What Changes in Your Paycheck in North Carolina
Your paycheck in North Carolina shows a North Carolina state income tax line item at a flat 4.75% rate—the same percentage whether you earn $1 or $1. For a $1 salary, that's ~ $1 annually (~ $1 per biweekly paycheck). North Carolina paychecks only show state and federal tax deductions—no local income tax line items. The flat rate means your state tax increases linearly with income, unlike progressive states where tax increases accelerate with higher brackets Retirees see no state tax on retirement income distributions, making North Carolina attractive for those relying on retirement savings.
Example State Tax in North Carolina
What you'll pay in North Carolina state income tax at different salary levels (single filer, no deductions):
| Gross Salary | State Tax (Year) | Effective Rate |
|---|---|---|
| $50,000 | $2,375 | 4.8% |
| $75,000 | $3,563 | 4.8% |
| $100,000 | $4,750 | 4.8% |
| $150,000 | $7,125 | 4.8% |
Use the calculator above to see your exact take-home pay with your filing status and deductions.
North Carolina Income Tax Rate
4.75% flat rate
Everyone pays 4.75% of taxable income, regardless of income level or filing status.
Key Facts That Affect Your Take-Home Pay
- North Carolina uses a flat 4.75% income tax rate for all income levels and filing statuses—unlike federal taxes or states with graduated brackets, your North Carolina tax percentage stays the same whether you earn $1 or $1. This flat rate was reduced from a higher progressive rate in recent years, making it one of the lower flat tax rates in the nation.
- North Carolina's flat tax rate means everyone pays the same 4.75% rate regardless of income level, creating a simple but potentially regressive system where lower earners pay a larger percentage of their take-home pay toward state tax than higher earners. The rate is higher than Pennsylvania's 3.07% but lower than Illinois's 4.95%.
- North Carolina does not require local income tax payments, so your withholding doesn't differ based on work location. All North Carolinians have the same income tax burden—the flat 4.75% state rate.
Is North Carolina Better for You?
North Carolina works well for:
North Carolina works well for high earners who benefit from the flat rate structure. In states with progressive brackets, someone earning $1 might pay 6%-8% effective state tax. In North Carolina, that same person pays a flat 4.75%, resulting in lower total state tax. Retirees also benefit from exemptions on Social Security and most retirement income, making North Carolina attractive for those relying on retirement savings The flat rate provides predictable tax planning for all income levels.
North Carolina may not be ideal if:
North Carolina is challenging for lower-income workers and single filers. While 4.75% seems modest, it's a larger percentage of take-home pay for someone earning $1 compared to someone earning $1. Flat taxes are regressive in their effective impact—they take a larger relative chunk from lower earners' ability to cover necessities A $1 earner pays $1 annually (4.75%), while the same earner in a progressive state with a 0% or very low bracket on the first portion of income might pay less. If you're early in your career or earning below median income, you might keep more net pay in states with progressive brackets that exempt low-income earners or in zero-tax states.
Common Mistakes People Make
Misconception: 'Flat tax means low tax.' North Carolina's 4.75% flat rate isn't necessarily low—it's simple, but not necessarily cheap. For someone earning $1, that 4.75% is $1, which could be more than they'd pay in a progressive state with generous lower brackets. The 'flat tax' label sounds appealing, but it doesn't automatically mean you'll pay less than in states with graduated brackets—especially for middle-income earners who might benefit from progressive brackets elsewhere.
Misconception: 'No local taxes means North Carolina is cheaper than other states.' While North Carolina avoids local income tax complications, the flat 4.75% rate combined with sales taxes (6.75%-7.5% in many areas) and property taxes can still create a significant tax burden. A high earner in North Carolina pays 4.75% income tax, while a high earner in a progressive state might pay a similar or lower effective rate at certain income levels, depending on the state's bracket structure.
Misconception: 'Everyone pays the same percentage, so it's fair.' While everyone pays the same 4.75% rate in North Carolina, the economic impact is different. 4.75% of a $1 salary ($1) represents a larger share of disposable income than 4.75% of $1 ($1). Flat taxes are proportionally equal, but not necessarily equitable in terms of real-world impact on people's financial lives—lower earners pay a larger percentage of their ability to cover necessities, while high earners benefit from not being pushed into higher brackets like they would be in progressive states.
One Thing to Know
North Carolina recently moved from a progressive system to a flat 4.75% rate, which benefits high earners but can be less favorable for lower earners who previously benefited from lower brackets. Many people who moved to North Carolina before the change are surprised to see their effective rate increase.
Important Notes
These calculations are estimates based on current tax law. Your actual take-home pay varies based on:
- Pre-tax deductions (401(k), health insurance, HSA, etc.)
- Your W-4 withholding elections
- Additional income or deductions at tax time
- Individual circumstances and tax situations
Tax rates are subject to change. Federal and state tax laws may be updated annually. This is not tax advice. For personalized help, consult a tax professional familiar with North Carolina tax laws.