North Carolina – Tax Reform Legislation Enacted

SALT Report 2765 – On July 23, 2013, North Carolina Governor Pat McCrory signed legislation that includes amendments to the following sales and use tax provisions.

Repealed Exemptions

Effective January 1, 2014, the following sales and use tax exemptions will be repealed:

  • Nutritional supplements sold by a chiropractic physician at his office to a patient as part of the patient’s treatment plan,
  • Meals and food products served to students in dining rooms regularly operated by state or private educational institutions or student organizations,
  • Sales of newspapers by newspaper street vendors, newspaper carriers making door-to-door deliveries, and in vending machines,
  • Bread, rolls, and buns sold at a bakery thrift store,
  • Back-to-school sales tax holidays,
  • Energy Star sales tax holidays

Extended Sunset Date for Refunds

Effective July 23, 2013, the sunset dates for the sales and use tax refunds available to passenger air carriers, motorsports teams or sanctioning bodies, and professional motorsports teams have been extended from January 1, 2014 until January 1, 2016.

Tax rate for Electricity and Piped Natural Gas

Effective July 1, 2014, the combined general tax rate of 7% will apply to the gross receipts derived from sales of electricity and piped natural gas.

Service Contracts

Effective January 1, 2014, service contracts will be subject to the 4.75% rate of tax. Service contracts include a warranty agreement, maintenance agreement, repair contract, or other agreement in which the seller agrees to maintain or repair tangible personal property.

For Further Information

North Carolina State Legislature – House Bill 998, Laws 2013

Office of North Carolina Governor Pat McCrory – Press Release