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.

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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.

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.]

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North Carolina income tax

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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.

  • Social Security: Not taxable
  • Pensions: Taxable
  • 401(k) and IRA Distributions: Taxable

North Carolina sales tax

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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?

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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 

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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

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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

Swipe to scroll horizontally

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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Kelley R. Taylor
Senior Tax Editor, Kiplinger.com

As the senior tax editor at Kiplinger.com, Kelley R. Taylor simplifies federal and state tax information, news, and developments to help empower readers. Kelley has over two decades of experience advising on and covering education, law, finance, and tax as a corporate attorney and business journalist.