GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2025
H 1
HOUSE BILL 1032
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Short Title: Repeal Two Percent Local Grocery Tax. |
(Public) |
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Sponsors: |
Representatives Chesser, Parι, Reeder, and Schietzelt (Primary Sponsors). For a complete list of sponsors, refer to the North Carolina General Assembly web site. |
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Referred to: |
Commerce and Economic Development, if favorable, Finance, if favorable, Rules, Calendar, and Operations of the House |
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April 22, 2026
A BILL TO BE ENTITLED
AN ACT to exempt groceries from the local Sales Tax.
The General Assembly of North Carolina enacts:
SECTION 1. G.S. 105‑465 reads as rewritten:
"§ 105‑465. County election as to adoption of local sales and use tax.
The county board of elections shall
prepare ballots for the special election. The question presented on the ballot
shall be "FOR one percent (1%) local sales and use tax on items subject to
States sales and use tax at the general State rate and on food" rate"
or "AGAINST one percent (1%) local sales and use tax on items subject
to State sales and use tax at the general State rate and on food".rate."
."
SECTION 2. G.S. 105‑467 reads as rewritten:
"§ 105‑467. Scope of sales tax.
(a) Sales Tax. The sales tax that may be imposed under this Article is limited to a tax at the rate of one percent (1%) of the following:
(1) A retailer's net taxable sales and gross receipts that are subject to the general rate of sales tax imposed by the State under G.S. 105‑164.4 except the tax does not apply to the sales price of an item taxable under G.S. 105‑164.4(a)(1a).
(2) through (4) Repealed by Session Laws 2011‑330, s. 45, effective June 27, 2011.
(5) The sales price of food that is not otherwise
exempt from tax pursuant to G.S. 105‑164.13 but is exempt from the
State sales and use tax pursuant to G.S. 105‑164.13B.
(5a) The sales price of a bundled transaction that
includes food subject to tax under subdivision (5) of this subsection, if the
price of the food exceeds ten percent (10%) of the price of the bundle. A
retailer must determine the price of food in a bundled transaction in
accordance with G.S. 105‑164.4D.
(5b) Repealed by Session Laws 2013‑3.4(c), effective July 1, 2014, and applicable to purchases made on or after that date.
(6), (7) Repealed by Session Laws 2011‑330, s. 45, effective June 27, 2011.
(8) The presumed sales price of an item of tangible personal property under G.S. 105‑164.12B.
(b) Exemptions and Refunds.
The State exemptions and exclusions contained in Article 5 of Subchapter I of
this Chapter, except for the exemption for food in G.S. 105‑164.13B,
Chapter apply to the local sales and use tax authorized to be levied
and imposed under this Article. The State refund provisions contained in
G.S. 105‑164.14 and G.S. 105‑164.14A apply to the local
sales and use tax authorized to be levied and imposed under this Article. A
refund of an excessive or erroneous State sales tax collection allowed under
G.S. 105‑164.11 and a refund of State sales tax paid on a rescinded
sale or cancelled service contract under G.S. 105‑164.11A apply to
the local sales and use tax authorized to be levied and imposed under this
Article. The aggregate annual local refund amount allowed an entity under
G.S. 105‑164.14(b) for the State's fiscal year may not exceed
thirteen million three hundred thousand dollars ($13,300,000).
."
SECTION 3. G.S. 105‑469 reads as rewritten:
"§ 105‑469. Secretary to collect and administer local sales and use tax.
(a) The Secretary shall
collect and administer a tax levied by a county pursuant to this Article. As
directed by G.S. 105‑164.13B, taxes levied by a county on food are
administered as if they were levied by the State under Article 5 of this
Chapter. The references in this section to Article 39 of this Chapter and
Chapter 1096 of the 1967 Session Laws and Articles 40 and 42 of this Chapter do
not include the adjustments made pursuant to G.S. 105‑524. The
Secretary must, on a monthly basis, distribute local taxes levied on food to
the taxing counties as follows:
(1) The Secretary must allocate one‑half of
the net proceeds on a per capita basis according to the most recent annual
population estimates certified to the Secretary by the State Budget Officer.
The Secretary must then adjust the amount allocated to each county as provided
in G.S. 105‑486(b). The Secretary must include one‑half of the
amount allocated under this subdivision in the distribution made under Article
40 of this Chapter and must include the remaining one‑half in the distribution
made under Article 42 of this Chapter.
(2) The Secretary must allocate the remaining net
proceeds proportionately to each taxing county based upon the amount of sales
tax on food collected in the taxing county in the 1997‑1998 fiscal year
under Article 39 of this Chapter or under Chapter 1096 of the 1967 Session Laws
relative to the total amount of sales tax on food collected in all taxing
counties in the 1997‑1998 fiscal year under Article 39 of this Chapter
and under Chapter 1096 of the 1967 Session Laws. The Secretary must include the
amount allocated under this subdivision in the distribution made under Article
39 of this Chapter.
(b) The Secretary shall require retailers who collect use tax on sales to North Carolina residents to ascertain the county of residence of each buyer and provide that information to the Secretary along with any other information necessary for the Secretary to allocate the use tax proceeds to the correct taxing county."
SECTION 4. G.S. 105‑506.2 reads as rewritten:
"§ 105‑506.2. Exemption of food.
A tax levied under this Article
does not apply to the sales price of food that is exempt from tax pursuant to G.S.
105‑164.13B or to the sales price of a bundled transaction taxable
pursuant to G.S. 105‑467(a)(5a).G.S. 105‑164.13B."
SECTION 5. G.S. 105‑538 reads as rewritten:
"§ 105‑538. Administration of taxes.
Except as provided in this Article,
the adoption, levy, collection, administration, and repeal of these additional
taxes must be in accordance with Article 39 of this Chapter. G.S. 105‑468.1
is an administrative provision that applies to this Article. A tax levied under
this Article does not apply to the sales price of food that is exempt from tax
pursuant to G.S. 105‑164.13B or to the sales price of a bundled
transaction taxable pursuant to G.S. 105‑467(a)(5a). G.S. 105‑164.13B.
The Secretary shall not divide the amount allocated to a county between the
county and the municipalities within the county."
SECTION 6. Section 9 of Chapter 1096 of the 1967 Session Laws, as amended by Section 2 of Chapter 12 of the 1979 Session Laws, Section 3 of Chapter 4 of the 1981 Session Laws, Section 13(e) of S.L. 2001‑427, Section 45.11(c) of S.L. 2003‑284, Section 27(b) of S.L. 2003‑416, and Section 19 of S.L. 2009‑445, reads as rewritten:
"Sec. 9. Distribution. The
Secretary of Revenue must divide the net proceeds of the tax collected under
this division on items other than food to Mecklenburg County and its
municipalities in accordance with the ad valorem distribution method described
in G.S. 105‑472(b)(2). The Secretary of Revenue must distribute
the taxes levied by Mecklenburg County on food to Mecklenburg County and the
municipalities within Mecklenburg County in accordance with G.S. 105‑469(a).
This amount shall be divided between the county and its municipalities in
accordance with the ad valorem distribution method described in G.S. 105‑472(b)(2).
The Secretary of Revenue must reduce the amount distributable to Mecklenburg County under this section by the amount set in G.S. 105‑522. This reduction does not affect the amount allocated to municipalities under this section.
If any provision of this Act or the application thereof to any person or circumstance is held invalid, such invalidity shall not affect other provisions or applications of the Act which can be given effect without the invalid provision or application, and to this end the provisions of this Act are declared to be severable."
SECTION 7. G.S. 105‑164.13B(b) is repealed.
SECTION 8. This act becomes effective October 1, 2026, and applies to sales made on or after that date.