Top 10 things the legislature did to impact business.

• Author: Mooneyham, Scott

1 SLASHED INCOME TAXES

Lawmakers have long talked about reforming the state's tax structure, and the Republican majority, in just its third year, made the most substantial changes in decades. The three-tiered personal income tax, with its maximum rate of 7.75% and minimum of 6%, will be replaced by a flat rate of 5.8% in 2014, then fall to 5.75% in 2015. The tax rate on corporate income will drop from 6.9% to 6% in 2014 and to 5% in 2015. If the state meets revenue targets, the rate will slide to 4% in 2016 and 3% in 2017. All this could result in an annual tax cut exceeding $600 million, with much of the savings going to businesses. This will make North Carolina more competitive with other Southeastern states, proponents say. Critics counter that this wasn't really reform because legislators failed to address the tax code's biggest flaw--sales tax not being levied on enough service transactions in what is increasingly a service-based economy. They also argue that the overhaul could hurt small-business owners by repealing a two-year-old exemption for personal business income.

FOR MORE ON THIS, SEE THIS MONTH'S CAPITAL GAINS COLUMN, WHICH BEGINS ON PAGE 22.

2 REWORKED UNEMPLOYMENT

Just days after returning to Raleigh, lawmakers passed sweeping changes to avoid higher unemployment-insurance taxes. The recession left the state unemployment system owing the federal government $2.5 billion. If the state pays this off quickly, businesses will avoid four years of automatic tax hikes. To do that, the legislature cut the maximum weekly benefit from $535 to $350 and reduced the duration to no more than 20 weeks. Doing so meant forgoing $780 million of federally paid benefits in the final six months of this year.

3 STAUNCHED FLOW OF MEDICAID MONEY

When it came to expanding Medicaid--a major plank of Obamacare--the legislature just said no, joining several other states in turning down the money. Taking it would have cost North Carolina close to $1 billion over five years, supporters of the move say. But that figure pales compared with the federal funds that would have poured into the state as a result of the expansion--an estimated $15.5 billion over the same period--and the state will not see 25,000 jobs that would have been created, according to a study by the nonpartisan North Carolina Institute of Medicine. Hospital officials criticized the decision, noting that the federal law was designed so the expansion could backfill money lost to Medicare...