December 17, 2013: ATTN: NC TAXPAYERS. The North Carolina General Assembly recently enacted a bill which becomes effective for tax years beginning January 1, 2014. Under new North Carolina law, the current graduated income tax rates will be replaced with a flat tax rate of 5.8% in 2014. All NC taxpayers will be allowed to take a higher standard deduction, but may no longer claim a personal exemption for themselves, their spouse, children, or any other qualifying dependents. Additionally, many deductions and tax credits that impact North Carolina withholding tax are no longer available for tax years beginning January 1, 2014.
As of January 1, 2014, the North Carolina Department of Revenue will reset all current withholding elections to zero (meaning NC will automatically withhold the maximum amount of State income tax from your paycheck, unless you instruct otherwise).
By now, you should have received notice from your employer prompting you to assess and complete a new Employee Withholding Allowance Certificate. To update your North Carolina withholding election for the 2014 tax year, submit a completed NC-4EZ or NC-4 form to your employer prior to year end to ensure the correct amount of State income tax is withheld for any pay periods on or after January 1, 2014.
Please contact your CPA if you have questions or concerns regarding your particular situation.