NC Provides New Deduction for Net Business Income

As detailed by the NC DOR on their website in Directive PD-12-2, NC law provides a deduction in calculating North Carolina taxable income for individuals equal to “An amount not to exceed fifty thousand dollars ($50,000) of net business income the taxpayer receives during the taxable year.  In the case of a married couple filing a joint return where both spouses receive or incur net business income, the maximum dollar amounts apply separately to each spouse’s net business income, not to exceed a total of one hundred thousand dollars ($100,000).  For purposes of this subdivision, the term ‘business income’ does not include income that is considered passive income under the Code.” 

Inherent to determining if this deduction is applicable to your tax situation is the determination if you or your spouse have “business income.”  The directive says that business income includes Schedule C, Schedule F, and Schedule E income as long as the income is not “passive income.” 

Our Firm will be actively communicating this information to our clients, but should you have any questions regarding the discussion please contact our Firm to discuss. 

brad@mcarthurco.com

704.544.8429