North Carolina Tax Guide 2025
Explore North Carolina's 2025 state tax rates for income, sales, property, retirement, and more. Learn how North Carolina compares nationwide.
Navigating the complexities of state taxes can be daunting, but understanding North Carolina's tax landscape is essential for residents and newcomers alike.
In this guide, we'll explore key components of The Tar Heel State's tax system, from income and sales taxes to property taxes and retirement benefits.
North Carolina state tax: Overivew
In North Carolina, residents benefit from a flat 4.5% income tax, making it easy to know what to expect. Sales taxes are around the national average, with property taxes on the lower side.
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The state doesn't have estate or inheritance taxes, and most groceries are tax-free, though some localities may add their own rules. All in all, it's a state that makes taxes a bit more manageable.
[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 tax
North Carolina has a flat rate of 4.5% personal income tax rate. That rate is currently scheduled to drop over the next few years until it reaches 3.99 in 2027.
North Carolina retirement taxes
- Social Security: Not taxable
- Pensions: Taxable
- 401(k) and IRA Distributions: Taxable
North Carolina sales tax
North Carolina's state sales tax is 4.75%. According to the Tax Foundation, localities can add as much as 2.25%, and the average combined rate is 7%.
- 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 is the property tax rate in North Carolina?
In North Carolina, property taxes are 0.63% of assessed home value, according to the Tax Foundation.
North Carolina Property Tax Breaks for Retirees
North Carolina offers a homestead property tax exemption for eligible residents. The state excludes from property tax, a portion of the appraised value of a permanent residence. The owners must occupy the home and be 65 or older or totally and permanently disabled to qualify. Income limits also apply.
North Carolina gas tax
Gasoline: $0.35 per gallon
Diesel: $0.35 per gallon
Source: The Sales Tax Handbook
North Carolina taxes on alcohol and tobacco
North Carolina tobacco taxes
Product | Tax Amount |
|---|---|
Cigarettes | $0.45 per pack of 20 |
Other tobacco products | 12.8% of the wholesale price (no more than $0.30 per cigar) |
Source: The Sales Tax Handbook
North Carolina alcohol taxes
Product | Tax Amount |
|---|---|
Beer | $0.62 per gallon |
Wine | $1 per gallon |
Liquor | state controlled |
Source: The Sales Tax Handbook
North Carolina estate and inheritance tax
There is no estate or inheritance tax in North Carolina.
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