North Carolina Income Tax Calculator 2025

4.25% Flat Tax (Down from 4.5% in 2024) | No Local Taxes | Southeast's Best Rate

Calculate Your North Carolina State Tax

Gross Income: $0
Standard Deduction: $0
Taxable Income: $0
NC State Tax (4.25%): $0
Effective Tax Rate: 0%
After-Tax Income: $0

North Carolina Income Tax Rate for 2025

North Carolina has a 4.25% flat income tax rate for 2025, down from 4.5% in 2024. This makes North Carolina one of the most tax-competitive states in the Southeast and one of the lowest flat-rate states in the entire United States.

📉 Tax Rate Trending Down: North Carolina reduced its flat tax rate from 4.5% (2024) to 4.25% (2025). The state has been steadily reducing its income tax over the past decade as part of a long-term strategic plan to attract businesses and residents. This is one of the lowest rates in the Southeast, only beaten by Tennessee (0%) and tied with Michigan (4.25%).
🏙️ No Local Income Taxes: North Carolina does NOT allow cities or counties to levy local income taxes. Whether you live in Charlotte, Raleigh, Durham, Greensboro, Winston-Salem, or anywhere else, you only pay the 4.25% state rate. This provides exceptional simplicity and predictability.

How the Tax is Calculated

North Carolina uses a simple formula:

  1. Start with your gross income
  2. Subtract standard deduction ($12,750 single / $25,500 married)
  3. Multiply by 4.25%
  4. That's your North Carolina tax!

Real Example: $75,000 Income

Single Filer:

  • Gross Income: $75,000
  • Standard Deduction: -$12,750
  • Taxable Income: $62,250
  • Tax: $62,250 × 4.25% = $2,646
  • Effective Rate: 3.53%

Married Filing Jointly:

  • Gross Income: $75,000
  • Standard Deduction: -$25,500
  • Taxable Income: $49,500
  • Tax: $49,500 × 4.25% = $2,104
  • Effective Rate: 2.81%

How North Carolina Compares to Other States

State Tax System Tax on $75k (single) vs North Carolina
North Carolina 4.25% flat $2,646 —
Tennessee No income tax $0 TN saves $2,646
Georgia 5.19% flat $3,270 NC saves $624
South Carolina Progressive (up to 6.2%) ~$3,850 NC saves $1,204
Virginia Progressive (up to 5.75%) ~$3,200 NC saves $554
Michigan 4.25% flat $2,950 NC saves $304
💡 Competitive Position: North Carolina has positioned itself as THE most tax-competitive state in the Southeast (except TN which has 0% tax). Lower than Georgia, Virginia, South Carolina, and Alabama. Tied with Michigan at 4.25%. This is a major selling point for attracting businesses and residents from higher-tax states.

Retirement Income in North Carolina

North Carolina's retirement tax situation is straightforward:

  • Social Security: 100% tax-free (no limit)
  • 401k/IRA Withdrawals: Taxed at 4.25%
  • Pension Income: Taxed at 4.25%
  • Investment Income: Taxed at 4.25%

North Carolina does not offer special retirement income exemptions (except Social Security). However, the low 4.25% rate and generous standard deduction ($12,750 single / $25,500 married) help minimize taxes for retirees.

Retirement Example: Age 68, Married

  • Social Security: $40,000 (tax-free)
  • 401k withdrawals: $50,000
  • Total income: $90,000

NC Tax Calculation:

  • Taxable income: $50,000 (only 401k is taxed)
  • Standard deduction: -$25,500
  • Taxable after deduction: $24,500
  • Tax: $24,500 × 4.25% = $1,041
  • Effective rate: 1.16% on total income

Best Cities in North Carolina (By Income Level)

For Income $30,000 - $50,000

Recommended: Greensboro, Winston-Salem, Fayetteville, Wilmington

Why: Affordable cost of living, housing $800-$1,200/month, good job opportunities

Tax Impact: ~3-3.5% effective rate after deductions

For Income $50,000 - $80,000

Recommended: Durham, Cary, Apex, Chapel Hill, Charlotte suburbs

Why: Research Triangle area (great tech jobs), excellent amenities, good schools

Tax Impact: ~3.5-4.0% effective rate

For Income $80,000 - $150,000

Recommended: Cary, Chapel Hill, Davidson, Cornelius, South Charlotte

Why: Top-rated schools, safe neighborhoods, strong job market

Tax Impact: ~4.0-4.2% effective rate

For Income $150,000+

Recommended: Chapel Hill, Davidson, Myers Park (Charlotte), Biltmore Forest (Asheville)

Why: Premium neighborhoods, best schools in state, luxury amenities

Tax Impact: ~4.25% effective rate

When Moving to North Carolina Makes Sense

✅ Move to North Carolina if:
  • You're moving from higher-tax states (NY, CA, NJ, MA, VA, GA, SC)
  • You work in tech/biotech (Research Triangle is booming)
  • You value low taxes + excellent universities (UNC, Duke, NC State)
  • You want Southern lifestyle with competitive taxes
  • You're retiring and want low taxes on retirement income (4.25% is very reasonable)
  • You work remotely for a high-tax state company
⚠️ Think Carefully if:
  • You're moving from Tennessee (0% tax) - you'll pay 4.25% more
  • You prioritize absolute lowest taxes (FL, TN, TX are better)
  • You have large retirement income and want special exemptions (PA is better)

Affordable Tax Filing for North Carolina

  1. Cash App Taxes - FREE for federal and NC state

    Completely free. Perfect for NC's simple 4.25% flat tax.

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  2. FreeTaxUSA - $0 federal, $14.99 NC state

    Clean interface, great for simple NC returns.

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  3. VITA - FREE (income under $64,000)

    IRS-certified volunteers. Find locations

State rankings: Lowest Tax States 2025 | Best States for Retirees | States with Flat Tax | Highest Tax States 2025

Related Resources

📊 Data Sources: NC Department of Revenue. Accurate for tax year 2025. Last updated: November 2025.