Overview of North Carolina Taxes
North Carolina now has a flat state income tax rate of 5.25%. The average effective property tax rate for the state is below the national average. There is a statewide sales tax and each county levies an additional tax. Retired? Use our Retirement Income Tax Calculator.
Number of State Personal Exemptions
Your Income Taxes Breakdown
|Tax Type||Marginal |
|Total Income Taxes|
|Income After Taxes|
* These are the taxes owed for the 2019 - 2020 filing season.
Your 2019 Federal Income Tax Comparison
- Your marginal federal income tax rate
- Your effective federal income tax rate
- Your federal income taxes
Total Estimated 2019 Tax Burden
Total Estimated Tax Burden $
Percent of income to taxes = %
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Our income tax calculator calculates your federal, state and local taxes based on several key inputs: your household income, location, filing status and number of personal exemptions. Also, we separately calculate the federal income taxes you will owe in the 2019 - 2020 filing season based on the Trump Tax Plan.
How Income Taxes Are Calculated
- First, we calculate your adjusted gross income (AGI) by taking your total household income and reducing it by certain items such as contributions to your 401(k).
- Next, from AGI we subtract exemptions and deductions (either itemized or standard) to get your taxable income. Exemptions can be claimed for each taxpayer as well as dependents such as one’s spouse or children.
- Based on your filing status, your taxable income is then applied to the the tax brackets to calculate your federal income taxes owed for the year.
- Your location will determine whether you owe local and / or state taxes.
- Last Updated: January 1, 2020...read more
When Do We Update? - We regularly check for any updates to the latest tax rates and regulations.
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- Our Tax Expert
Jennifer Mansfield, CPA Tax
Jennifer Mansfield, CPA, JD/LLM-Tax, is a Certified Public Accountant with more than 30 years of experience providing tax advice. SmartAsset’s tax expert has a degree in Accounting and Business/Management from the University of Wyoming, as well as both a Masters in Tax Laws and a Juris Doctorate from Georgetown University Law Center. Jennifer has mostly worked in public accounting firms, including Ernst & Young and Deloitte. She is passionate about helping provide people and businesses with valuable accounting and tax advice to allow them to prosper financially. Jennifer lives in Arizona and was recently named to the Greater Tucson Leadership Program.
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Taxes in North Carolina
North Carolina State Tax Quick Facts
- Income tax: 5.25%, flat rate
- Sales tax: 6.75% - 7.50%
- Property tax: 0.86% average effective rate
- Gas tax: 36.45 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.
A financial advisor in North Carolina can help you understand how taxes fit into your overall financial goals. Financial advisors can also help with investing and financial plans, including retirement, homeownership, insurance and more, to make sure you are preparing for the future.
North Carolina Income Taxes
North Carolina moved to a flat income tax beginning with tax year 2014. For tax year 2019, all taxpayers pay a flat rate of 5.25%. 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.
Taxpayers who don’t itemize their deductions can claim North Carolina’s standard deduction. The standard deduction for the 2019 tax year is $10,000 for single filers, $20,000 for joint filers and $15,000 for heads of household. 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 Durham and Orange counties, 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 7.5%. Below are the sales tax rates for all the counties in North Carolina.
Sales Tax Rates(Updated January 2020)
|County||State Rate||County Rate||Total Sales Tax|
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%. Aircraft and boats also face a lower rate of 3% of the purchase price, or $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 0.86%, which is below the national average. Furthermore, the typical homeowner in North Carolina pays about $1,378 annually in property taxes, good for just over $100 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 1.11%. 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 in the Tar Heel State.
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 36.45 cents per gallon for both regular and diesel. These are the 15th- and 14th-highest rates, respectively.
North Carolina Estate Tax
North Carolina repealed its estate tax on January 1, 2014.
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.
- While the etymology of North Carolina’s nickname, the Tar Heel State, is unknown, it likely has to do with the tar that was harvested from North Carolina’s pine forests in its early history.
- 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 sophomore.
Places with the Lowest Tax Burden
Are you curious how your tax burden stacks up against others in your state? SmartAsset’s interactive map highlights the counties with the lowest tax burden. Scroll over any county in the state to learn about taxes in that specific area.
To find the places with the lowest tax burdens, SmartAsset calculated the amount of money a specific person would pay in income, sales, property and fuel taxes in each county in the country.
To better compare income tax burdens across counties, we used the national median household income. We then applied relevant deductions and exemptions before calculating federal, state and local income taxes.
In order to determine sales tax burden, we estimated that 35% of take-home (after-tax) pay is spent on taxable goods. We multiplied the average sales tax rate for a county by the household income after taxes. This balance is then multiplied by 35% to estimate the sales tax paid.For property taxes, we compared the median property taxes paid in each county.
For fuel taxes, we first distributed statewide vehicle miles traveled to the county level using the number of vehicles in each county. We then calculated the total number of licensed drivers within each county. The countywide miles were then distributed amongst the licensed drivers in the county, which gave us the miles driven per licensed driver. Using the nationwide average fuel economy, we calculated the average gallons of gas used per driver in each county and multiplied that by the fuel tax.
We then added the dollar amount for income, sales, property and fuel taxes to calculate a total tax burden. Finally, each county was ranked and indexed, on a scale of 0 to100. The county with the lowest tax burden received a score of 100 and the remaining counties in the study were scored based on how closely their tax burden compares.