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On January 18, 2026, North Carolina lawmakers unveiled a comprehensive tax reform bill that aims to lower tax rates for individuals and businesses while simultaneously increasing revenue for the state. The bill, known as the North Carolina Revenue Enhancement and Tax Fairness Act, is being hailed as a significant step towards creating a more equitable and efficient tax system.One of the key provisions of the bill is the lowering of individual income tax rates across all income brackets. Under the proposed changes, the highest income tax rate would be reduced from 5.25% to 4.75%, while the lowest rate would be lowered from 3% to 2.5%. These reductions are expected to provide relief for working families and individuals while also incentivizing economic growth and investment in the state.In addition to lowering individual income tax rates, the bill also includes measures to reduce corporate tax rates and simplify the tax code for businesses. The current corporate tax rate of 2.5% would be lowered to 2%, making North Carolina more competitive with neighboring states and attracting more businesses to the state. Furthermore, the bill proposes to streamline the tax filing process for businesses by eliminating certain deductions and credits that complicate the tax code.To offset the revenue loss from lowering tax rates, the bill includes new revenue-generating measures such as expanding the sales tax base to include services that are currently exempt. This broadening of the sales tax base is expected to generate additional revenue for the state while also modernizing the tax system to reflect the changing economy.Overall, the North Carolina Revenue Enhancement and Tax Fairness Act represents a bold and innovative approach to tax reform that aims to strike a balance between lowering rates for individuals and businesses and increasing revenue for the state. Lawmakers are hopeful that these changes will stimulate economic growth, attract investment, and create a more equitable and efficient tax system for the benefit of all North Carolinians.