NC HOUSE REPUBLICAN BUDGET - WHAT DOES IT MEAN FOR YOU?

NC House Republicans, led by Speaker Destin Hall, have united to pass the North Carolina House budget for fiscal year 2025-2026—a historic legislative package that is Committed to Carolina, delivering meaningful pay raises for teachers and state employees, targeted tax relief for working families, and cuts to wasteful government spending, including DEI programs.

Below is a point-by-point explanation of each key accomplishment, what it means for you, and how it benefits your family. 

1. No Tax Increases, More Money in Your Pocket

   • What it means for you: The NC House budget preserves your scheduled income tax reduction, lowering the rate from 4.25% to 3.99%, without introducing new taxes or increasing existing ones.

   • How It Helps You: By eliminating wasteful state government spending, the budget prioritizes keeping your tax dollars where they belong—in your wallet. For instance, if you earn $60,000 annually, you’ll avoid new state income tax burdens, giving you more financial flexibility for essentials like groceries, rent, or savings, even as costs rise.

     
     

2. Reinstates the back-to-school sales tax holiday starting in 2026.

   • What it means for you: Starting in 2026, you can buy school supplies, clothing, and other back-to-school items tax-free during a designated period, likely a weekend, as was offered in North Carolina from 2002 to 2013.

   • How it helps you: If you have school-aged children, you save money on items like notebooks, pencils, backpacks, and clothes. For instance, spending $1,000 during the holiday could save you nearly $50, easing the financial strain of back-to-school shopping.

     
     

3. No tax on the first $5,000 in tips from state income tax, supporting service industry workers.

   • What it means for you: If you work in the service industry (e.g., as a server, bartender, or hairdresser), you won’t pay state income tax on up to $5,000 of your tip income each year.

   • How it helps you: This increases your take-home pay. If you earn $5,000 in tips annually, you could save approximately $250-$300 (based on NC’s 4.75% income tax rate in 2023), giving you extra money for bills, savings, or personal expenses.

     
     

4. Increases the standard tax deduction by $500 for individuals and $1,000 for married couples.

   • What it means for you: Your standard deduction, which lowers your taxable income, increases to $13,350 if you’re single or $26,700 if you’re married filing jointly (based on 2024 levels of $12,850 and $25,700, plus the new increase).

   • How it helps you: You pay less in taxes. If you’re single, the $500 increase could save you about $24-$30 annually (at a 4.75% tax rate); if married, you could save $48-$60. This provides modest relief to help with your household expenses.

     
     

5. Funds dozens of new positions at NC DMV and authorizes a privatization pilot program for license renewal.

   • What it means for you: The budget adds staff to the Division of Motor Vehicles and tests a program letting private companies handle license renewals.

   • How it helps you: You may experience shorter wait times at DMV offices for licenses, registrations, or other services due to more staff. The privatization pilot could let you renew your license at private locations, saving you time and making the process more convenient.

     
     

6. Eliminates wasteful spending by cutting nearly 3,000 vacant government positions.

   • What it means for you: The budget cuts funding for nearly 3,000 unfilled state government jobs, redirecting those funds to other priorities.

   • How it helps you: Your tax dollars are used more efficiently, resulting in reduced wasteful spending. This could prevent future tax hikes or service cuts, ensuring your money supports active government services that directly benefit you.

     
     

7. Raises starting teacher pay to $50,000, making NC #1 in the Southeast for entry-level teacher compensation.

   • What it means for you: If you’re a new public school teacher, your starting salary will be at least $50,000, higher than in other Southeastern states.

   • How it helps you: As a new teacher, you earn a competitive salary, supporting your financial stability. If you’re a parent or community member, this attracts quality teachers to your local schools, improving education for your children or community.

     
     

8. Increases teacher compensation by 8.7% over the biennium.

   • What it means for you: If you’re a teacher, your pay will increase by 8.7% over two years, on top of any starting salary boosts.

   • How it helps you: As a teacher, you could see an extra $4,700 over two years (based on an average $54,000 salary in 2023), boosting your income. If you’re a parent, this helps retain experienced teachers, ensuring better education for your kids.

     
     

9. Restores master’s pay, rewarding teachers who pursue advanced training.

   • What it means for you: If you’re a teacher with a master’s degree, you’ll receive additional pay for your advanced education.

   • How it helps you: As a teacher, you’re incentivized to pursue advanced degrees, potentially earning an extra $3,000-$5,000 annually (based on historical rates). If you’re a parent, this means your children benefit from better-educated teachers.

     
     

10. Delivers a 2.5% across-the-board raise for state agency employees, community college staff, and UNC System personnel.

    • What it means for you: If you work for a state agency, community college, or the UNC system, you’ll get a 2.5% salary increase.

    • How it helps you: If you earn $50,000, you’ll gain an extra $1,250 annually before taxes, helping you keep up with inflation and support your family. If you’re a taxpayer, this ensures that skilled workers stay in roles critical to your community, such as public safety or education.

      
      

11. Grants state retirees a 1% cost-of-living bonus in year one and a 2% bonus in year two.

    • What it means for you: If you’re a retired state employee (e.g., former teacher or government worker), your pension will increase by 1% in 2025 and 2% in 2026.

    • How it helps you: If you receive a $30,000 pension, you’ll get an extra $300 in year one and $600 in year two, helping you cover rising costs and maintain your quality of life in retirement.

      
      

12. Restores the Rainy Day Fund to $4.75 billion.

    • What it means for you: The state’s emergency savings fund is fully restored to $4.75 billion to cover future crises like natural disasters or economic downturns.

    • How it helps you: Your tax dollars are protected by this reserve, reducing the chance of future tax hikes or cuts to services you rely on during emergencies, like disaster relief or unemployment support.

      
      

13. Redirects NCInnovation funding toward ongoing Hurricane Helene disaster relief and recovery efforts.

    • What it means for you: Funds originally for a tech startup program are now used to support recovery from Hurricane Helene, which hit in late 2024.

    • How it helps you: If you live in Western North Carolina or were affected by Helene, you’ll benefit from more resources for rebuilding homes, businesses, or infrastructure, easing your financial and emotional burden during recovery.

      
      

14. Delivers $50 million in school safety grants.

    • What it means for you: Schools will receive $50 million to fund safety upgrades, including security systems, mental health resources, and training.

    • How it helps you: If you’re a parent or student, your school will be safer with improvements like cameras, secure entrances, or counseling services, giving you greater peace of mind about school safety.