Rep. Butler files bill in North Carolina House to modify income tax rate triggers

A new bill filed by State Rep. Deb Butler in the North Carolina House seeks to revise the mechanism for reducing individual income tax rates based on General Fund revenue thresholds, according to the North Carolina State House.

The bill, filed as HB 459 on March 19 during the 2025 regular session, was formally listed with the short title: ‘Income Tax Rate Reduction Trigger Mods.’

The following is our breakdown, based on the actual bill text, and may include interpretation to clarify its provisions.

In essence, this bill modifies the income tax rate reduction trigger for North Carolina, effective for taxable years beginning on or after Jan. 1, 2025. The bill outlines adjustments to the individual income tax rate from 4.99% in 2022 to 4.25% in 2025, with a potential decrease to 3.99% after 2025. It introduces a rate reduction mechanism where, if the total General Fund revenue exceeds a specified trigger amount for a fiscal year, the tax rate will be the greater of either the prior year’s rate decreased by 0.5% or 2.49%. The trigger amounts increase incrementally each fiscal year, starting at $33.042 billion in FY 2025-26 and reaching $39 billion by FY 2032-33. The act becomes effective when it becomes law.

Of the four sponsors of this bill, Pricey Harrison proposed the most bills (26) during the 2025 regular session.

Bills in North Carolina follow a multi-step process before becoming law. A lawmaker starts by filing a bill, which is assigned to a committee for review. The bill must be read three times in each chamber. If one chamber changes the bill after the other passes it, both must agree on the final version. Once both chambers approve the same bill, it goes to the governor, who has 10 days (or 30 if the legislature is not in session) to sign, veto, or let it become law without a signature.

You can read more about the bills and other measures here.

Butler graduated from the University of Tennessee, Knoxville in 1983 with a BA and again in 1986 from Wake Forest University School of Law with a JD.

Butler, a Democrat, was elected to the North Carolina State House in 2017 to represent the state’s 18th House district, replacing previous state representative Susi Hamilton.