How will the budget’s tax changes impact you? Estimate your 2022 taxes here
By Will Doran and
Tyler Dukes
Whether it’s through tax cuts or new raises for state workers, one of the main selling points that helped North Carolina lawmakers finally pass a new state budget was that just about everyone will have more money in their pockets.
Scott Sharpe
ssharpe@newsobserver.com
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Your Share of the Budget
With NC’s new state budget, everyone should see a bit extra in their bank accounts. When it comes to income taxes, anyone who files their taxes with a standard deduction will pay less next year, and possibly nothing at all. Every teacher in the state will get at least a $2,300 bonus and every state employee will get at least a $1,000 bonus. What’s in it for you? This is The N&O’s special report.
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Starting in 2022, state income taxes will go down for everybody due to new tax laws in the budget that North Carolina lawmakers just passed.
Corporations are the biggest winners, with their income tax rate set to hit 0% by 2029 under the new cuts. But regular people will see some benefits, too. The income tax rate for people will drop from 5.25% currently to 4.99% next year, and it will keep gradually decreasing over the next few years until settling at 3.99% in 2026 and beyond.
The cuts to the tax rate will disproportionately help wealthier earners. But a different change that lawmakers also passed, to raise the standard deduction, is aimed at helping low-income people.
The standard deduction is the amount of money someone can make before they have to start paying taxes. By raising it from $21,500 currently to $25,500 next year, that means anyone making less than $25,5000 won’t have to pay income taxes at all. And people making more than that will now owe slightly less in taxes, since the higher standard deduction means a lower taxable income.
Finally, the new tax laws also raise the deductions that people can take for having kids. It applies to lower and middle class families.
Everyone will have different outcomes depending on their marital status, how much money they make and how many kids they have. To see how much money you might owe in taxes next year, enter your data below.
Your 2022 tax estimate is ERROR about $TK, or about TK%, compared to an estimated tax bill of TKequal to your tax estimate in 2021 using the same annual income, filing type and number of children.
BEHIND THE ESTIMATE
Disclaimer
The North Carolina income tax estimate shown here is for taxes in 2022, which people will file in 2023. The calculation uses the standard deduction. Results in reality may differ from the estimate you see in this calculator. For example, if you itemize your deductions or if your adjusted gross income is substantially different than your taxable income, your taxes may be higher or lower. The News & Observer is not a financial services provider, and if you have questions or concerns about your taxes in the future, you may wish to consult a professional.
How was this calculated?
With a filer type of ERROR and a gross annual income of ERROR, your standard deduction is ERROR and a total child tax credit of ERROR at a rate of ERROR for each of your ERROR children. That puts your taxable income at about ERROR.
What's the new tax rate?
The 2021-2023 budget sets the tax rate for filers at 4.99%, down from a previous rate of 5.25%.
What are the new standard deductions?
The new budget sets standard deductions based on the type of filer for the tax year starting in 2022.
Filer type
2021
2022
Married, filing jointly
$21,500
$25,500
Head of household
$16,125
$19,125
Single
$10,750
$12,750
Married, filing separately
$10,750
$12,750
How is the child tax credit calculated?
Depending on how you file, your tax deduction per child depends on your adjusted gross income.
Will Doran reports on North Carolina politics, particularly the state legislature. In 2016 he started PolitiFact NC, and before that he reported on local issues in several cities and towns. Contact him at wdoran@newsobserver.com or (919) 836-2858.
Tyler Dukes is the lead editor for AI innovation in journalism at McClatchy Media, where he leads a small team of journalists that helps the company’s 30 local newsrooms responsibly harness data, automation and artificial intelligence to elevate and strengthen their reporting. He was previously an investigative reporter at The News and Observer in Raleigh, N.C. In 2017, he completed a fellowship at the Nieman Foundation for Journalism at Harvard University. He is a graduate of North Carolina State University and grew up in Elizabeth City, N.C.
With NC’s new state budget, everyone should see a bit extra in their bank accounts. When it comes to income taxes, anyone who files their taxes with a standard deduction will pay less next year, and possibly nothing at all. Every teacher in the state will get at least a $2,300 bonus and every state employee will get at least a $1,000 bonus. What’s in it for you? This is The N&O’s special report.
