What’s New for Tax Year 2019

North Carolina Individual Income Tax Extension

Effective January 1, 2019, state law permits an automatic extension to file your North Carolina income tax return if you certify that you were granted an automatic extension to file your federal income tax return.  (For more information on the child deduction, see Page 7 of Form D-401, North Carolina Individual Income Tax Instructions.)

Veterans Benefits and Transition Act

The Veterans Benefits and Transition Act of 2018 (PL 115-407 signed into law December 31, 2018) amended the Servicemembers Civil Relief Act to allow the spouse of a servicemember to elect to use the same state of residence as the servicemember for state tax purposes.  Beginning with taxable year 2018, this election can be made regardless of when or where the taxpayers were married.  (For more information on the child deduction, see Page 5 of Form D-401, North Carolina Individual Income Tax Instructions.)

Form D-400 Affirmation

The affirmation statement for the D-400 and accompanying schedules and statements has been clarified to state that upon signing the return, the taxpayer is declaring and certifying that the taxpayer has examined the return and all accompanying schedules and statements, and that they are true, correct, and complete.

N.C. Standard Deduction Amount Increased

The N.C. Standard deduction for each filing status is increased for tax year 2019.  To determine the N.C. standard deduction amount for your filing status, see Page 13 of Form D-401, North Carolina Individual Income Tax Instructions.

Charitable Contributions

Beginning with tax year 2019, N.C. law was changed to conform to federal law that allows a federal income tax exclusion to taxpayers over the age of 70 1/2 that make qualified charitable distributions from an individual retirement plan.  This change eliminates the corresponding N.C. adjustments to taxable income that were previously required.

Change in Tax Rate

The income tax rate imposed on an individual's North Carolina taxable income for tax years beginning on or after January 1, 2019 is reduced from 5.499% to 5.25%.

Form D-400 Schedule AM No Longer Year Specific

Schedule AM is no longer year specific and may be used to amend any tax period eligible to be amended under N.C. law.  Taxpayers will now be required to enter the calendar year or other tax year being amended in the appropriate fields at the top of Schedule AM.  (For more information on Form D-400 Schedule AM, see page 21 of Form D-401, North Carolina Individual Income Tax Instructions.

Other 2019 Legislative Changes

For information on other changes that affect tax year 2019, see 2019 Tax Law Changes.