H259 - 2023 Appropriations Act. (SL 2023-134)

Overview: Part 42 of S.L. 2023-134 (2023 Appropriations Act) includes the following tax-related changes:

• Personal income tax changes that include accelerating the currently scheduled rate reductions for 2024, 2025, and 2026 with successive rate reductions of .5% if General Fund revenues hit certain triggers in certain fiscal years with a floor of 2.49%. (Section 42.1)
• Business tax changes that include:
• Capping the franchise tax at $500 for the first one million dollars of a C Corporation's tax base. (Section 42.6A)
• Repealing the State privilege tax on professionals, effective for taxable years beginning on or after July 1, 2024. (Section 42.7)
• Allowing certain trusts and corporations to be partners of a taxed partnership. (Section 42.21)
• Sales tax changes that include:
• Prospectively exempting from sales tax goods and services, other than alcoholic beverages, sold by a provider of continuing care to its independent living residents. The exemption would not apply to sales of alcoholic beverages, and a provider of continuing care must pay sales and use tax on the purchase price of an item that would be exempt under this provision. (Section 42.10)
• Extending the sunsets on exemptions and refunds for professional motorsports teams. (Section 42.11)
• Aligning the sales tax exemption for parts and accessories used in the repair and maintenance of certain aircraft with the existing sales tax exemption for labor on the same aircraft. (Section 42.12)
• Extending by 5 years the sunset on the exemption for aviation gasoline and jet fuel for use in commercial aircraft. (Section 42.13)
• Expanding the exemption on fuels and consumables used by boats engaged in the transportation of freight on the ocean to also include transport in intracoastal waterways, sounds, or rivers (currently limited to oceangoing vessels on the high seas). (Section 42.14)
• Exempting breast pumps, including repair and replacement parts, and breast pump collection and storage supplies. (Section 42.16)
• Excise tax change that modifies the way in which snuff is taxed from being cost-based to weight-based and an expansion of the tax base to include alternative nicotine products. (Section 42.18)
• Creation of a new excise tax applicable to the gross receipts derived from each ride using a for-hire ground transportation service provider, such as Uber, Lyft, or a taxi service, effective July 1, 2025. The rate will be 1.5% for exclusive ride service and 1% for shared ride service. The proceeds of the tax will be credited to the Highway Fund. (Section 42.19)
• Prohibiting a regional transportation authority from levying the short-term car rental tax in a county that has withdrawn from the authority. This provision applies only to Surry County. (Section 42.20)
• Clarification of the motor fuel tax formula. (Section 42.22)
• Property tax exclusion for real and personal property located at a legacy airport, effective for taxable years beginning on or after July 1, 2024. (Section 42.23)