North Carolina State Income Tax

North Carolina State Income Tax is a flat income tax. It also has state sales tax and property taxes varying by county. Residents are not taxed on Social Security or Railroad Retirement benefits. However, the state does tax nonresidents who receive income from a North Carolina source. Several deductions are available, including the standard deduction, personal exemption, and dependent deductions. The state also has a privilege tax for professionals, based on the services they provide and levied on a statutory basis rather than on the amount of income received.

Both the House- and Senate-passed budgets accelerate current reductions in North Carolina state’s flat individual income tax rate to 4.5 percent. The Senate version would reduce the rate faster and further, and the House bill does not include any additional reductions beyond 2024. These cuts may come at a cost. Recent revenue collections and projections show that the state is facing a major shortfall. The governor has pushed for more substantial investment in infrastructure and education, but lawmakers are far more interested in prioritizing tax cuts.

How to Pay North Carolina State Income Tax?

Taxpayers who do not pay their taxes on time may face serious consequences. They will be charged late payment penalties and interest. They may even be subject to liens or other collection activities. However, paying your taxes on time is possible to avoid these penalties. To do so, visit the State of North Carolina’s website to make a payment. Select ‘Pay Taxes Online’ option, then complete the required information and provide your banking information. You can choose to pay by bank draft or debit/credit card.

Individuals must file by April 15 (or the 15th day of the fourth month following the close of the taxable year for fiscal year filers). In order to receive an extension, an application must be filed with the state.

North Carolina State Tax Deductions

Individual taxpayers can reduce their taxable income by taking advantage of various deductions, including home mortgage interest, charitable contributions, and medical expenses. Additionally, unused federal net operating losses (NOLs) may be carried forward for 15 years. Those who work in the state can also take advantage of the state’s property tax relief programs. These programs assist qualified individuals and families who cannot afford their property taxes. These programs are administered by the Department of Revenue. To qualify for a program, you must meet certain income requirements.