North Carolina’s tax cuts will cost $900 million. Here is what families lose.

After leaving North Carolina without a comprehensive operating budget for a year, state lawmakers finally approved a spending plan for FY 2026-27. Yet, despite having ample time — and broad public support across party lines — to address affordability concerns, lawmakers made only modest changes to the scheduled personal income tax while preserving the continued reduction and eventual elimination of the corporate income tax. The result is a familiar set of priorities: outsized benefits for the wealthiest households and corporations, paired with limited tax relief and insufficient public investment for everyday North Carolinians.

The final budget delays some of the scheduled personal income tax rate cuts but leaves North Carolina on a path toward increasingly lower rates, resulting in billions of dollars in lost revenue. That’s billions of dollars that could go toward public investment in North Carolinians’ well-being. Under the final budget, the personal income tax rate will decline to 3.49 percent in 2027, remain at that level through 2029, then decline to 3.24 percent in 2030, and eventually reach 2.99 percent in 2033. After 2034, two revenue triggers could reduce the rate further, first to 2.74 percent and ultimately to 2.49 percent. Revenue triggers are a flawed policy that authorize automatic rate cuts when the General Fund reaches a specified threshold, regardless of whether those revenues are needed to address unmet public needs.

What will households receive in return? Most North Carolina households will receive less than $170 from the personal income tax cut next year. Meanwhile, the richest 1 percent can expect an average tax cut exceeding $7,000. For many families, $170 offers little meaningful relief from the rising costs of groceries, housing, utilities, and child care — and it doesn’t cover the hundreds of additional dollars the average household has had to pay at the gas pump this year.

Relatedly, the budget does nothing to shield North Carolina families and local governments from the federal cuts to SNAP food assistance enacted through H.R.1. Counties will be left to bear the $52 million in new SNAP administrative costs this fiscal year, while the budget also shifts any future state share of SNAP benefit costs onto counties, which could total $140 million starting in October 2027.

For everyday North Carolinians, meager tax relief and the potential loss of services like SNAP food assistance are two sides of the same fiscal choice: The state is giving up revenue that could instead be invested in families and communities. In FY 2027, the state will lose $900 million. These losses are projected to grow to $2.6 billion in FY 2028 and continue increasing in the years that follow.

The $900 million in lost revenue — and the even larger losses projected in the years ahead — represents a widening gap between what North Carolinians need to thrive and what the state is willing to invest in their well-being. By preserving tax cuts that overwhelmingly benefit wealthy households and corporations, lawmakers are manufacturing a circumstance of scarcity and hardship for everyday North Carolinians, while directing the greatest benefits to those already most prosperous.