The Privilege of Doing Business

Fred, a man with brown hair, wears a pale blue shirt, red and black striped tie, and a black suit.By Fred Moreno

For decades, North Carolina citizens have had the opportunity to work in several different industries and practices. Certain dealings require that person to first obtain a professional license. This is typically done by passing an exam and satisfying certain education or training requirements. Once all required conditions are completed to obtain a required professional license, the North Carolina citizen is well on their way to pursue success in their chosen field. However, it is typically soon after obtaining such a license that the person is first introduced to the North Carolina Privilege Tax. The North Carolina Privilege Tax is a tax imposed for the purpose of “carrying on the business, exercising the privilege, or doing the act named.”[1] This tax is required to be paid on an annual basis at a cost of $50. Most professional licensees regulated by occupational licensing boards qualify as individuals subject to the annual North Carolina Privilege Tax. This includes veterinarians, physicians, real estate brokers, real estate appraisers, funeral directors, certified public accountants, etc.

Throughout the decades following its inception, few changes have been made to the way the North Carolina Privilege Tax was collected. Even with emerging technological advances, licensees were unable to file, pay, or renew their privilege license online. In the 2023 legislative session of the NC General Assembly, bills were introduced to modify the North Carolina Privilege Tax by reducing the amount of professionals that were subject to its requirements. These bills stood to make the most drastic changes to the tax since 2014, when municipal privilege taxes were eliminated. The municipal privilege tax allowed municipalities to levy their own privilege license tax in addition to the state tax.

The 2023 general session ended without the filed bills becoming law; however, language was included in the final budget which addressed the North Carolina Privilege Tax. Session Law 2023-134, also known as the State Budget, abolished the privilege tax for several licensed professionals as it repealed N.C. Gen. Stat § 105-41 and N.C. Gen. Stat. § 93-12(12). This change goes into effect on July 1, 2024, for the upcoming fiscal year.

[1] N.G. Gen. Stat. § 105-33(a).