NC Senate Gives Final Approval to Responsible Spending Plan

Four Democrats joined Republicans in supporting the budget

Initiates additional personal income tax cuts, with goal of hitting 1.99%

Sets aside additional funds for Hurricane Helene relief, state employee and teacher pay increases, and public safety needs

Raleigh, N.C. — Today, the North Carolina Senate gave final approval to its 2025–27 fiscal biennium budget, which includes additional tax relief for all North Carolinians, pay increases for state employees and teachers, funding for hurricane recovery needs, and targeted reductions to rein in unnecessary government spending.

The budget received a 30–15 bipartisan vote, with four Democrats joining the Republicans in supporting the responsible spending plan. The budget now goes to the N.C. House of Representatives for consideration.

The first year of the budget spends about $32.6 billion, and the second year spends about $33.3 billion. This modest increase allows us to replenish our state’s Rainy Day fund and address the most pressing needs.

Top highlights of the budget include:

• Funding to replenish the Rainy Day fund to $4.75 billion, putting it back to what it was prior to Hurricane Helene.
• Setting aside $700 million for Hurricane Helene Recovery needs, plus $633 million in temporary and permanent repurposing of funds within the Department of Transportation to support recovery.
• An across-the-board 1.25% pay increase in the first year of the biennium for most state employees, plus a $3,000 bonus over the biennium.
• Teachers will receive an average 2.3% pay increase in FY 2025–26 and an average increase of 3.3% over the biennium, plus a $3,000 bonus over the biennium.
• On average, teachers will receive additional compensation of 8.9% over the biennium.
• A $3,000 bonus over the biennium for local law enforcement officers across the state.
• Initiating guaranteed tax relief for all North Carolinians by cutting the personal income tax rate to 3.49% in 2027 and 2.99% in 2028.
• Adjusting the tax rate revenue triggers to reach a 1.99% personal income tax rate.
• Increasing support for NC Children’s, a partnership between the UNC and Duke health systems to build the state’s first and only freestanding children’s hospital, by $638.5 million and exempting it from certificate of need reviews, for a total of $855 million in state support.

To see more budget highlights broken down by area, click here.