This past quarter, the NC Department of Revenue issued a directive providing more clarification on a tax cut for business owners. The NC DOR may release and work through additional details, but at this point it appears that actively participating business owners will be able to exclude up to $50,000 in taxable income from their 2012 (and forward) income tax return. This new provision appears to apply to income earned as a sole proprietor (reported on Schedule C) as well as business income and profits passed on through a K-1 document from an Partnership or S Corporation. If both spouses on a tax return have business income they could potentially exclude up to $100,000 from NC taxable income. With an average NC tax rate of 6-7%, this has the potential to save an indivdual business owner up to $3,500 a year in NC taxes. I hope this starts your weekend out right if you did not already know about this provision!
Even in the CPA circles this provision has not been widely publicized so feel free to share the news with your fellow NC business owners.