North Carolina income tax rate for 2025 and 2026

North Carolina’s individual income tax is a single percentage of North Carolina taxable income: 4.25% for tax year 2025 and 3.99% for tax year 2026, the rates the North Carolina Department of Revenue (NCDOR) lists on its tax rate schedules and uses in its 2026 withholding tables. Because there is one rate, there are no tax brackets: the same percentage applies to the first dollar of taxable income and the last.

The 2026 state budget, Session Law 2026-41, signed July 7, 2026, set the next cuts in law: 3.49% for 2027, 2028 and 2029, 3.24% for 2030, 2031 and 2032, and 2.99% after 2032. It replaced the revenue triggers the 2023 budget had set up for 2027 onward. Smaller cuts of 0.25 point can follow from 2035 if state revenue passes new targets, down to a floor of 2.49%. NCDOR’s rate page still describes the 2023 triggers, so go by the session law.

A constitutional amendment on the November 3, 2026 ballot (Session Law 2026-4) would lower the highest income tax rate North Carolina may ever charge from 7% to 3.5%, for tax years from 2027. It caps future rates; it does not change the 3.49% already scheduled for 2027.

A North Carolina return starts with your federal adjusted gross income (AGI). You add some items, such as interest on other states’ municipal bonds and part of any federal bonus depreciation, and deduct others on Schedule S, such as the federally taxed part of Social Security and interest on U.S. Treasury bonds. Then you take North Carolina’s standard deduction or its itemized deductions, and a deduction for each qualifying child. The rate applies to what is left.

North Carolina’s standard deduction is its own, much smaller than the federal one, and has no extra amount for being 65 or older or blind. The amounts are set in G.S. 105-153.5 with no end date, and the 2026 laws did not change them, so the same figures apply to 2025 and 2026. North Carolina itemized deductions are limited to mortgage interest and real estate taxes (together capped at $20,000), charitable gifts, medical and dental expenses, repayment of claim-of-right income and, from 2025, gambling losses.

For example, a single filer with $60,000 of federal AGI and no other adjustments has $47,250 of North Carolina taxable income after the $12,750 standard deduction, and owes $1,885 for 2026 at 3.99%, or $2,008 for 2025 at 4.25%. A married couple with two children under 17 and $90,000 of AGI subtracts $25,500 and a $1,500 child deduction per child, and owes $2,454 for 2026.

The July 2025 federal tax law (Public Law 119-21) created deductions for 2025 through 2028 for qualified tips (up to $25,000), overtime pay (up to $12,500, or $25,000 on a joint return), interest on a loan for a new U.S.-assembled car (up to $10,000) and an extra $6,000 for each person 65 or older. They are taken after AGI. NCDOR says they “do not affect North Carolina taxable income”, and the General Assembly created no state version, so tips and overtime stay taxable in North Carolina.

In July 2026, Session Law 2026-31 moved North Carolina’s reference to the Internal Revenue Code from January 1, 2023 to July 5, 2025, which brings most of the federal law’s AGI changes into the 2025 return. NCDOR’s earlier guidance had told 2025 filers to leave those changes out; if you filed that way, NCDOR says to amend if the update affects you.

North Carolina still decouples from federal bonus depreciation: you add back 85% of it and deduct 20% of the add-back in each of the next five years. The 2026 law added a similar rule for research expensing under section 174A: add back 80%, then deduct 25% a year over four years.

North Carolina does not tax Social Security or Railroad Retirement benefits: you deduct the federally taxed part on Schedule S. Most other retirement income is taxed at the flat rate, including private pensions, 401(k) and IRA withdrawals and pensions from other states’ governments, because North Carolina has no general pension exclusion. Two groups are exempt.

North Carolina has few individual credits. It repealed its child tax credit for tax years from 2018 and has no earned income credit, so the child deduction above is the main break for families. The credit most people use is for income tax paid to another state or country, on Form D-400TC, for North Carolina residents who also paid tax elsewhere on the same income. The form also carries historic rehabilitation credits and carryovers of older credits.

A North Carolina resident must file if their federal gross income is more than the threshold for their filing status, which matches the standard deduction: $12,750 single, $25,500 married filing jointly, $19,125 head of household, $12,750 married filing separately ($0 if your spouse itemizes). File even below that to get back North Carolina tax withheld from your pay. Married couples who file a joint federal return must file jointly in North Carolina if both are residents or both have North Carolina taxable income.

Everyone files Form D-400, residents, part-year residents and nonresidents alike, with Schedule S for additions and deductions, Schedule A for itemized deductions, Schedule PN for part-year residents and nonresidents and Form D-400TC for credits. 2025 returns were due April 15, 2026; the statute sets the same date, April 15, for 2026 returns, filed in 2027.

If you have a federal extension, you get the six-month North Carolina extension automatically by filling in the federal extension circle on the D-400; otherwise file Form D-410 by April 15. Neither extends the time to pay, and a federal disaster postponement does not carry over automatically.

Check a North Carolina refund with NCDOR’s “Where’s My Refund?” tool at ncdor.gov/refunds, or call its refund line at 1-877-252-4052. You will need the Social Security number on the return and the exact refund amount, from line 34 of Form D-400.

NCDOR gives no standard processing time, and it screens returns for identity theft, which can mean a request to verify who you are. If more than six weeks have passed since you got the e-file acknowledgment, NCDOR says to call 1-877-252-3052; for a paper return, it says to wait 12 weeks before mailing a copy. Paper returns asking for a refund go to PO Box R, Raleigh, NC 27634-0001.

North Carolina has no local income tax: cities and counties can levy only taxes the General Assembly authorizes, and none is authorized on income. It also has no reciprocal agreement exempting cross-border workers. A nonresident who works in North Carolina is subject to North Carolina withholding on that pay and files a D-400 with Schedule PN, and NCDOR says any relief from double tax must come from the home state.

A North Carolina resident who works in South Carolina, Virginia or another state is taxed by North Carolina on all income and claims the D-400TC credit for the other state’s tax on the same income, up to the North Carolina tax on it. No credit is allowed for city or county income taxes. Virginia treats North Carolina as a border state with a special calculation for its own residents who work here.

You are a resident if North Carolina is your domicile, or if you live here for more than a temporary or transitory purpose; more than 183 days in the state creates a presumption of residence. In a year you move, you file as a part-year resident with Schedule PN, which taxes all income received while a resident and North Carolina-source income for the rest of the year. Someone who moves away stays a resident until they have both set up a domicile elsewhere and abandoned the North Carolina one.