North Carolina does not have a separate capital gains tax or a preferential rate. A gain that is part of your federal adjusted gross income flows into North Carolina taxable income and is taxed at the same flat rate as wages and interest.
This guide sets out the current and scheduled rates, how the gain gets onto Form D-400, the few North Carolina adjustments that touch gains, how part-year residents and nonresidents are handled, and where the home sale exclusion fits. It uses North Carolina Department of Revenue pages and the 2025 Form D-400 instructions, plus two IRS pages, all read on 2 November 2026. The North Carolina General Assembly statute site refused our automated request, so we rely on the Department's own description of the statutes.
The Department of Revenue's rate schedule page says: "For Taxable Years beginning in 2025, the North Carolina individual income tax rate is 4.25% (0.0425)." For taxable years after 2025 the rate is 3.99% (0.0399). The same page lists 4.50% for 2024 and 4.75% for 2023. The Department's 2025 law changes page says the 2023 General Assembly accelerated these reductions in Session Law 2023-134.
For later years the rate page says additional rate changes may apply to tax years beginning with 2027 based on certain rate reduction triggers. We could not read the statute text. The Department's notice of 23 July 2026 (updated 9 October 2026) names Session Law 2026-31 and Session Law 2026-41 but does not mention a 2027 rate. A tax-news report (Ernst & Young, 28 July 2026) and a legislative staff summary that we could not open in full say Senate Bill 257 was signed on 7 July 2026 and replaces the trigger-based reductions for 2027 through 2034 with set rates: 3.49% for 2027 through 2029, 3.24% for 2030 through 2032 and 2.99% from 2033. We treat that as a report, not an official figure, and the rate page we read does not show it. Check the Department's rate schedule page before planning a sale in 2027 or later.
One rate applies to all North Carolina taxable income, so a long-term gain is not taxed at a lower North Carolina rate than a short-term gain. We found no separate capital gains line or rate in the Form D-400 instructions, which tell you to multiply taxable income by the single rate.
The Form D-400 instructions say the starting point for determining North Carolina taxable income is federal adjusted gross income, entered on Line 6. A capital gain that is in your federal adjusted gross income is therefore in your starting figure. You then add and deduct the North Carolina adjustments listed on Schedule S, take the North Carolina standard deduction or itemized deductions, and apply the rate to the result.
The Department's notice of 23 July 2026 says North Carolina follows the Internal Revenue Code in effect as of July 5, 2025 to the extent it conforms, after Session Law 2026-31. Earlier 2025 return guidance used a January 1, 2023 date. The notice and the instructions do not discuss any change to how capital gains themselves are computed, so we state no change.
Federal rules decide what counts as a gain and its holding period. IRS Topic 409 says that if you hold an asset for more than one year before you dispose of it, the gain is long-term, and that net short-term gains are taxed as ordinary income at graduated rates. North Carolina does not use those distinctions to set a different rate.
The 2025 D-400 instructions list a small number of gain-related adjustments on Schedule S:
We did not find in the instructions a North Carolina exclusion for gains on small business stock or a deduction of a share of long-term gains, so we do not state one. If you think one applies, check the Schedule S list and the Department's personal taxes bulletin.
These figures are our arithmetic, a gain multiplied by 3.99%, the rate the Department gives for tax years after 2025. They assume your other income already exceeds your deductions so the gain is taxed in full, and they ignore credits. They are not an official calculation.
| Capital gain included in federal AGI | North Carolina tax on that gain at 3.99% (our arithmetic) |
|---|---|
| $10,000 | $399.00 |
| $50,000 | $1,995.00 |
| $100,000 | $3,990.00 |
| $500,000 | $19,950.00 |
For a 2025 return the same gain would be taxed at 4.25%, the 2025 rate.
If you or your spouse were not a full-year North Carolina resident, the instructions say you must complete and attach Schedule PN to find the percentage of your total income that is subject to North Carolina tax. Schedule PN has a line for "Capital Gain or (Loss)". In Column A you enter income from all sources, and in Column B the part received from North Carolina sources or received while a resident. Line 14 of the D-400 is Line 12b multiplied by the taxable percentage.
The instructions say a part-year resident must include all income received while a resident of North Carolina, including income from another state received during that time. They say a nonresident must file if total gross income exceeds the filing threshold and the income came from North Carolina sources, which they describe as income attributable to ownership of an interest in real or tangible personal property in North Carolina, from a business, trade, profession or occupation carried on in North Carolina, or from gambling in North Carolina. A gain on the sale of North Carolina real property fits the first category. We did not find a statement on gains from intangibles such as stock, so ask the Department about those.
Our hypothetical below shows how the percentage works. It is not a real case and assumes a 2026 rate.
| Step (our hypothetical) | Amount |
|---|---|
| Schedule PN Line 23, Column A: total income from all sources after NC adjustments (assumed none; includes a $60,000 gain) | $200,000 |
| Schedule PN Line 22, Column B: the part received from NC sources or while a resident (same assumption) | $80,000 |
| Taxable percentage (Line 22 divided by Line 23, four decimals) | 0.4000 |
| D-400 Line 12b (assumed, after NC deductions) | $150,000 |
| Line 14: Line 12b times the taxable percentage | $60,000 |
| Tax at 3.99% | $2,394.00 |
North Carolina starts from federal adjusted gross income, so the federal treatment of a home sale carries through. IRS Topic 701 says that if you have a capital gain from the sale of your main home, you may qualify to exclude up to $250,000 of that gain from your income, or up to $500,000 if you file a joint return with your spouse. We read that as leaving only the gain above the exclusion in federal AGI and so in the North Carolina starting figure. The North Carolina pages we read do not discuss home sales separately. See our home sale capital gains guide for the federal tests.
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