North Carolina - New Law Imposes A 3% Corporate Income Tax Surtax

Effective for taxable years beginning on or after January 1, 2009, a new law imposes corporate income tax surtax equal to 3% of the corporate income tax payable by the corporate taxpayer for the taxable year. This surtax is in addition to the regular corporate income tax owed, and is due at the time prescribed for filing a corporate income tax return. The law also imposes a graduated surtax on individual income taxpayers, which is similarly effective for taxable years beginning on or after January 1, 2009, and set to expire for taxable years beginning on or after January 1, 2011. In addition, the law generally updates state corporate and individual income tax conformity with the Internal Revenue Code (IRC) as in effect on May 1, 2009 (previously, May 1, 2008), with some exceptions, effective for taxable years beginning on or after January 1, 2008. However, "any amendments to the IRC enacted after May 1, 2008, that increase North Carolina taxable income for the 2008 taxable year become effective for taxable years beginning on or after January 1, 2009." Effective for taxable years beginning on or after January 1, 2009, the law decouples from select federal income tax provisions, including the deferral of recognition of income from discharge of certain business indebtedness as enacted by the federal American Recovery and Reinvestment Act of 2009 under IRC Sec. 108(i). The law also partially decouples from certain IRC §168(k) and IRC §168(n) bonus depreciation provisions.