North Carolina State Taxes

The state of North Carolina requires you to pay taxes if you are a resident or nonresident that receives income from a California source. The state income tax rate is 5.25%, and the sales tax rate is 4.75%.

North Carolina offers tax deductions and credits to reduce your tax liability, including a standard deduction or itemized deductions.

North Carolina Income Tax Rate

North Carolina has an individual income tax rate of 5.25% that applies to all income levels.

Income Tax Deductions for North Carolina

North Carolina’s itemized deductions can differ from federal itemized deductions. While there are common deductions, such as home mortgage interest and real estate property taxes, you can also claim a deduction for repayment of claim of right income, qualified charitable contributions and more.

Standard Deduction

The state of North Carolina offers a standard deduction for taxpayers. The 2021 standard deduction allows taxpayers to reduce their taxable income by $10,750 for single filers, $21,500 for married filing jointly and $16,125 for heads of households.

Itemized Deductions

A taxpayer may qualify for the itemized deduction if the amounts exceed the standard deduction. The state of North Carolina allows for itemized deductions as follows:

  • Home mortgage interest
  • Real estate property taxes
  • Qualified charitable contributions
  • Medical and dental expenses
  • Real estate property taxes

North Carolina taxpayers can deduct up to $20,000 who are both liable for the mortgage, the deduction can only be taken by the spouse who actually paid them.

Qualified Charitable Contributions

You may deduct qualified charitable contributions of up to 60% of your adjusted gross income.

Medical and Dental Expenses

The state of North Carolina allows you to deduct medical and dental expenses that exceed 7.5% of your federal adjusted gross income.

North Carolina State Income Tax Credits

Credit for Income Tax Paid to Another State or Country

If you received income from a source in another state or country and paid tax on it, you can claim a credit for the amount on your North Carolina state tax return to avoid double taxation.

Do I Have to Pay Income Tax in North Carolina?

You are required to file a North Carolina tax return if you receive income from North Carolina and you fall into one of the following categories:

  • Resident: You have lived in North Carolina for more than 183 days during the taxable year.
  • Part-Year Resident: You became a resident of North Carolina during the tax year or moved and became a resident of another state during the tax year.
  • Nonresident: You did not live in North Carolina at any time during the tax year but received income from North Carolina sources.

Sales Tax and Sales Tax Rates

North Carolina has a 4.75% state sales tax rate; some counties have their own rate that pushes it up as far as 7.5%.

Property Taxes and Property Tax Rates

Property Tax Rate

Property taxes vary and are locally assessed by each county.

Capital Gains Taxes

There is no capital gains tax in North Carolina; the gains are included as income and taxed at the flat income tax rate of 5.25%.

Inheritance and Estate Tax and Inheritance and Estate Tax Exemption

North Carolina does not have an inheritance or estate tax.

More from Forbes Advisor