New Service Tax Now in Effect for Some North Carolina Businesses

Date: March 15, 2016 Last Edit: March 17, 2016

Passing along higher costs to customers could hamper business growth and state’s economic competitiveness.

New Service Tax Now in Effect for Some North Carolina Businesses

Small businesses in some service industries are now forced to charge customers more. As of March 1, any North Carolina business that performs “repair, maintenance and installation services” on tangible personal property now has to collect a sales tax on every transaction they make.

This means home improvement projects, car repairs and delivery and installation of appliances from stores like Home Depot or Lowe’s are all more expensive for consumers now. The state sales tax rate is 4.75 percent, but total tax rate in some municipalities can add up to more than 7 percent.

WRAL.com reports that the tax is expected to generate $166 million in revenue, but will be offset by other tax cuts. However, time will tell how this new service tax will impact North Carolina’s small businesses.

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