North Carolina State Tax: Overivew
North Carolina state tax includes a flat personal income tax rate. The state's sales taxes are generally considered to be near the national average and the state's property taxes are relatively low. North Carolina, which doesn't have estate or inheritance taxes also doesn't tax groceries, although some localities do.
[Data for this state tax guide was gathered from a number of sources including the Census Bureau, the state’s government website, the Sales Tax Handbook, and the Tax Foundation. Property taxes are cited as a rate percentage rather than the assessed value.]
North Carolina Income Taxes
North Carolina has a flat rate of 4.75% personal income tax rate. That rate is currently scheduled to drop over the next few years until it reaches 3.99 in 2027.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
- North Carolina doesn't tax Social Security benefits.
- Income from federal government retirement plans, or designated North Carolina state and local government retirement plans, is exempt if the retiree had five or more years of creditable service as of August 12, 1989. This exemption is known as the "Bailey exemption."
- Railroad Retirement benefits are also exempt.
North Carolina Sales Tax
North Carolina's state sales tax is 4.75%. According to the Tax Foundation, localities can add as much as 2.75%, and the average combined rate is 6.98%.
- Groceries: Exempt from state tax, but 2% local tax may apply
- Clothing: Taxable
- Motor Vehicles: Exempt from ordinary sales tax, but taxable under special 3% highway-use tax
- Prescription Drugs: Exempt
What are Property Taxes in North Carolina?
In North Carolina, property taxes paid are generally about .82% of assessed home value, according to the Tax Foundaiton.
North Carolina Property Tax Breaks for Retirees
North Carolina offers a homestead property tax exemption for eligible residents. The state excludes from property taxes a portion of the appraised value of a permanent residence. The owners must occupy the home and be aged 65 or older or totally and permanently disabled to qualify. There are income limits that are listed on the state's website.
North Carolina Gas (Motor Fuel) Tax
Gasoline: Taxed in North Carolina at 40.5 cents per gallon effective January 1, 2023.
Diesel: 40.75¢ per gallon effective January 1, 2023.
North Taxes on Alcohol and Tobacco
| Product | Tax |
|---|---|
| Cigarettes | $0.45 per pack of 20 |
| Other tobacco products | 12.8% of the wholesale price (no more than $0.30 per cigar) |
| Vapor products | $0.05 per ml |
Source: The Sales Tax Handbook
| Product | Tax |
|---|---|
| Beer | $0.62 per gallon |
| Wine | $1 per gallon |
| Liquor | $12.30 per gallon |
Note: The liquor tax is an estimate by the Distilled Spirits Council of the United States and published by the Tax Foundation.
North Carolina Estate and Inheritance Taxes
There is no estate or inheritance tax in North Carolina.
-
-
Should I Trade Stocks or Options?
Answering the question "should I trade stocks or options" will depend on your own risk tolerance, investing objectives and understanding of market dynamics.
-
This Is How You Can Be a Snowbird in Retirement
There’s a lot to consider, and warm weather shouldn’t be the only deciding factor. For instance, will you rent or buy? What’s the tax and health care situation?
-
A Little-Known Tax-Free Way To Help Pay Your Student Loan
Student Debt Employers can provide valuable assistance with employee student loan repayments.
-
Tax Tips for National Preparedness Month
Disaster Preparedness September is National Preparedness Month. These tips can help you secure important documents and information — before a disaster happens.
-
Places That Now Have More Time To Pay Estimated Tax
Tax Deadlines Estimated tax payments are due soon — September 15 in most cases. But many people have more time to pay the IRS due to natural disasters. Are you one of them?
-
IRS Announces Florida Tax Relief Following Hurricane Idalia
Tax Deadline In response to the severe damage caused by Hurricane Idalia, the IRS has extended tax deadlines for affected Floridians.
-
Will Your State Rebate Check Be Taxed for 2023?
State Rebates Here's what the IRS says about taxing 'state stimulus checks' and other special state rebates and what it could mean for you.
-
Most Expensive States for Millionaires in 2023
Income Tax If you earn a lot of money, you may want to avoid these most expensive states for millionaires. Some high earners in these areas could pay income tax rates greater than 50%.
-
Hawaii IRS Tax Deadline Extended After Devastating Wildfires
Tax Relief Some Hawaii tax deadlines have been extended by the IRS following devastating wildfires. Here's what impacted residents should know.
-
Best States for Middle-Class Families Who Hate Paying Taxes
State Taxes Here are the best states for middle-class families with "middle incomes" (due to low tax burdens).
