North Carolina has a flat income tax rate of 3.99% for 2026 (down from 4.5% in 2024 and 4.25% in 2025). At $100,000 income, a NC resident pays approximately $3,481 in state income tax after the standard deduction ($12,750 single). No local income tax. North Carolina has taxed income at a single flat rate since 2014, and that rate has been cut in steps since 2019's 5.25%.
At a glance
Key Facts
Income Tax Rate 2026
3.99% flat rate on all taxable income for 2026 (reduced from 5.25% in 2021; further reductions beyond 2026 depend on revenue triggers)
Standard Deduction
$12,750 (single); $25,500 (married filing jointly) — North Carolina maintains its own standard deduction
Local Income Tax
None — no city or county income tax in North Carolina
Sales Tax
4.75% state + local (typically 2%–2.5%) = 6.75%–7.25% combined; food exempt from the state rate but subject to a 2% local rate
Property Tax
Average effective rate ~0.66%; rates vary significantly by county; no state property tax
Capital Gains
Taxed as ordinary income at 3.99% flat rate — no preferential rate for long-term gains
Introduction
North Carolina has taxed individual income at a single flat rate since tax year 2014, when it replaced its graduated brackets. The flat rate was 5.25% from 2019 through 2021 and has since been legislatively reduced in annual steps: 4.99% (2022), 4.75% (2023), 4.5% (2024), 4.25% (2025), and 3.99% for 2026.
The rate schedule through 2026 is fixed by law. Further reductions from 2027 onward depend on state revenue thresholds defined in North Carolina's tax reform legislation — if revenue is sufficient, the rate continues falling; if not, the reduction pauses. As of 2026, the confirmed rate is 3.99%.
Section 01
NC Flat Tax: What the 3.99% Rate Means at Every Income Level
With a flat rate, the calculation is simple: taxable income (after standard deduction) × 3.99%. Here are the key numbers for 2026:
$50,000 income: Taxable income $37,250 (after $12,750 standard deduction). NC tax: $1,486. Effective rate: 2.97%
$500,000+ income: Effective rate approaches 3.99% as standard deduction becomes smaller percentage of income
Because the rate is flat, every filer benefits from the cut in proportion to taxable income. Compared with the 5.25% rate that applied in 2019–2021, the 3.99% rate is 1.26 percentage points lower: a $500,000 earner saves roughly $6,100 a year ($487,250 of taxable income × 1.26%), and a $100,000 earner saves roughly $1,100 ($87,250 × 1.26%).
Section 02
The NC Flat Tax Phasedown: Road to 3.99%
North Carolina law sets a path of annual rate reductions:
2022: 4.99%
2023: 4.75%
2024: 4.5%
2025: 4.25%
2026: 3.99% (confirmed)
As of 2026, North Carolina is operating at the confirmed 3.99% rate per the NC Department of Revenue's tax rate schedule. Additional reductions beyond 2026 depend on revenue triggers set in state law.
Section 03
NC vs Neighboring States: How the Flat Tax Compares
North Carolina's 3.99% flat rate compares favorably to several southeastern states and mid-Atlantic neighbors:
South Carolina: 5.21% top rate for 2026 (two brackets: 1.99% below $30,000 of taxable income)
Virginia: 5.75% top rate (4 brackets)
Georgia: 4.99% flat for 2026
Tennessee: 0% (no income tax — but note TN has no income tax, higher sales tax)
Florida: 0% (no income tax)
Among states with an income tax, NC's 3.99% flat rate is competitive. The no-income-tax states (TN, FL) have higher sales taxes and/or property taxes that partially offset the income tax advantage. NC's combination of moderate income tax, moderate property tax, and decent public services (UNC system, good roads) makes it attractive for many relocating families.
Section 04
Triangle (Raleigh-Durham-Chapel Hill) and Charlotte: Tax Realities
The Research Triangle (Raleigh-Durham-Chapel Hill) and Charlotte are the primary destinations for professionals moving to NC. Beyond the state income tax:
Property taxes: Wake County (Raleigh): effective rate ~0.73%. Mecklenburg County (Charlotte): effective rate ~0.87%. Durham County: effective rate ~1.0%.
No local income tax: Unlike New York, Philadelphia, or DC, there is no city or county income tax in NC — what you see (state flat rate) is what you pay.
Sales tax: Wake County combined rate: 7.25%. Mecklenburg County: 7.25%. Food is exempt from the state sales tax but subject to a 2% local rate.
Navigating state income tax — especially if you are relocating, have multi-state income, or are planning retirement — benefits from professional CPA guidance. TaxHub connects you with licensed tax professionals.
⚠ Not for simple single-state returns. Free filing is fine for straightforward W-2 situations.
What is North Carolina's income tax rate for 2026?
North Carolina's income tax rate for 2026 is 3.99% flat on all taxable income. This applies to all income levels — no brackets, no graduation. The standard deduction for 2026 is $12,750 (single) and $25,500 (married filing jointly). Further reductions below 3.99% would apply only from 2027 onward and only if state revenue triggers are met.
Q
Does North Carolina have local income taxes?
No. North Carolina has no city or county income taxes. You pay only the state flat rate of 3.99% (plus the federal income tax). This is unlike New York City (which has a separate local income tax) or Maryland counties (which add 2.25%–3.3% on top of state tax).
Q
How does NC tax capital gains?
North Carolina taxes capital gains as ordinary income at the same 3.99% flat rate. There is no preferential lower rate for long-term capital gains at the state level. Federal long-term capital gains tax rates (0%/15%/20%) still apply on top.
Q
What is NC's standard deduction?
North Carolina's standard deduction for 2026 is $12,750 for single filers and $25,500 for married filing jointly. NC maintains its own standard deduction that does not automatically track the federal amount.
Q
Will NC income tax drop to 3.99% in 2026?
Yes — the 3.99% rate is confirmed and in effect for the 2026 tax year per the NC Department of Revenue's official rate schedule, not merely conditional. Reductions beyond 3.99% (for 2027 and later) are conditional on revenue triggers in state law.
Q
What are property taxes like in North Carolina?
NC property taxes are set at the county level with no state property tax. The statewide average effective rate is approximately 0.66%, though county rates vary — Wake County (Raleigh) averages ~0.73%, Mecklenburg County (Charlotte) ~0.87%, and Durham County ~1.0% of assessed value.
Q
What is North Carolina's pass-through entity (PTE) tax rate for 2026?
North Carolina's pass-through entity tax rate matches the individual flat rate: 3.99% for 2026. Eligible partnerships and S-corporations can elect to pay NC income tax at the entity level, with partners/shareholders receiving a credit for tax paid — a strategy commonly used to work around the federal SALT deduction cap. The election has been available since tax year 2022.
Disclaimer:This guide is for educational purposes only and does not constitute tax or legal advice. Tax rates and rules change annually. Consult a qualified CPA or tax attorney for advice specific to your situation.