About North Carolina State Income Tax

North Carolina switched to a flat tax system in recent years. The current rate is 4.75%, which has been gradually reduced from 5.25% as part of the state's tax reform efforts.

North Carolina Tax Features

• Flat Tax Rate: 4.75% on all taxable income
• Simplified System: Easier to calculate than progressive brackets
• Recent Reductions: Rate has decreased from 5.75% in 2014
• Standard Deduction: $12,750 for single filers, $25,500 for married (2026)

How North Carolina Tax is Calculated

North Carolina's flat tax makes calculation straightforward:

1. Determine your total income
2. Subtract the standard deduction ($12,750 single / $25,500 married)
3. Multiply taxable income by 4.75%
4. Add federal tax based on your bracket

Frequently Asked Questions

What is North Carolina's income tax rate?

North Carolina has a flat income tax rate of 4.75% as of 2026. This rate applies to all income levels, making it one of the simpler state tax systems.

Does North Carolina tax Social Security benefits?

No, North Carolina does not tax Social Security retirement benefits, making it attractive for retirees.

How does NC compare to neighboring states?

North Carolina's 4.75% flat rate is competitive: Virginia has rates up to 5.75%, South Carolina up to 6.5%, Georgia up to 5.75%, and Tennessee has no state income tax.

Will the tax rate continue to decrease?

North Carolina has been gradually reducing its income tax rate over the past decade. Future reductions are possible but depend on state budget and legislative decisions.

North Carolina vs. Neighboring States

Comparison with neighboring states:

• Tennessee: No state income tax
• Virginia: Progressive up to 5.75%
• South Carolina: Progressive up to 6.5%
• Georgia: Progressive up to 5.75%

Tips for North Carolina Taxpayers

• Take advantage of the generous standard deduction
• Consider retirement account contributions to reduce taxable income
• NC doesn't tax Social Security - great for retirees
• Keep records of qualifying deductions and credits
• File electronically for faster processing