North Carolina

North Carolina

Budget Cycle
Biennial

Governor Submits Budget
March

Fiscal Year Begins
July 1 

Governor Signs Budget 
June-August 

Budget Links 

FY2026-2027 (proposed)
FY2024-2025 (enacted)
FY2022-2023 - revised (enacted)
FY2022-2023 (enacted)
FY2020-2021 (proposed)




Proposed Budget - Fiscal Years 2026 - 2027

On March 19, North Carolina Governor Josh Stein introduced a biennial budget for fiscal years 2026 and 2027. The budget proposes $33.6 billion in general fund spending for fiscal 2026, an increase of $2.3 billion, or 7.4 percent, over the fiscal 2026 base budget and $34.3 billion in fiscal 2027, an increase of $700.7 million, or 2.1 percent, over fiscal 2026. The consensus revenue forecast estimates general fund revenues at $34.9 billion in fiscal 2026 (increase of 0.5 percent over the revised fiscal 2025 estimate) and $34.1 billion in fiscal 2027 (decrease of 2.4 percent from fiscal 2026). The budget includes an unappropriated reserve balance of $8.0 billion and closing balances are projected to be $364.1 million in fiscal 2026 and $183.7 million in fiscal 2027.

 


Proposed Budget Highlights

The governor’s proposed biennial budget makes key investments in the economy, families, education, workforce, health care, and public safety to help ensure every North Carolinian has a shot at a brighter future.

Revenue Changes

  • Maintains the individual income tax rate at 4.25 percent (instead of falling to 3.49 percent in 2027) and the corporate income tax rate at 2.25 percent (instead of falling to zero after 2029). 
  • Establishes a refundable Working Families Tax Credit equal to 20 percent of the federal Earned Income Tax Credit for eligible families.
  • Provides a refundable child and dependent care credit equal to 50 percent of the federal credit for eligible families.
  • Converts the existing child tax deduction to a refundable Child Tax Credit worth up to $150 per child.
  • Reestablishes a back-to-school sales tax holiday for three days in August.

Improving Public Education

  • Increases average teacher pay by 10.6 percent, reinstates master’s pay, and provides a stipend to teachers for school supplies. Existing principals will receive a 6 percent increase over the biennium.
  • Supports all students with disabilities and adds funds for high-dosage tutoring.
  • Provides universal school breakfast at no cost to students, adds school health personnel and school resource officers, and pilots a program to reduce cell phone distractions in school.

Building a Strong Workforce

  • Increases funds to support free community college for high demand skills training.
  • Provides nonrecurring funds in the first year of the biennium for growing the health care workforce.
  • Allocates funds for apprenticeships and work-based learning grants.
  • Increases the maximum weekly unemployment benefit and extends the time benefits are available.
  • Funds a one-time tax credit for employer unemployment contributions to support businesses facing recent increases in costs and those recovering from Hurricane Helene.
  • Provides funds to support reentry from the criminal justice system, including post-secondary college funding and funds for health care services prior to release. 

Child Care and Early Education

  • Increases subsidized child care rates.
  • Curbs the closure of NC Pre-K centers by increasing reimbursement rates, adding new seats, and providing necessary administrative funds.
  • Allocates funds to support the transition from Pre-K to kindergarten for more than 3,500 children.

Public Safety

  • Increases salaries for correctional officers and youth counselors by 6.5 percent to make their compensation more competitive, increasing the starting pay to more than $40,000.
  • Increases salaries for other public safety personnel by 3 percent, including state troopers, probation and parole officers, and juvenile court counselors. 
  • Provides stable funding for the Voice Interoperability Plan for Emergency Responders to enable first responder communications over a secure radio network during disasters.
  • Creates a new Fentanyl Control Unit of prosecutors, drug agents and financial investigators to help stop the flow of narcotics.
  • Allocates funds to expand the use of medication to treat opioid use disorder to all adult correctional institutions following a successful pilot program. 

Health Care Investments

  • Invests funds to improve the recruitment and retention of Direct Support professionals who help people with disabilities.
  • Allocates funds to increase the rates of primary care and obstetricians/gynecologist providers in the Medicaid program.
  • Provides funds in the second year of the biennium to support the creation of up to 200 Innovations Waiver Slots and 75 Traumatic Brain Injury Waiver slots.
  • Allocates funds to create co-response teams in 50 rural counties across the state.

Other Priorities

  • Funds a 2 percent across-the-board salary increase for state employees and a 2 percent cost-of-living bonus to retirees.
  • Provides a $1,000 bonus for net appropriation and receipt-supported state employees paid from the General Fund.
  • Increases employer contributions to the State Health Plan by 5 percent in each year of the biennium.
  • Establishes the IMPACT Center to advance projects that substantially improve government operations and cut inefficiencies in state programs and policies. 
  • Proposes a $4 billion bond to modernize old and outdated school buildings.