As the voice of business on Jones Street, the NC Chamber’s government affairs team closely monitors legislative and policy developments so you don’t have to. We regularly share updates on activity at the General Assembly that could impact your business and North Carolina’s broader economic competitiveness.

With that in mind, today we are providing the following update on state tax and budget developments as lawmakers continue to navigate an unresolved budget and key fiscal policy decisions heading into 2026.

North Carolina leaders are currently engaged in a policy debate over future spending priorities and tax policy, with the Governor, House, and Senate holding differing views on the path forward. State agencies continue operating under a continuation budget and mini budget appropriations, which restricts new program funding and makes new appropriations to critical state priorities and functions.

Several key issues continue to be sticking points between the House and Senate, including:

• Teacher and state employee compensation,
• Funding related to capital projects, and
• The pace of scheduled personal and corporate income tax cuts, which continue to decrease under current law. The individual rate fell to 4.25% in 2025 and is scheduled to decline again in 2026, while the corporate income tax is on a statutory path to 0% by 2030.

House leaders have raised concerns about a potential fiscal cliff tied to revenue triggers, while Senate leadership has continued to emphasize the importance of maintaining scheduled tax cuts as part of North Carolina’s long-term economic growth strategy.

Additional Perspective

In a recent interview with Colin Campbell on the WUNC Politics Podcast, NC Chamber President and CEO Gary Salamido was asked about the budget negotiations. The conversation provides helpful context on the policy differences driving the impasse, scheduled income tax cuts, and the importance of predictability and competitiveness to North Carolina’s business climate. Listen here >

NC Chamber Tax Priorities Looking Ahead

As North Carolina looks ahead to 2026, the NC Chamber’s efforts to strengthen the state’s pro-growth, pro-jobs tax climate are focused on eliminating the franchise tax entirely. For years, the NC Chamber has advocated for repealing the franchise tax, a duplicative and burdensome levy that continues to hinder economic growth. While recent reforms have provided some relief, the tax remains complex and onerous. Fully abolishing the franchise tax is essential for North Carolina to maintain its competitive edge and support long-term economic growth.

As discussions continue at the General Assembly, the NC Chamber will closely monitor developments and keep members informed on legislative and fiscal decisions that impact North Carolina’s business community.