NC Budget and Tax Center

Doubling the Standard Deduction is insufficient to protect low- and moderate income families

Low-income families actually fare worse under House and Senate tax plans

Proponents of the House plan claim that doubling the standard deduction and child tax credit provide a generous benefit to low- and middle-income taxpayers in North Carolina. However, what proponents fail to acknowledge is that, at the same time, they are eliminating the personal exemption allowance and allowing the state Earned Income Tax Credit to expire, which effectively makes our current tax law a better bet for these taxpayers.

Proponents support this claim by highlighting that doubling the standard deduction would make the state have the most generous treatment of the first dollar of income in the country. This claim is simply false. When comparing the House tax plan to current tax law – which includes a standard deduction, personal exemption, child tax credit and a state Earned Income Tax Credit – low-income taxpayers will see their first dollar of income taxed sooner. As a result, North Carolina would indeed climb in ranks among states; however, not for its generosity, but rather it requiring low- and middle- income taxpayers to pay more income taxes.

Doubling the standard deduction allowance and child tax credit while eliminating the personal exemption allowance and allowing the state EITC to expire does not protect low- and middle-income families in North Carolina, as proponents of the House tax plan contend. These provisions in the House plan are also not sufficient to address the state’s upside-down tax system overall because they are not able to address the total taxes paid, including an expanded sales tax, by low- and middle income taxpayers.

5 Comments


  1. Jack

    June 18, 2013 at 4:34 pm

    The NCGA is setting the stage for our very own gilded age. NC will be a haven for Payday Loan businesses.

  2. Kit

    June 19, 2013 at 8:42 am

    And local businesses will lose out on the beginning of the year sales. All the people I know who get refunds spend them on things they can’t do during the year because of low income. Replacing the broken washer, car repairs, new shoes for the kids, home repairs, etc, etc. Guess they’ll just have to be happy with their tax cuts.

  3. NoGOPinNC

    June 19, 2013 at 11:52 am

    I guess when teachers, cops and other public employees who have seen year after year of stagnant or falling wages stop buying stuff, the wealthy will make it up to all the small businesses that lose profits. Or we can try a new economic plan called trickle up… Where we see what happens when the middle can’t afford to buy anything and eventually even wealthy leaded trinket bargain mart heirs experience a huge loss in business.

  4. Jim Hanson

    June 19, 2013 at 1:55 pm

    It is about time the income tax system is changed to a fairer system.
    The special deductions, exemptions, and credits need to end.
    Compare two workers doing the same job and getting paid the same wage.
    1) The single tax payer is killed in taxes (both federal and state).
    2) The worker who CHOSE to get married and have children gets tons of tax breaks.
    The personal exemption for worker (2) is multiplied by 6 if they have 4 children, while worker (1) gets only one. Then there is the child tax credits and the Earned Income Credit (only for workers with dependents.)

    This is not fair and needs to change to treat every tax payer equal. End discrimination!

  5. Doug

    June 19, 2013 at 8:53 pm

    Quite a bit of hysteria for a change where it is likely none of these people will notice in the first place. They are already getting a huge number of government perks that are not affordable to make up the difference.

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