Sales & Use Taxes
Orange County's local sales tax rate is 2.75%, which is comprised of five different sales tax levies -- the 1% Article 39; the half-percent Articles 40, 42 and 43; and the quarter-cent Article 46. Counties must share Articles 39, 40 and 42 revenues with municipalities within its territory either on a per capita or ad valorem basis. Orange County currently distributes this revenue on a per capita basis. In addition, a portion of the county's share of Articles 40 and 42 must be dedicated to public school capital needs. By resolution, the Board of County Commissioners shares 50% of the revenue from the Article 46 with local school districts for capital needs.
Article 39 is the original local-option sales tax for counties authorized by the N.C. General Assembly in 1971. The tax was set at one percent of eligible sales. Beginning in October 2003, Article 39 contains food tax as instructed in G.S. 105-469. Article 39 Sales and Use Tax is distributed on a point of delivery basis. The point of delivery allocation method distributes the revenue to the county in which goods are delivered. Point of delivery is typically where the sales transaction occurs. However, larger items such as construction materials may be delivered to the purchaser’s home or where the goods are to be used. The delivery site is where the sales taxes are credited for the sales tax collection, regardless of where the retailer is.Link to page
The 1983 General Assembly authorized counties to levy an additional one-half percent local option sales tax as an added source of revenue to meet growing financial needs and to reduce reliance on other revenues, such as property tax. When originally enacted, counties were required to set aside 40 percent for the first five years of the levy and 30 percent for the next five years to meet public school capital needs. In 1998, the General Assembly enacted legislation to extend the county-required earmarks. Article 40 Sales and Use Taxes are collected in a statewide pool and then allocated to the county area based on county population percentage after statutory adjustments. Statutory adjustments require the population proportion to be multiplied by an adjustment factor. The adjustment factor for Orange County is currently set at 1.15, meaning the county receives additional revenue based on what would be distributed to a county on a strictly per capita basis.Link to page
The NC General Assembly authorized counties to collect a half-cent sales tax under Article 42 beginning in FY 1986-87. The initial legislation mandated that counties set aside 60 percent of their share of the tax for public school capital outlay for 11 years. In 1998, the Legislature made the 60 percent share permanent. Public school capital outlays are defined as: funds appropriated for school capital outlay; increases in county school capital reserve funds; and funds used to make debt service payments on any school bonds issued after the date five years prior to the effective date of the sales tax. Article 42 Sales and Use Tax is distributed on a point of delivery basis, as is the Article 39.Link to page
In August 2009, the NC General Assembly ratified the Congestion Relief and Intermodal Transport Fund Act, allowing Orange, Durham and Wake Counties to generate new revenue for public transportation. These revenues include a one-half cent sales tax (Article 43 sales tax) that can be levied in each county if approved by public referendum. Voters in Orange County approved the referendum on Nov. 6, 2012, by a 59-41 margin. A regional transportation public authority, known today as Go Triangle, was created to help administer these revenues and work on public transit service projects involving all three counties. The Orange County Bus and Rail Investment Plan was created to help expand transit services in Orange County in particular. The revenues from Article 43 are allocated by the NC Department of Revenue to GoTriangle, which then allocates a portion of that money to Orange County through reimbursements for projects that either offer new public transit services or expand existing ones.Link to page
In November 2011, Orange County voters approved the Article 46 One-Quarter Cent (1/4 cent) County Sales and Use Tax, which became effective on April 1, 2012. The Board of County Commissioners approved a 10-year commitment to allocate the proceeds as follows: 50% to be allocated between the county’s two school systems, based on the Average Daily Membership (ADM) of each school system, for the dedicated purpose of funding capital projects, including but not limited to, facility improvements at older schools and the procurement of technology. 50% to be allocated to Orange County Economic Development initiatives, including funding infrastructure improvements needed to recruit new businesses and expand existing businesses; funding for business loans and grants to grow businesses in Orange County; targeted business recruitment, retention, and expansion efforts; and community branding and marketing.Link to page
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