North Carolina SB 595: Primary Care Payment Reform Task Force.

Bill Text

GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2025

SESSION LAW 2026-31
SENATE BILL 595

*S595-v-5*
AN ACT TO MAKE VARIOUS CHANGES TO THE REVENUE LAWS; TO SHIFT
ENFORCEMENT OF VAPOR DIRECTORY VIOLATIONS TO THE ALE DIVISION; TO
ENHANCE TAX FORECLOSURE AND SPECIAL ASSESSMENT COLLECTION
EFFORTS; TO UPDATE LAWS RELATED TO CREDIT UNIONS; TO UPDATE THE
REFERENCE TO THE INTERNAL REVENUE CODE; TO PROTECT DISABLED AND
OLDER ADULTS FROM FINANCIAL EXPLOITATION AND TO UPDATE THE
SAVINGS BANK LAWS TO INCREASE ALIGNMENT WITH THE COMMERCIAL
BANKING LAWS; TO PROVIDE A METHODOLOGY FOR RETAILERS TO ROUND
CASH TRANSACTIONS DUE TO THE ELIMINATION OF THE PENNY; AND TO
INCREASE COMPENSATION FOR MEMBERS OF THE BOARD OF TRUSTEES OF
THE PIEDMONT AUTHORITY FOR REGIONAL TRANSPORTATION.

The General Assembly of North Carolina enacts:

PART I. PERSONAL INCOME TAX CHANGES
SECTION 1.1.(a) G.S. 105-153.5(c1) reads as rewritten:
"(c1) Other Additions. Adjustments. – The following other adjustments shall be made in
determining North Carolina taxable income:
(1) S Corporations subject to the provisions of Part 1A of this Article, partnerships
subject to the provisions of this Part, and estates and trusts subject to the
provisions of Part 3 of this Article must add any amount deducted under
section 164 of the Code as state, local, or foreign income tax.
(2) A shareholder of an S Corporation subject to the provisions of Part 1A of this
Article may deduct the aggregate amount of losses or deductions of an S
Corporation pursuant to the provisions of G.S. 105-131.4.
(3) A shareholder of an S Corporation subject to the provisions of Part 1A of this
Article must add the aggregate amount of losses or deductions of an S
Corporation included in the shareholder's adjusted gross income to the extent
the losses or deductions exceed the shareholder's combined adjusted bases,
determined in accordance with G.S. 105-131.3, in the stock and indebtedness
of the S Corporation."
SECTION 1.1.(b) This section is effective for taxable years beginning on or after
January 1, 2026.
SECTION 1.2.(a) G.S. 105-153.5A reads as rewritten:
"§ 105-153.5A. Net operating loss provisions.
...
(g) Limitation. – The provisions of this section apply only to individuals, estates, and
trusts."
SECTION 1.2.(b) G.S. 105-153.5A(a) reads as rewritten:
"(a) State Net Operating Loss. – A taxpayer's State net operating loss for a taxable year is
the amount by which business deductions for the year exceed gross income for the year as
determined under the Code adjusted as provided in G.S. 105-153.5 and G.S. 105-153.6. The

Page 2 Session Law 2026-31 Senate Bill 595
amount of a taxpayer's State net operating loss must also be determined in accordance with the
following modifications:
(1) No State net operating loss deduction shall be allowed.
(2) The amount deductible on account of losses from sales or exchanges of capital
assets shall not exceed the amount includable on account of gains from sales
or exchanges of capital assets.
(3) The exclusion provided by Code section 1202 shall not be allowed.
(4) No deduction shall be allowed under G.S. 105-153.5(a1) for the child
deduction.
(5) The deductions which are not attributable to a taxpayer's trade or business
shall be allowed only to the extent of the amount of the gross income not
derived from such trade or business.
(6) Any deduction under Code section 199A shall not be allowed.
(7) The amount of the taxpayer's excess business loss, as defined under the
provisions of section 461(l) of the Code, shall be fully allowed as a State net
operating loss."
SECTION 1.2.(c) Subsection (a) of this section is effective when this Part becomes
law and applies retroactively to taxable years beginning on or after January 1, 2022. Subsection
(b) of this section is effective for taxable years beginning on or after January 1, 2026. The
remainder of this section is effective when it becomes law.
SECTION 1.3.(a) G.S. 105-160.2 reads as rewritten:
"§ 105-160.2. Imposition of tax.
(a) Scope. – The tax imposed by this Part applies to the taxable income of estates and
trusts as determined under the provisions of the Code except as otherwise provided in this Part.
The taxable income of an estate or trust is the same as taxable income for such an estate or trust
under the provisions of the Code, adjusted as provided in G.S. 105-153.5 and G.S. 105-153.6,
except that the adjustments provided in G.S. 105-153.5 and G.S. 105-153.6 are apportioned
between the estate or trust and the beneficiaries based on the distributions made during the
taxable year. G.S. 105-153.6.
(b) Tax Base. – The tax is computed on the amount of the taxable income of the estate or
trust that is for the benefit of a resident of this State, or for the benefit of a nonresident to the
extent that the income (i) is derived from North Carolina sources and is attributable to the
ownership of any interest in real or tangible personal property in this State or (ii) is derived from
a business, trade, profession,