Franchise Tax
North Carolina gets high marks for its tax competitiveness for businesses, though it could compete even better with rival states if it eliminated or modernized the franchise tax. That’s the finding of a study commissioned by the NC Chamber Foundation. The research by financial services firm EY and the Council on State Taxation concluded that “North Carolina offers one of the most competitive business tax environments in the country’’ based upon its comparison with 11 other states including South Carolina and Georgia.
In a comprehensive measure, EY said earlier this week, North Carolina ranked first. Its total effective business tax rate — all state and local business taxes as a share of gross state product — is 3.2%, the lowest of all 50 states. The U.S. average is 4.5%.
“A competitive tax climate is one of the clearest levers for attracting business investment and driving economic growth,’’ the study said. “North Carolina delivers on that front, with one significant outlier. (The) franchise tax generates just 1.8% of total state tax revenue, but because it taxes net worth rather than profitability, it can disproportionately burden well-capitalized businesses in the growth and investment stage, including the innovative companies North Carolina is competing to attract and retain.’’
But keeping that edge is more likely if lawmakers repeal the franchise tax, which the state chamber says hurts the state’s overall business tax climate as “a complex and onerous burden” and “an additional tax on capital investment in North Carolina,’’ the study said. The chamber has been pushing lawmakers on the issue for years, without success.
The burden falls especially hard on “the start-up innovator firm, such as a young biotech firm,” according to the study. “Economies expand through the accumulation of physical and financial capital, human capital, and technological progress. As such, levying a tax on capital is akin to taxing job creation or innovation in terms of effects on economic growth, with effects that are potentially longer lasting given the timeline for capital accumulation.’’
At present, North Carolina’s franchise tax equals 0.10% of gross state product — five times the national average (0.02%) and more than three times the average of the states in the EY study.
DMV Waits
After years being plagued by never ending wait times, North Carolina’s Division of Motor Vehicles has picked up speed. Gov. Josh Stein announced Thursday that the wait times at DMV offices have been reduced significantly compared to a year ago, when customers waited in long lines for hours outside in the summer heat.
“In-office wait times are down almost 90% since last year, with the average customer waiting only 22 minutes. That compares to an average time of nearly three hours in the summer of 2025,” Stein, a Democrat, said Thursday during a news conference at the Albemarle Building in downtown Raleigh. The 22-minute average wait is based on visits in July, Stein’s office said in a news release. Summertime brings an uptick in demand.
The DMV is part of the Department of Transportation, which is a Cabinet agency in Stein’s administration.
Online DMV transactions, which were a result of Senate Bill 245 that Stein signed into law in 2025. SB 245 allowed drivers to renew their driver’s license remotely if their most recent transaction was in person, as well as obtaining a full provisional license remotely. With more than 337,000 customers completing their transactions online, that’s 337,000 fewer people in line at DMV offices, Stein said.
Over 1,000 more appointments are available across the state each day, Stein said, compared to March of this year. Customers can upload documents like their proof of insurance from their phones instead of bringing a print copy to a DMV office.
The governor encouraged DMV customers to walk in to offices directly, and said they no longer need to make an appointment unless they want one. The DMV lists live wait times for various locations across the state.
Minority Business Office
A state office that worked to increase business opportunities for companies owned by members of underrepresented groups was abolished in the North Carolina budget passed in July. The shutdown of the Office for Historically Underutilized Businesses, established in 1999 under an executive order by Democratic Gov. Jim Hunt, took effect immediately, leaving many businesses scrambling to understand its impacts.
Now, a coalition of groups is holding a statewide town hall on Sept. 10 at the International Civil Rights Center & Museum in Greensboro to answer questions business owners, community members, policymakers and others in attendance may have about the closure of the office and other provisions related to minority contracting in the budget.
“Thousands of North Carolina firms lost the one office, in existence for 27 years, that was established to assist them with state government and public sector contracting opportunities. Most of these businesses found out about the HUB Office’s elimination after the fact. No one is talking about the devastating impact this is having on our HUB and small businesses,” said Gerry McCants, president of the Greensboro Business League, in a news release shared with The News & Observer.
The league, one of the leading organizations for the event, educates, advocates and litigates on behalf of Black-owned businesses, according to its website. The town hall “is not a meeting about what happened, but more so about what we do next to rebuild the infrastructure, create new pathways, and ensure our HUB and small businesses are positioned to compete for public-sector opportunities,” McCants said.
Data centers may face new tariffs under new proposals
Data center operators in North Carolina may be required to pay more for electricity, and for the power grid upgrades that keep them running, starting in 2027. On Wednesday, the state’s Utilities Commission started officially seeking proposals for a large load tariff — essentially a new, standardized set of electric rates that data center operators will have to pay if they’re powered by Duke Energy.
In several other states, large load tariffs aim to prevent everyday customers from having to pay for power that supplies data centers, many of which require massive amounts of energy. To keep up with growing power demand from data centers, Duke Energy recently estimated it will need to build 14 gigawatts of new energy generation across several states — enough to power over 10 million households — in the next five years.
In response, Duke committed in July to the Ratepayer Protection Pledge — a White House-led agreement that calls for data centers to pay for their own energy costs. While the pledge itself wasn’t binding, a large load tariff would make it a reality.
After Duke signed the pledge, N.C. Gov. Josh Stein publicly called for the state to consider such a tariff.
What’s actually in that tariff could drastically change how much everyday customers pay to cover the cost of Duke’s new power plants and transmission lines, several experts said at a Utilities Commission hearing on Thursday.
“This is an unprecedented amount of load in a very short period of time,” said Jay Lucas, the manager of energy rates for North Carolina’s Public Staff, the state-run utility watchdog group. “As it stands now, Duke Energy will have a lot of work to separate which costs will be for these large loads … and some costs that will not benefit other customers.”
As of right now, the discussion over large load tariffs will play out as a part of Duke Energy’s rate cases for its two North Carolina subsidiaries. In both eastern and western North Carolina, Duke is seeking a rate increase in the mid-9% range for residential customers, among other things. Because those rate cases are set to wrap up by Jan. 1, the state Utilities Commission will likely decide whether to implement a system-wide large load tariff this fall.
Two proposals for large load tariffs have already been submitted: one from Duke Energy, and one from Public Staff.
Duke Energy’s plan would act mainly as an “overlay” to existing tariffs that it has already imposed on large customers. It would also only apply to customers that sign a new contract with Duke after Jan. 1.
Public Staff’s plan wants the new tariffs imposed in addition to existing tariffs. It would apply to all large customers that are “taking service” after Jan. 1, not just those with new contracts. If a large customer breaks its contract early, Public Staff’s plan calls for the customer to pay 100% of the bills for the remaining service, compared with 25% in Duke’s plan.
Both plans call for contracts with large customers to last for 10 to 15 years at a minimum, and require at least two years of advance notice if a customer terminates the contract early.
Aviation Development
Landing JetZero burnished the Triad’s reputation as “the new hub for aviation innovation’’ that creates more advanced manufacturing opportunities in North Carolina as long as economic leaders assemble shovel-ready sites and improve workforce training. That’s the message from Lee Lilley, the state’s commerce secretary. He told a Winston-Salem audience on Tuesday, “there’s so much pressure, particularly in advanced manufacturing, to get products out of the factory. (Companies) want to go someplace where they can build quick, find talent and start making product right away.’’ Lilley and other state recruiters attended last month’s Farnborough International Airshow in London. In meetings with about 25 aerospace and defense companies, he said he learned the global industry “sees North Carolina and specifically this region as the new hub for aerospace innovation.’’