Rep. Prather files North Carolina House bill to restore earned income tax credit

The new bill filed by State Rep. Lindsey Prather seeks to reinstate North Carolina’s earned income tax credit for individuals who qualify under federal guidelines, according to the North Carolina State House.

The bill, filed as HB 1082 on April 28 during the 2025 regular session, was formally listed with the short title: ‘Tax Relief for Working Families Act.’

The following is our breakdown, based on the actual bill text, and may include interpretation to clarify its provisions.

In essence, this bill reenacts North Carolina’s earned income tax credit by restoring a state income tax credit for individuals who qualify for the federal earned income tax credit under Section 32 of the Internal Revenue Code. It sets the state credit at 20% of the federal credit amount and makes the credit refundable, meaning any amount that exceeds a taxpayer’s state income tax liability must be paid to the taxpayer as a refund. Nonresidents and part-year residents must prorate the credit based on their share of North Carolina income. The bill takes effect for taxable years beginning on or after Jan. 1, 2026.

Of the four sponsors of this bill, Prather proposed the most bills (38) during the 2025 regular session.

Bills in North Carolina follow a multi-step process before becoming law. A lawmaker starts by filing a bill, which is assigned to a committee for review. The bill must be read three times in each chamber. If one chamber changes the bill after the other passes it, both must agree on the final version. Once both chambers approve the same bill, it goes to the governor, who has 10 days (or 30 if the legislature is not in session) to sign, veto, or let it become law without a signature.

You can read more about the bills and other measures here.

Prather graduated from the University of North Carolina Asheville in 2008 with a BA.

Prather, a Democrat, was elected to the North Carolina State House in 2023 to represent the state’s 115th House district, replacing previous state representative John Ager.