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North Carolina Taxes: What You Need to Know
In North Carolina, income tax withholding is required for salaries and wages of residents, regardless of where they are earned, and for non-residents performing services in the state.
Also, withholding applies to non-wage compensation for non-resident contractors and certain payments to individuals or entities lacking valid taxpayer identification numbers.
North Carolina does not impose an estate or inheritance tax. North Carolina imposes income taxes on both residents and non-residents earning income from state sources.
Here are the key tax rates and deductions for 2026:
| Tax Type | Rate/Details |
|---|---|
| Individual Income Tax Rate | 3.99% (flat rate for all income levels) |
| Corporate Income Tax Rate | 2.0% |
| Sales Tax Rate | 4.75% (combined average with local taxes ~7.00%) |
| Property Tax Rate | Varies by county (effective rate ~0.66% on owner-occupied housing) |
(Source)
An overview of North Carolina Taxes
Federal, State, and Local Tax Withholding
Federal Tax Withholding: This is based on the federal income tax brackets ranging from 10% to 37%, depending on your income level and filing status. (Source)
State Tax Withholding: North Carolina has a flat income tax rate of 3.99% for all taxpayers in 2026 — reduced from 4.25% in 2025 under Session Law 2023-134. (Source)
Local Tax Withholding: North Carolina does not have local income taxes.
FICA & State Insurance Taxes
FICA Taxes: These include Social Security and Medicare taxes. Social Security is taxed at 6.2% of your wages up to $184,500 in 2026, while Medicare is taxed at 1.45% with no income limit. An additional 0.9% Medicare surtax applies to high earners (wages over $200,000 for single filers or $250,000 for married filing jointly). (Source) (Source)
State Insurance Taxes: North Carolina does not have a state disability insurance tax or a state-administered paid family leave insurance program that employees contribute to. The state’s unemployment insurance (UI) program is funded entirely by employers — no deductions are made from employee wages.
Pre-Tax Deductions
Medical Insurance: Contributions to employer-sponsored health insurance plans are typically pre-tax, reducing your taxable income.
401(k) Contributions: Contributions to a 401(k) retirement plan are also pre-tax, with limits of $24,500 per year for 2026 and an additional $8,000 catch-up for those aged 50 and older, or $11,250 for those aged 60–63 under SECURE 2.0. (Source)
Health Savings Accounts (HSA): For 2026, HSA contribution limits are $4,400 for self-only coverage and $8,750 for family coverage. (Source)
Flexible Spending Accounts (FSA): Up to $3,400 pre-tax for eligible medical expenses in 2026, with a maximum carryover of $680. (Source)
Let’s take a glimpse at the tax types and percentages in table format:
| Tax Type | Percentage/Rate |
|---|---|
| Federal Income Tax | 10% – 37% |
| State Income Tax | 3.99% |
| Social Security (FICA) | 6.2% (on first $184,500) |
| Medicare (FICA) | 1.45% |
| Additional Medicare Surtax | 0.9% (high earners) |
| 401(k) Contribution Limit | $24,500 |
| 401(k) Catch-Up Contribution | $8,000 (age 50+) / $11,250 (age 60–63) |
Median Household Income in North Carolina
According to the U.S. Census Bureau, the median household income in North Carolina was $67,220 in 2024.
| Year | Median Household Income |
|---|---|
| 2024 | $67,220 |
| 2023 | $68,610 |
(Source)
Source: U.S. Census Bureau, Current Population Survey Annual Social and Economic Supplement, via Federal Reserve Bank of St. Louis (FRED). Current dollars, not seasonally adjusted.
North Carolina Tax Brackets 2026
For the tax year 2026, North Carolina has a flat income tax rate of 3.99% for all taxpayers — down from 4.25% in 2025. This means that regardless of your income level, the same rate applies. The reduction is part of a multi-year phase-down schedule enacted under Session Law 2023-134. (Source)
North Carolina Individual Income Tax Rate History and Schedule:
| Tax Year | Rate |
|---|---|
| 2024 | 4.50% |
| 2025 | 4.25% |
| 2026 | 3.99% |
| 2027+ | May drop further based on revenue triggers |
For the complete 2026 withholding tables and methods, refer to Publication NC-30, 2026 Income Tax Withholding Tables and Instructions for Employers.
Standard Deduction
North Carolina’s standard deduction amounts vary by filing status. Taxpayers may deduct from federal adjusted gross income either the NC standard deduction or NC itemized deductions — whichever is greater. For the most current amounts applicable to tax year 2026, refer to the NCDOR NC Standard Deduction page.
Note: North Carolina law does not provide an additional standard deduction amount for taxpayers who are age 65 or older or who are blind, unlike the federal system.
(Source)
Federal Income Tax Tables in 2026 Based on Income
Federal Single Filer Tax
| Tax Rate | Taxable Income Threshold | |
|---|---|---|
| 10% | Income from $0.00 | $12,400.00 |
| 12% | Income from $12,400.01 | $50,400.00 |
| 22% | Income from $50,400.01 | $105,700.00 |
| 24% | Income from $105,700.01 | $201,775.00 |
| 32% | Income from $201,775.01 | $256,225.00 |
| 35% | Income from $256,225.01 | $640,600.00 |
| 37% | Income from $640,600.01 | and above |
Federal Married (Joint) Filer Tax
| Tax Rate | Taxable Income Threshold | |
|---|---|---|
| 10% | Income from $0.00 | $24,800.00 |
| 12% | Income from $24,800.01 | $100,800.00 |
| 22% | Income from $100,800.01 | $211,400.00 |
| 24% | Income from $211,400.01 | $403,550.00 |
| 32% | Income from $403,550.01 | $512,450.00 |
| 35% | Income from $512,450.01 | $768,700.00 |
| 37% | Income from $768,700.01 | and above |
Federal Married (Separate) Filer Tax
| Tax Rate | Taxable Income Threshold | |
|---|---|---|
| 10% | Income from $0.00 | $12,400.00 |
| 12% | Income from $12,400.01 | $50,400.00 |
| 22% | Income from $50,400.01 | $105,700.00 |
| 24% | Income from $105,700.01 | $201,775.00 |
| 32% | Income from $201,775.01 | $256,225.00 |
| 35% | Income from $256,225.01 | $384,350.00 |
| 37% | Income from $384,350.01 | and above |
Federal Head of Household Filer Tax
| Tax Rate | Taxable Income Threshold | |
|---|---|---|
| 10% | Income from $0.00 | $17,700.00 |
| 12% | Income from $17,700.01 | $67,450.00 |
| 22% | Income from $67,450.01 | $105,700.00 |
| 24% | Income from $105,700.01 | $201,750.00 |
| 32% | Income from $201,750.01 | $256,200.00 |
| 35% | Income from $256,200.01 | $640,600.00 |
| 37% | Income from $640,600.01 | and above |
(Source)
Deductions in the state of North Carolina include:
- Standard Deduction: Available to all taxpayers.
- Itemized Deductions: Available if they exceed the standard deduction, including home mortgage interest, real estate property taxes, qualified charitable contributions, and medical and dental expenses.
(Source)
