North Carolina Income Tax Calculator - SmartAsset (2024)

Taxes in North Carolina

North Carolina State Tax Quick Facts

• Income tax: 4.75% flat rate
• Sales tax: 4.75% - 7.50%
• Property tax: 0.80% average effective rate
• Gas tax: 40.5 cents per gallon both of regular gasoline and diesel

In 2013, the North Carolina Tax Simplification and Reduction Act radically changed the state’s tax structure. Previously, North Carolina had a progressive income tax, with rates ranging from 6% to 7.75%. The new law introduced a flat rate income tax and more than doubled the standard deduction for North Carolina taxpayers. The effect was a significant overall reduction in taxes for taxpayers of all income levels.

Along with the state income tax, other taxes paid by North Carolinians include sales taxes (to both state and local authorities), property taxes and a gas tax. North Carolina’s estate tax was repealed as part of the 2013 law.

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North Carolina Income Taxes

North Carolina moved to a flat income tax beginning with tax year 2014. For tax year 2023, all taxpayers pay a flat rate of 4.75%. That rate applies to taxable income, which is income minus all qualifying deductions and exemptions, as well as any contributions to a retirement plan like a 401(k) or an IRA.

In North Carolina, taxpayers can claim itemized deductions for charitable contributions, mortgage interest and property taxes. The deductions for the latter two categories cannot exceed $20,000. Most other deductions that were previously available in North Carolina, including the Net Business Income deduction and the College Savings Program deduction, are no longer available as of 2014.

Taxpayers who don’t itemize their deductions can claim North Carolina’s standard deduction. The standard deduction for the 2023 tax year is $12,750 for single filers and $25,500 for joint filers. However, there is no personal exemption in North Carolina for filers, spouses or dependents. To file your federal tax return, you can look into tax preparation software or hire a professional accountant.

North Carolina Sales Tax

The base sales tax in North Carolina is 4.75%. In addition to that statewide rate, every county in North Carolina collects a separate sales tax, which ranges from 2% to 2.75% in most counties. In Durham and Orange counties specifically, there is an additional 0.5% tax which is used to fund the Research Triangle Regional Public Transportation Authority. In sum, that means sales tax rates in North Carolina range from 6.75% to 7.50%. Below are the sales tax rates for all the counties in North Carolina.

Those rates apply to most products in the state as well as some services, including the repair of tangible personal property (including automobiles), laundry service and admissions to entertainment events (e.g. movie tickets). Most types of food are subject to a lower tax rate of 2%. The retail sale of an aircraft is subject to 4.75% sales tax with a maximum of $2,500. The retail sale of a boat is subject to a lower rate of 3% of the purchase price or a $1,500 total, whichever is lower.

North Carolina Property Tax

Many counties in North Carolina collect property taxes at an effective rate (taxes paid as a percentage of home value) of less than 1%, making the state average effective property tax rate 0.80%, which is below the national average. Furthermore, the typical homeowner in North Carolina pays about $1,583 annually in property taxes, which breaks down to over $130 per month.

In general, however, rates are higher in North Carolina’s largest cities. For example, in Mecklenburg County, which includes Charlotte, the effective property tax rate is 1.03%. If you are looking into buying a home in North Carolina or are considering refinancing, our mortgage rates guide has all the information you need about getting a mortgage there.

North Carolina Capital Gains Tax

In North Carolina, both long- and short-term capital gains are treated as regular income, which means the 5.25% flat income tax rate applies.

North Carolina Gas Tax

North Carolina’s statewide gas tax is 40.4 cents per gallon for both regular and diesel.

North Carolina Estate Tax

North Carolina repealed its estate tax in 2013.

North Carolina Unauthorized Substances Tax

According to North Carolina law, anyone who “possesses an unauthorized substance,” including marijuana, cocaine, moonshine, mash and illicit mixed beverages, will have the substances confiscated and must then pay an excise tax within 48 hours.

• Basketball legend Michael Jordan is from Wilmington, North Carolina, where he was famously cut from the varsity basketball team at Emsley A. Laney High School as a sophom*ore.
• North Carolina is one of the top states in the country that produces sweet potatoes.