Higher sales tax: $240/year for average home, city says

You’d pay more for clothes, restaurant meals and other items — in exchange for expanded transit and roads across Mecklenburg County

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An increase in Mecklenburg’s sales tax to 8.25% would raise billions for roads and transit upgrades — prices would rise slightly on most things you buy

by Steve Harrison
WFAE

Mecklenburg voters will likely decide in November on whether to increase the countywide sales tax from 7.25% to 8.25% to fund a multi-billion dollar transportation plan.

So far, most of the focus has been on what the plan will build: roads, new rail lines, more frequent bus service and vastly more on-demand “micro transit,” which is similar to Uber.

But how much would residents pay?

The Charlotte Area Transit System and the City Council have not focused on the cost to residents, which would be substantially larger than a typical property tax increase.

For instance, Ed McKinney, the city’s point person for the mobility plan, showed a slide in June at a Public Transit Advisory Committee meeting that gave a cost estimate. But he did not read aloud that the city estimates the increased tax would cost the average household in Mecklenburg $240 a year. The city estimates the average low-income household would pay an additional $132 a year.

A slide from a city presentation last month shows the “household impact” of a higher sales tax would be $20/month, or $240/year, for the average household. (From City of Charlotte presentation)

The town of Matthews opposes the plan because it probably won’t include money to build the Silver Line light rail to the town. Mayor John Higdon said he plans to display on the town website his estimates for the tax burden, which he puts at $290 a year for the median Mecklenburg household. For residents in his town — which is wealthier than the county overall — he estimates the tax would cost households $370 a year.

The city said its calculation comes from the federal government’s Consumer Expenditure Survey for the southeast U.S., adjusted for inflation for 2025.

Higdon said he used a different method. He took the Census Bureau’s estimate for the median household income in Mecklenburg County, which is $84,500. That’s also higher than the median household income for the southeast U.S., which is about $73,000.

An increase of 1 percentage point in the sales tax adds little to the cost of any individual purchase — it’s just 20 more cents on something that costs $20 — but over the course of a year, that additional money adds up.

Is the correct number $240 a year? $290 a year?

Impossible to say. It’s a ballpark guesstimate either way. The main point: It’s a substantial hike to local taxes.

You can try to estimate your household’s tax burden. The sales tax is applied to things like clothes, toys, electronics including TVs, restaurant and bar food and drinks, furniture and books. Some items are exempt, such as medicine, most groceries and cars.

The state has information about what is subject to the sales tax here.

Here are some other things to consider about the sales tax:

As a way to raise money, the sales tax has some inherent benefits

The biggest: Part of it is paid by people who don’t live in Mecklenburg County. Citing a one-page Charlotte Regional Business Alliance study, the city says 30% of the sales tax proceeds will be paid by non-Mecklenburg residents. The alliance didn’t respond to questions from WFAE and Transit Time about its methodology.

It’s unclear what the exact percentage is, but clearly a significant chunk of the sales tax comes from people who don’t live here. Some people are here on business. Others are commuters. And some are people who come to Mecklenburg to shop, go out to eat and go to concerts and sporting events.

Sales taxes are, however, considered regressive taxes

Wealthier households would pay more in absolute terms because they consume more. But studies have shown that sales taxes consume a greater share of a low-income families’ income than they do for wealthier households.

(Property taxes — local government’s other main source of revenue — are also considered regressive because low-income residents pay a greater share of their income toward housing, and thus the property tax.)

Sales taxes paid by businesses could also translate to higher prices

The city estimates that roughly 30% of the sales tax revenue would be generated by non-Mecklenburg residents, and about 35% will come from residents. The rest would be paid by businesses.

Some of those costs will be ultimately paid for by Mecklenburg residents, however, even if it’s not a direct item on your receipt. For instance, if you build a new deck on your house, you won’t pay sales tax on the contractor’s bill. But a contractor who buys $8,000 worth of supplies in Mecklenburg County would pay an extra $80 for the roads/transit tax. That would be passed on to the consumer.

North Carolina already charges sales tax for some home repair services, like repairing windows.

Other taxes/fees are going up

Mecklenburg County increased property taxes in fiscal year 2025 and for fiscal year 2026. The county estimates the median household will pay a combined $74 in higher property taxes for those two increases.

The city of Charlotte did not raise property taxes this year. But it did increase them last year, a hike that cost the median homeowner $49 annually.

The biggest hikes have been fees homeowners pay for garbage, storm water and water service. In fiscal year 2025, the city said those hikes would cost the median homeowner an extra $67 a year. For the upcoming fiscal year, the median homeowner will pay $90 more.

That’s a two-year tax-and-fee hike of $280. If you add the transit sales tax, that’s a two-year increase of $520.

What the tax would do

Of course, any tax increase must be weighed against the benefits it provides. The city of Charlotte and other proponents say the tax increase or roads and transit will be transformational, and that it’s critical for a fast-growing region like Charlotte.

Mecklenburg Commissioner Leigh Altman said on WFAE’s “Charlotte Talks with Mike Collins” this week that the mobility plan would help low-income workers, allowing them to get to work faster. She also said the plan will enable so-called “choice” riders to use transit by making it more convenient.

The proposed sales tax increase is expected to generate $19.4 billion over 30 years. In the first year, the tax would likely bring in about $325-330 million.

By state law, at least 40% of the money from the tax must be spent on roads or road-related projects such as sidewalks and street lights.

No more than 40% can be spent on rail transit, and 20% can be spent on other transit uses, like buses and new on-demand “micro transit.”

The road money is a windfall for Charlotte and the six Mecklenburg towns

The city has said that the sales tax would generate more than $130 million a year countywide for roads and road-related projects — money that Charlotte and the six Mecklenburg towns would be free to spend on streets, sidewalks, crosswalks, streetlights and redesigning intersections.

Charlotte’s share is estimated at $102 million for roads in the first year and $5.7 billion over 30 years. The towns get smaller amounts, but the figures still represent 10% to 20% of the towns’ budgets:

Mecklenburg’s towns and the city of Charlotte would receive millions for roads and road-related projects with the new tax. (City of Charlotte presentation)

Charlotte has a website that details potential projects. But as of now, there are no public cost estimates and no timeline for the projects that would be built in the first few years.

Charlotte envisions spending its road money all over the city, but it hasn’t released specifics and says those decisions would be made later. (City of Charlotte presentation)

There would be roughly $66 million annually for buses and micro transit

The bus mobility plan doesn’t call for many new bus routes. Instead, the focus is increasing the frequency on the 15 highest-ridership routes so buses arrive every 15 minutes, as opposed to every 20 minutes or more. All other routes would have buses arriving at least every 30 minutes.

CATS also plans to give some bus routes “signal priority” so they don’t have to stop at as many red lights.

The money would also be spent on 2,000 new bus benches and shelters.

It appears most of the money would go to expanding a new “micro transit” service that mimics Uber. CATS started this in north Mecklenburg in February and plans to add 18 additional zones.

Rail transit receives the most attention

The transit law calls for the Red Line commuter rail line to Lake Norman to be built first. After that, CATS has prioritized building the Silver Line from the airport to Bojangles Coliseum; then completing the Gold Line streetcar to the east down Central Avenue and to the west along Beatties Ford Road; and then extending the Lynx Blue Line to Pineville.

It’s an ambitious project list, and CATS said it can build and operate the trains for roughly $130 million annually in today’s dollars.

But it’s important to remember what was promised when voters chose not to repeal the existing half-cent sales tax for transit in 2007.

At the time, the Lynx Blue Line had just opened from uptown to I-485/South Boulevard. Leading up to the repeal vote, CATS pledged to voters that the half-cent sales tax would build:

• The Blue Line extension from uptown to I-485 near Cabarrus County.

• The streetcar through central Charlotte.

• The Red Line to Lake Norman.

• Bus-rapid transit from uptown to Matthews.

CATS did build the Blue Line extension — but it had to cut the line short and terminate it at UNC Charlotte to save money.

It shifted construction and operations of the streetcar to the city of Charlotte.

It didn’t have enough money to build the Red Line (which was also held up by Norfolk Southern’s ownership of the tracks), nor any sort of bus-rapid transit to Matthews.

There are many reasons. The biggest is that CATS underestimated how much it would cost to build and operate the trains.

CATS over-promised 18 years ago. Is it doing so again?

Steve Harrison is a reporter with WFAE, Charlotte’s NPR news source. Reach him at sharrison@wfae.org.

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Discussion of transit plan on ‘Charlotte Talks’

“Charlotte Talks with Mike Collins” held a robust discussion of the proposed transit and transportation plan this week, with county commissioner Leigh Altman, Action NC political director Robert Dawkins and WFAE’s Steve Harrison. You can listen here:

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