Key Tax Facts: North Carolina
- Flat 4.25% rate for tax year 2025, falling to 3.99% in 2026
- Bailey settlement exempts certain government retirees from state tax
- Social Security benefits are exempt
- No deduction for federal income taxes paid
North Carolina State Income Tax Overview
North Carolina has a flat state income tax rate of 4.25% for tax year 2025, down from 4.5% in 2024. H.B. 259 accelerated the reduction schedule, and the rate drops to 3.99% in 2026 with further cuts tied to revenue triggers. North Carolina moved to a flat tax in 2014, replacing a graduated system. The standard deduction is $12,750 for single filers and $25,500 for married couples filing jointly, well above most states. North Carolina does not tax Social Security benefits and exempts military retirement pay for qualifying veterans, but it does tax most other retirement income, including IRA and 401(k) distributions.
North Carolina Income Tax Rate (2025)
North Carolina uses a flat income tax rate -- the same percentage applies to all taxable income regardless of how much you earn.
What a North Carolina Resident Actually Pays: A Worked Example
| Taxable Income | $65,000.00 |
| North Carolina Flat Rate | 4.25% |
| Estimated State Tax | $2762.50 |
| Effective Rate | 4.25% |
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Frequently Asked Questions -- North Carolina Income Tax
Does North Carolina have a state income tax?
Yes. North Carolina imposes a state income tax with a flat rate of 4.25%. This is separate from your federal income tax obligation.
What is the North Carolina income tax rate for 2025?
North Carolina uses a flat income tax rate of 4.25% on all taxable income, regardless of income level or filing status.
Do I have to file a North Carolina state tax return?
Most full-year North Carolina residents with income above the state filing threshold must file a state return. Check the North Carolina Department of Revenue for current thresholds and requirements.
How accurate is this estimate?
This is a planning estimate of your federal income tax only. It does not calculate North Carolina state tax, and it does not account for state deductions, credits, exemptions, or local taxes. Use the North Carolina rate schedule above as a reference, and verify with official North Carolina tax forms or a qualified tax professional.
Does this calculator include federal income tax?
Yes. The calculator estimates your 2025 federal income tax using the official IRS 2025 brackets. It does not compute your North Carolina state tax -- see the North Carolina rate schedule below to work that out.
Where can I find official North Carolina tax forms?
Official forms, instructions, and filing guidance are available at the North Carolina Department of Revenue.
What is the sales tax rate in North Carolina?
North Carolina's combined state and average local sales tax rate is 6.99%. This is separate from income tax and applies to most retail purchases -- use our sales tax calculator to check a specific purchase.
When are North Carolina 2025 state taxes due?
2025 taxes are generally filed in 2026. The North Carolina filing deadline is April 15, 2026, the same as the federal deadline.
Understanding Your North Carolina Tax Estimate
Your results combine two separate bills: federal tax owed to the IRS, and North Carolina state tax owed to the North Carolina Department of Revenue. The state return is filed separately from your federal Form 1040, with a state filing deadline of April 15. For the mechanics of how bracket math actually works -- why your effective rate is almost always lower than your top bracket -- see our marginal vs. effective tax rate guide.
Lowering Your North Carolina Bill
Pre-tax retirement contributions reduce your federal and North Carolina taxable income in the same move -- see our 401(k) contribution limits and HSA limits guides for the current caps. Beyond that, North Carolina-specific credits and deductions that don't exist at the federal level are listed at the North Carolina Department of Revenue -- worth checking, since these are easy to miss if you only look at federal guidance.
Combined Sales + Income Tax Picture
North Carolina's combined state-plus-average-local sales tax rate is 6.99%. If you're self-employed, that's an added layer on top of income tax -- our self-employment tax calculator covers the SE-specific piece separately.
Disclaimer: Estimates for educational purposes only. State tax results are approximations based on published bracket data and do not account for all deductions, credits, exemptions, local taxes, or individual situations. Not tax, legal, or financial advice. Consult the North Carolina Department of Revenue or a qualified tax professional for guidance specific to your situation.