Lawmakers say the pay raise for teachers would be the largest the state has seen since 2006.
RALEIGH, N.C. — North Carolina’s top legislative leaders announced a budget framework on Tuesday that includes an average 8% teacher pay raise, significant salary increases for law enforcement and a phased reduction of the state income tax rate.
House Speaker Destin Hall and Senate President Pro Tempore Phil Berger said the agreement resolves the major structural disputes that have kept North Carolina without a full budget since 2023 — the longest such stalemate in the country.
“As best we can tell, (this is) the largest average teacher pay increase at least since 2006 and one of the largest that we’ve seen in probably the last 30 years or so,” Hall said.
The framework would make North Carolina’s starting teacher pay first in the South when factoring in local supplements. Teachers with more than 16 years of experience would receive a $1,000 bonus; those with less experience would receive $500.
State employees would receive an average 3% raise, with larger increases in high-need areas of government. Employees earning less than $65,000 a year would receive a $1,750 bonus; those earning more would receive $1,000. State retirees would receive a 2.5% bonus.
Law enforcement saw some of the largest salary increases in the agreement. SBI and ALE officers would receive an average 20.3% raise including step increases. State Highway Patrol officers would see an average 17.7% raise with steps, with civilian patrol personnel receiving up to 11.5%. Correctional officers would receive an average 15.4% increase and probation and parole officers an average 10.1%. Nearly $40 million would be set aside to provide local law enforcement officers across the state a one-time $1,750 bonus.
On taxes, the agreement repeals existing income tax rate triggers and sets a new reduction schedule. The rate — currently 3.99% — would drop to 3.49% on Jan. 1, 2027, and remain there through 2029. It would then fall to 3.24% through 2032, then to 2.99% through 2034, before two additional trigger-based reductions would eventually bring the rate to 2.49%. There are no changes to the planned corporate income tax phaseout, which is set to reach zero in 2030.
Both chambers also agreed to place a constitutional amendment on the November ballot that would cap the state income tax rate at 3.5%, and to take up a House-passed measure limiting property tax levies.
On the children’s hospital funding dispute, Berger said $208 million in previously held ARPA funds would be released to the North Carolina Children’s Hospital, with further discussions ongoing about whether additional dollars would follow.
Hall and Berger said raises and bonuses would take effect upon enactment of the budget. Appropriations chairs still need to work through individual line items, a process both leaders said would take weeks. The total budget size is still to be determined, though Berger said it would represent roughly 7% growth over the current and upcoming fiscal years combined — about 3.5% per year.
