NC could fund our public schools by taxing the rich and corporations

In a few weeks, North Carolinians will vote on a constitutional amendment to limit the income tax rate to 3.5 percent. This amendment would lock in tax breaks for wealthy people and corporations, and it would have lasting impacts on public schools, which rely heavily on funding from state income taxes.

The amendment wouldn’t immediately affect the income taxes that individuals and corporations pay. The income tax rate for individuals will already drop to 3.49 percent in 2027, and the current rate for corporations is 2 percent, with the complete elimination of the corporate income tax scheduled for 2030. However, if approved, the amendment would block lawmakers from putting in place fair revenue options like the Kids Over Corporations and Fair Share for Public Schools Acts, two bills filed during the 2026 legislative session that would raise public funds by taxing profitable corporations and millionaires. Together, these acts could mean historic investments for public schools.

North Carolina’s public schools rely on funding from state income taxes

Lowering income tax rates has significant consequences for all the public services our communities depend on, including public schools. Income taxes from individuals and corporations make up more than half of the state’s General Fund revenue, and more than one-third of this fund is spent on K-12 education. State funding makes up the majority of school districts’ budgets in North Carolina, funding teacher positions, instructional materials, school buses, and more — so income tax revenue has a big impact on our public schools.

An income tax cap of 3.5 percent would have a huge effect on North Carolina’s ability to raise public revenue:

• Compared to the rate limit of 7 percent that’s currently in the state constitution, a 3.5 percent rate limit would mean an estimated revenue capacity loss of about $17 billion dollars — which is half of the state General Fund.[1]

If North Carolina invested an additional $17 billion in public education, the state could raise teacher pay and per-pupil spending to the national average, and fund 40 percent of facilities needs in school buildings across the state.

A lower income tax cap would block recent policy proposals to tax the rich and big corporations

Permanently locking in a 3.5 percent rate on income taxes would also prevent lawmakers from passing legislation that could raise significant revenue for our schools by taxing big corporations and the richest households at higher tax rates. This includes two bills filed in 2026:

• The Kids Over Corporations Act (SB 943) would stop the scheduled elimination of the corporate income tax and instead set the corporate income tax rate at 5 percent. This would put North Carolina’s rate in line with our neighboring states, all of which tax corporate profits at 5 percent or higher. This would bring in $2 billion in revenue that could be spent on community needs like our public schools.
• The Fair Share for Public Schools Act (HB 1073/SB 1016) would create a 7 percent personal income tax rate on income over $1 million and distribute the revenue raised to public schools through the State Public School Fund. This tax on millionaires would raise about $1 billion for schools.

Combined, revenue from these two bills would total $3 billion that could fund major investments in public education statewide, improving learning conditions for kids in every community in North Carolina.

$3 billion would translate to thousands of dollars in new funding per student in every county

To understand how $3 billion from these two bills could impact schools across the state, the map below breaks this funding down by county, showing how it would affect spending per student, as well as supporting significant teacher raises, new staff, and more. These estimates assume that 35 percent of funds would be used to raise teacher pay, 35 percent would be used to hire new teachers, and the remaining 30 percent would be used for other needs, that could include materials, additional staff, transportation, building repairs, and more. Ultimately, any new revenue for public schools could be allocated toward a wide variety of needs in each district, but this analysis is meant to provide an example of the concrete impacts that $3 billion could have on teacher pay, new staff, and more.  (For a table showing data for all 100 counties, see the Appendix.)

With an additional $3 billion in revenue, per-pupil funding could increase anywhere from about $1,900 in Union County to more than $4,600 in Hyde County. While public school districts in every county would see significant impacts, the highest potential increases in per-pupil funding would happen rural counties.

Substantial raises for teachers

These funds could provide teachers with raises ranging from 15 percent to 29 percent in each county.[2] Teacher pay in North Carolina recently has ranked among the lowest in the nation, and higher salaries for teachers could reduce teacher turnover by lowering the likelihood that they leave the profession or leave North Carolina for neighboring states that offer higher pay. Raising teacher salaries could ensure the people educating our kids can afford necessities and don’t have to work multiple jobs to make ends meet.

Hiring new teachers

Funds from raising taxes on millionaires and corporations would also make it possible to fund thousands of additional teaching positions. Statewide, over 10,000 new teaching positions could be hired, more than enough to cover a recent count of teacher vacancies in the 2025-2026 school year. Filling teacher positions would be especially important in districts with the highest vacancy rates, which are mostly in rural areas. These funds could also be used to cover some of the teaching positions that are currently funded locally. This could take some of the pressure off of counties, which are increasingly being asked to fund costs that have previously been funded by the state.

Funds for other needs like counselors, services for students with disabilities, and more

School districts could get $900 million to address other pressing needs. These could include hiring the specialized instructional support staff, such as counselors, social workers, nurses, and psychologists, needed to address mental health challenges among students. As of 2025, zero North Carolina counties met the recommended ratio of students to social workers or psychologists.

These funds could also be used for Exceptional Children (EC) services. Currently, the state covers the costs of services for students with disabilities for up to 13 percent of a district’s students, which is about $5,300 per student. Districts have to cover any additional costs if more than 13 percent of their students need services, which is the case in many districts.

Additional funds could also allow districts to fix outdated buildings and facilities. Many rural school districts rely on state grants to address the aging buildings that shape students’ daily learning environments. New funding could address serious issues like broken air-conditioning, leaky roofs, and mold, and could ensure that students can learn in clean and comfortable classrooms.

Continued tax cuts are hurting our public schools

For over a decade, income tax cuts have been shrinking the funding available for our public schools. Recent proposals to raise taxes on the richest people in our state and on profitable corporations could make a substantial difference for teachers, students, and families across the state, but lowering the income tax cap would stop those policies from moving forward. North Carolina’s children deserve the sound basic education that’s promised in our state’s constitution. An amendment with a lower income tax cap would make that promise even harder to honor.