Lawmakers Propose Slowing Income Tax Cuts to Fund Teacher Raises in Budget Deal

(NORTH CAROLINA) — Republican lawmakers in North Carolina proposed slowing the state’s personal income tax reduction schedule as they work to fund teacher raises in a budget deal.

The legislature has been progressively lowering the rate with a goal of reaching 2.99% by 2033, a timetable that now runs years behind the original proposal timeline. Republican leaders framed the change as a choice to preserve room in the budget for education spending while keeping the tax cut in place.

House Speaker Dustin Hall said the slower pace was tied directly to negotiations over teacher pay. “We’ve continued to reduce that rate and do it in a responsible way that allows us to continue to provide these kinds of raises,” Hall said.

Hall’s comments place the latest debate inside a familiar budget fight in Raleigh, where lawmakers have paired long-term tax cuts with promises to keep spending priorities intact. This round centers on how quickly the state should pursue an income tax reduction while also paying for teacher raises that Republican leaders want in the current budget deal.

The proposal does not stop the personal income tax cut. It delays the stepdown from the accelerated schedule lawmakers had previously proposed and stretches the timeline instead.

Even with that slowdown, the broader tax-cut agenda remains in place. The personal income tax rate is still scheduled to fall to 2.99% by 2033.

A separate piece of the tax plan would continue without change. Lawmakers still plan to phase out the corporate tax rate on the existing schedule, with elimination targeted for 2030.

That split, slowing one tax cut while keeping another on track, drew criticism from the NC Budget and Tax Center, a nonprofit organization that has argued the state cannot absorb more lost revenue without weakening public services. The group said the proposal still leaves communities with fewer resources as costs rise.

Alexandra Forter Sirota, executive director of the NC Budget and Tax Center, said the state was already struggling to support basic programs. “We’re hobbling forward. With underfunding of many of the programs and services that communities rely on, our classrooms are underfunded. Childcare providers are closing. Many health care providers are on the brink of closure with new cuts coming forward.”

Sirota’s criticism points to a deeper dispute over what North Carolina can afford to give up in future revenue. Republican leaders have argued that the state can continue reducing taxes and still meet spending goals if lawmakers move carefully. Budget critics counter that even a slower income tax reduction drains money from services that many communities rely on.

The clash also reflects how Republicans are weighing near-term and long-term political goals. Teacher raises carry immediate visibility in a budget deal, while tax cuts remain central to the party’s broader fiscal program.

Hall presented the revised schedule as a matter of pacing, not retreat. He said the personal income tax stepdown would still happen, only on an extended timeline rather than the faster path lawmakers had discussed earlier.

That approach allows Republican leaders to argue that both priorities remain alive at once. The budget deal can carry teacher raises now, while the income tax reduction continues over a longer stretch of years.

Opponents see a different result. They argue that a slower schedule still leads to less revenue over time, and that the pressure will show up in schools, child care and health care long before the final tax rate arrives.

North Carolina’s debate comes down to speed and sequence, not to whether taxes will fall at all. Under the proposal on the table, lawmakers would keep the income tax reduction, preserve the goal of 2.99% by 2033, continue the corporate tax phase-out toward 2030, and try to make room in the same budget deal for teacher raises.