RALEIGH -- Our state legislature passed House Bill 82 Thursday, and it means changes to some of your taxes.
Some North Carolinians will see a tax cut. Others will see a tax increase. WFMY News 2 uncovered what this updated tax code means for your wallet.
Political science professor Kenneth Fernandez at Elon University told WFMY News 2 the state had to make adjustments to the tax code in order to put more cash in the state budget.
However, Fernandez noticed the changes they chose to make tend to favor the rich and hurt working families, especially those who take the earned income tax credit.
Professor Fernandez explained, "If they make very little income, and they're single and have no kids, really we're only talking about a few dollars, but if you're a large family with a very modest income, then we're talking it could be you know 10-12 percent reduction which could be several hundred dollars."
Your earned income tax credit is going down from 5 percent to 4.5 percent. That will affect nearly 20 percent of taxpayers.
Two other things on the chopping block: no more deductions for your mortgage insurance premium. They're also eliminating the tuition and expenses deduction for students. If you itemize, you won't be able to deduct those expenses from your state income taxes.
Fernandez told us the state would have lost money without these changes. Less money in the budget could mean a tax increase anyway. What he noticed is some of the wealthiest taxpayers will benefit from this.
"It allows individuals, certain deductions are a little bit larger than it used to be a year ago and that will, on average, create about a 3-percent tax reduction for people that itemize their taxes and are of a certain level, certain income," said Fernandez.
Most of these adjustments will only affect people who itemize their taxes, roughly three out of 10 taxpayers.
Fernandez doesn't think this is a radical move, but it's only the beginning. Major tax reform is on the agenda and we could see that in the next couple months.
WFMY News 2