Constitutional Amendment to Keep the State Income Tax Rate from Being Raised Higher than 3.5%

The law today

Article V, Section 2(6) of the North Carolina Constitution currently provides that the rate of tax on incomes shall not in any case exceed seven percent; the session law rewrites that limit to three and one-half percent. Under S.L. 2023-134 the personal income tax rate was cut to 3.99% in 2026, with further half-point cuts triggered by General Fund revenue thresholds; the Fiscal Research Division's May 2026 forecast anticipates 3.49% in 2027 and 2.99% in 2028 and after.[1][9]

Official fiscal estimate

The General Assembly's Fiscal Research Division (May 19, 2026 fiscal note on S.B. 1080) estimated no fiscal impact, because the personal income tax rate is expected to be below the maximum allowable rate under existing revenue triggers, the statutory corporate income tax rate is and will be below the maximum, and election costs are anticipated to be minimal.[9]

Arguments made for

• Sen. Michael Lee (R-New Hanover) said in a statement to WECT: "Our tax reforms have produced more than a decade of strong revenue growth while letting people keep more of what they earn, and this amendment locks in that progress. I'm encouraging North Carolinians to vote yes in November. This is their decision to make, and it's a chance to put a real, lasting protection in the constitution for every taxpayer in the state."[2]
• Sen. Ralph Hise (R-Mitchell) said in a May committee meeting: “I fundamentally disagree with the state concept of an income tax.”[10]

Arguments made against

• Gov. Josh Stein (D) called the amendment, at a May 27, 2026 press conference, "a con, a cynical shell game and a millionaire protection cap," and said: "We have to have a balanced budget every year when revenues are needed. You know who's going to have to pay? It's you. Regular people every time they go buy something through the sales tax."[3]
• The NC Budget & Tax Center said: "Income tax limits don't impact the total state and local taxes paid by North Carolinians. A limit on the income tax rate won't keep total state and local taxes low. In reality, states with income tax limits or no income tax tend to rely more on sales taxes, property taxes, and fees to fund the programs and services that are necessary to move our communities forward."[4]

On record in support

• Sen. Michael Lee (R-New Hanover), a primary sponsor, said he is encouraging North Carolinians to vote yes.[2]

On record in opposition

• Gov. Josh Stein (D) criticized the amendment at a May 27, 2026 press conference.[3]
• NC Budget & Tax Center published an analysis critical of the amendment.[4]
• NC By the People, a ballot referendum committee of 20 organizations, is campaigning against all three amendments, including this one.[11]
• North Carolina Association of Educators, a coalition member, was quoted in the coalition's release saying the amendments would drain billions from schools.[11]