Republican lawmakers in North Carolina have steadily reduced the state’s income taxes for more than a decade. On Tuesday, voters will decide whether to make it more difficult for future lawmakers to reverse those cuts as affordability becomes one of the central issues of the midterm elections.

The ballot measure, titled “Lower Taxes for All NC,” is a proposed constitutional amendment that would reduce North Carolina’s maximum allowable income-tax rate from 7% to 3.5%. The change would halve the ceiling on what the state can charge individuals and corporations through income taxes, but it would not immediately lower anyone’s tax bill.

North Carolina’s individual income-tax rate is currently 3.99%. Under legislation already approved, the rate is scheduled to decline to 3.49% in 2027, 3.24% in 2030 and 2.99% in 2033.

The amendment concerns the state’s future taxing authority. If approved, raising income-tax rates above 3.5% would require another constitutional amendment. That process requires approval by three-fifths of both chambers of the state legislature, followed by approval from a majority of voters. The scheduled rate reductions could proceed under existing legislation, but any future increase above the new constitutional ceiling would face that additional hurdle.

Supporters say the restriction would protect taxpayers from future tax increases. Critics counter that it could leave North Carolina with fewer options for raising money to maintain public services during an economic downturn.

The proposal is part of the Republican-dominated legislature’s broader response to the rising cost of living. In a Reuters/Ipsos poll conducted Tuesday, 48% of registered voters identified affordability as their top issue. The Reuters/Ipsos poll examined the issues voters were focused on ahead of the midterm elections.

North Carolina voters will also decide Tuesday whether to allow the state legislature to limit how much local governments can raise property taxes. Nationwide, nine measures related to income and wealth taxes are on ballots in six states, according to Ballotpedia. One of the most prominent is California’s Proposition 40, which would impose a one-time 5% wealth tax on individuals with a net worth of more than $1 billion.

Republicans’ tax-cutting record in North Carolina

The income-tax amendment is the latest effort to reduce or restrict taxes under North Carolina’s Republican-controlled legislature.

Republicans won control of both chambers of the state’s General Assembly in 2010 after years of Democratic control and have remained in power since 2011. For years, they have held enough seats to enact legislation without support from the two consecutive Democratic governors who have occupied the executive office since 2017.

Republican lawmakers used that influence in 2013 to pass a tax overhaul that replaced North Carolina’s graduated individual income-tax brackets with a flat tax. They have also reduced corporate taxes.

In 2018, North Carolina voters approved a constitutional amendment reducing the maximum allowable income-tax rate from 10% to 7%. Fewer than 60% of voters supported that proposal. The amendment on Tuesday’s ballot would cut the ceiling in half again, to 3.5%.

The measure passed the Republican-controlled state Senate and state House before being placed on the ballot. Democratic Gov. Josh Stein did not need to approve it because North Carolina governors cannot veto proposed constitutional amendments.

Stein has nevertheless made clear that he opposes the proposal. At a press conference in May, he said the initiative could allow the legislature to cut taxes for wealthy individuals while increasing pressure to raise the state’s sales tax to replace lost revenue.

“It will not put any more money in anyone’s pockets,” Stein said. “But what it will do is make regular people pay the consequences of it next year and years into the future because it will insulate the very wealthy from ever having an increase in their income tax.”

Stein also said placing the limit in the state constitution would make it more difficult for future legislatures to change.

Republican state Sen. Michael Lee, a sponsor of the legislation that put the income-tax cap on the ballot, said the restriction would build on the legislature’s earlier tax reductions.

“Our tax reforms have produced more than a decade of strong revenue growth while letting people keep more of what they earn, and this amendment locks in that progress,” Lee said in a statement earlier this year to North Carolina news station WECT.

Revenue and public services

The proposal has raised questions about how North Carolina would finance government services and what services might face cuts if income-tax revenue declines.

The state collected approximately $17 billion in individual income taxes during the 2024-25 fiscal year, according to the North Carolina Office of State Budget and Management. That amount represented nearly half of the state’s $34.6 billion in General Fund revenue.

The money supports public education, health care and other government services. The amendment would not reduce tax revenue immediately, but opponents argue that making future income-tax increases more difficult could leave lawmakers with two primary alternatives: cutting services or raising revenue through other sources, including higher sales taxes.

Alexandra Sirota, executive director of the NC Budget & Tax Center, has warned that restricting income taxes could also limit the state government’s ability to respond to changing economic conditions. In a September statement, she said the amendments would not provide an immediate tax cut.

“These tax amendments won’t cut anyone’s taxes,” Sirota said. “But they would make it more difficult for future lawmakers to fairly raise the revenue needed to meet costs through a higher rate on millionaires, billionaires, and highly profitable corporations.” The NC Budget & Tax Center published Sirota’s statement and a fact sheet on the tax cap.

A national debate over tax limits

North Carolina is not the only state reconsidering how much its government should be allowed to tax residents and businesses.

Colorado voters will decide Tuesday between competing proposals. One would replace the state’s 4.4% flat income tax with a graduated rate reaching as high as 8.4%; the other would cap income-tax rates at 4.4%.

In Iowa, voters are considering a measure that would require a two-thirds legislative majority to increase income taxes. Washington voters will decide whether to repeal a newly enacted 9.9% income tax on household income exceeding $1 million.

California voters are also set to weigh one of the most contentious measures on Tuesday’s ballot: a 5% tax on billionaires’ wealth. The proposal has been opposed by prominent figures including Google cofounder Sergey Brin. Fortune reported on California’s Proposition 40 and the broader debate over wealth-tax rates in a separate report.

The ballot initiatives come as voters report difficulty affording goods and services. Inflation rose to 3.6% in September from 3.4% in August, according to the Commerce Department. The war in Iran has also pushed oil prices up about 68% over the past year, contributing to higher prices for products that rely on gasoline during production or distribution. Fortune has reported on the inflation figures and oil prices.

Polls show Democrats gaining traction in some deeply Republican states as they argue that Republicans in power have not done enough to address affordability. In Texas, former Republican attorney general Ken Paxton is slightly behind Democrat James Talarico in a Senate race that faces long odds for Democrats because no Democrat has won statewide office in Texas since 1994.

In Michigan, Dr. Abdul El-Sayed holds a double-digit lead over Republican opponent Mike Rogers in another closely watched Senate contest.

Republicans have also sought to address affordability concerns at the national level, where Republican members control both chambers of Congress. Earlier this year, Republicans helped advance the 21st Century Road to Housing Act, bipartisan legislation intended to address high housing costs by accelerating homebuilding and reforming zoning.

The story was originally featured on Fortune.com: https://fortune.com/2026/11/03/republicans-democrats-midterm-election-north-carolina-income-tax-cap-voting-laws/