in 2027.

The budget law also raises the amount of income not subject to taxes through the standard deduction. For example, a married couple filing jointly won't have to pay any taxes on the first $25,500 of income for the 2022 tax year, compared with $21,500 in 2021.

And the per-child tax deduction grows in 2022 by $500. Families making up to $40,000 will now receive a $3,000 per-child deduction — an amount that phases out as incomes increase.

Most tax filers won’t see these changes when they file their returns this coming April, since refunds or payments are based on 2021 rules. Rather, they will surface when returns are filed in early 2023 or estimated tax payments made in 2022.

Still, the increased deductions will result in an another 215,000 state resident returns that won't owe any income tax in 2022, according to Senate leader Phil Berger's office, citing the legislature's nonpartisan staff. That's above the roughly 1 million returns that would have zero tax liability without the changes, Berger's office says.

“Even for those folks that are not dropping off of the tax rolls, the tax bill that they will have to pay will be lower,” Berger said this week.

The tax cuts follow a decadelong effort by Republicans to reduce income taxes, which they say has contributed to sustained economic growth. In 2011, the year GOP lawmakers took control of the General Assembly, there were three individual income tax rates, with the rate reaching 7.75% for the top wage-earners. Critics have said rates have fallen too much for the rich, to the detriment of additional income for items such as education.

Another new law requires law enforcement recruits to receive psychological screenings from a licensed psychologist to determine their suitability for police work before being formally employed to work as an officer or deputy.

Such a requirement had previously been set in administrative rules that could be subject to change and hadn't applied to sheriffs' deputies, according to training officials.

This and another Jan. 1 requirement that officers get access to regular training of mental health and wellness strategies were contained in wide-ranging police reform legislationsigned by Cooper in September.

Another law effective Saturday creates a new felony when an elected local government official asks for or receives financial benefits from the public body the person represents. And public officials in medium- and large-sized cities and counties would be prohibited from awarding money to nonprofits with which they are associated. The law followed a stinging state audit involving the city of Rocky Mount and a council member.

Other laws taking effect Saturday:

  • will raise monetary allowances to serve adult care home residents and to assist parents of foster and adopted children.
  • require local magistrates to receive 12 hours of continuing education annually — up from every two years.
  • require the state Alcoholic Beverage Control Commission to make a “good-faith effort” to provide all liquor brands available to all local boards, which sells the products in their stores.
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