Tax changes like the car repair tax approved by the General Assembly as part of a state budget adopted earlier this month will slightly increase taxes paid by many lower income North Carolinians, according to an analysis by NC Budget and Tax Center while those in upper income brackets will get significant tax breaks.
Among the major types of individual purchases affected by the sales tax change are car repairs, installation of an appliance or repairs to a computer. The change could also affect bigger ticket items like the installation of a mobile home, but the state Department of Revenue is still working out the details of what will be covered and what will not.
Car repair businesses are already required to charge sales tax on parts they sell as part of fixing your car, but under current law, they don’t charge sales tax on the labor involved.
That changes March 1, when both parts and labor will be subject to the tax. People at several garages said that labor makes up about half the cost of an average repair, so the change will effectively double the amount of sales tax people pay to get their car fixed.