North Carolina Income
Tax Rates & Rules

North Carolina Income Tax at a Glance

North Carolina taxes individual income at a single flat rate rather than graduated brackets. For tax year 2026, that rate is 3.99 percent, applied to North Carolina taxable income regardless of how much a filer earns. There is no local or county income tax layered on top; the state rate is the only individual income tax North Carolina residents and workers pay.

How North Carolina Income Tax Works

Because North Carolina uses a flat tax rather than brackets, every dollar of North Carolina taxable income is taxed at the same 3.99 percent rate; there is no stepped structure where higher income pushes only the top slice into a higher bracket. North Carolina taxable income starts from federal adjusted gross income, then applies North Carolina's own additions, deductions, and either the state standard deduction or North Carolina itemized deductions, which are not identical to federal itemized deductions.

The 2026 Rate and Its Phased Reduction History

North Carolina's individual rate has been reduced annually under a state law passed to phase down income taxes over several years: 4.99 percent in 2022, 4.75 percent in 2023, 4.5 percent in 2024, 4.25 percent in 2025, and 3.99 percent in 2026. The law includes further scheduled decreases in future years, but those additional cuts are contingent on the state meeting certain revenue targets, so they are not guaranteed the way the rate through 2026 is.

North Carolina Standard Deduction

North Carolina's standard deduction amounts, as most recently published by the Department of Revenue, are $12,750 for single filers and those married filing separately when the spouse does not itemize, $25,500 for taxpayers married filing jointly or a qualifying surviving spouse, and $19,125 for head of household. Unlike the federal standard deduction, North Carolina does not add an extra amount for filers who are 65 or older or blind.

How North Carolina Income Tax Is Withheld From a Paycheck

Employers withhold North Carolina income tax from wages based on the employee's Form NC-4, Employee's Withholding Allowance Certificate, on which the employee reports withholding allowances calculated from federal and North Carolina income adjustments, the North Carolina child deduction, itemized deductions, and tax credits. Employees who plan to claim only the North Carolina standard deduction and the child deduction can use the simpler NC-4EZ instead. The effect on take-home pay is easier to see through a North Carolina paycheck calculator.

Who Has to File a North Carolina State Income Tax Return?

A resident must file a North Carolina return if gross income for the year exceeds the filing-requirement threshold for their filing status, thresholds that mirror the standard deduction amounts. Nonresident aliens must file a North Carolina return whenever they are required to file a federal return, regardless of income level. Part-year residents and nonresidents who received North Carolina-source income above these thresholds must also file, using Form D-400 along with Schedule PN.

Does North Carolina Tax Remote Workers?

Nonresidents and part-year residents are taxed only on the portion of their income attributable to North Carolina, calculated by multiplying federal taxable income by the ratio of North Carolina-source income to total income from all sources. A remote worker physically performing services from North Carolina generally has North Carolina-source income from that work even if the employer is based elsewhere, while a nonresident working remotely for a North Carolina-based employer from outside the state is generally not taxed by North Carolina on those wages.

North Carolina Income Tax vs. Payroll Taxes

North Carolina income tax is only one tax connected with a paycheck. Employees can also have federal income tax, Social Security, and Medicare associated with their wages. A North Carolina pay stub can show gross earnings, North Carolina income tax withholding, federal payroll taxes, other deductions, and net pay for the relevant pay period.

Need to Organize Your Payroll Records?

Accurate payroll records make it easier to review gross wages, tax withholding, deductions, and net pay. If you need to turn genuine payroll information into an itemized document, you can use our paystub maker to organize the information and create a professional pay stub. Online PayStub is intended for lawful payroll, business, and recordkeeping purposes.