How Tax Changes Will Affect NC Families

Examples of middle-class North Carolina families who will see their taxes rise if the middle-class tax cuts are not extended.

EXAMPLE 1: Typical North Carolina Family of Four

A typical median-income North Carolina family of four: a married couple with two children earning $63,700 would see a $2,200 tax increase.

•     A tax increase of $1,000 because the Child Tax Credit will fall from $1,000 to $500 per child.

•     A tax increase of $890 because of merging the 10% tax bracket into the 15% tax bracket.

•     A tax increase of $310 because of the expiration of marriage penalty relief that provides a larger standard deduction for married couples.

Total tax increase on this family if Congress fails to act = $2,200

EXAMPLE 2: A Family of Four with a Child in College

A married couple in North Carolina with a 15-year-old at home and a 19-year-old in her second year at the University of North Carolina; the couple’s income is $80,000.

•     A tax increase of $550 because instead of being able to claim the $2,500 American Opportunity Tax Credit to help with college expenses, they will only be able to claim the Hope Credit worth $1,950.

•     A tax increase of $500 because the Child Tax Credit will fall from $1,000 to $500 per child.

•     A tax increase of $890 because of the disappearance of the 10% tax bracket.

•     A tax increase of $310 because of the expiration of marriage penalty relief that provides a larger standard deduction for married couples.

Total tax increase on this family if Congress fails to act = $2,250

EXAMPLE 3: An Upper Middle-Class North Carolina Family

A couple with one child earning $130,000.

•     A tax increase of $890 because of the disappearance of the 10% tax bracket.

•     A tax increase of $3,150 because of a combination of the expiration of marriage penalty relief and the increase in the 25% tax rate to 28%.

Total tax increase on this family if Congress fails to act = $4,040

EXAMPLE 4: A Single Mother with Two Children in North Carolina

A single mother with two children working full-time at $12 an hour (earning $24,000 a year).

•     A tax increase of $1,500 because the Child Tax Credit will fall from $1,000 to $500 per child and less of it will be available to low- and moderate-income working families.

•     A tax increase of $170 because of the disappearance of the 10% tax bracket.

Total tax increase on this family if Congress fails to act = $1,670