North Carolina

Sales Tax

  • Statewide: 4.75%
  • Counties can levy an additional sales tax of no more than 2.75%.
  • Current average sales tax (with local taxes included): 6.938%
  • Common Exceptions at State Level:
    • Prescription Medicine: Exempt
    • Unprepared Foods: Exempt at the state level, but most counties levy a tax of 2%
    • Electricity: 7%
  • Gasoline Tax: 54.75 cents/gallon (Includes all state, local and federal taxes)
  • Diesel Fuel Tax: 60.75 cents/gallon (Includes all state, local and federal taxes)
  • Cigarette Tax: 45 cents/pack of 20
  • Some counties level an additional .5% transit tax. Motor vehicles are exempt from sales tax but pay a 3% highway use tax at time of purchase.

 

Personal Income Tax

  • Personal Income Tax Rate: 5.25% 
  • Standard deduction: Single Filing Status: $10,750. Married Filing Jointly: $21,500
  • Personal Exemption Allowance: None
  • Itemized Deductions Allowed?: Yes, if itemized on federal return. Differ from federal itemized deductions and subject to limitations.
  • Retirement Income
    • Social Security: Exempt
    • IRAs: Taxable at ordinary income tax rates*
    • 401Ks/Defined contribution employer retirement plans: Taxable at ordinary income tax rates
    • Private pensions: Taxable at ordinary income tax rates
    • Public Pensions: Taxable at ordinary income tax rates*
  • Military Pay
    • Active Duty Pay: Taxable to the extent include in federal Adjusted Gross Income
    • Military Retirement Pay: Exempt (as of 2021 tax year)
    • Military Disability Pay: Exempt
    • VA Disability Dependency & Indemnity Compensation Benefits: Taxable at ordinary income tax rates
    • SBP/SSBP/RCSBP/RSFPP: Exempt (as of 2021 tax year)

Income tax comments: *May be excluded from taxation if had five years active duty before Aug. 12, 1989. (Bailey settlement agreement)

 

Property Tax

  • Local municipalities average .84% of the property's assessed value.
  • Calculation of assessed value: 100% of fair market value; reappraised at least every eight years.
  • Relief programs for:
    • 65 and over or Disabled: Excludes greater of first $25,000 or 50% of appraised value. Income cannot exceed $31,500.
    • Disabled or Surviving Spouse (if not remarried): Excludes up to $45,000 of appraised value if 100% service-connected disability; no income requirements.
    • Circuit Break Property Tax Deferment: If 65 or disabled and low income, annual tax is limited to 4% or 5% of income up to $47,250, though taxes over limit are only deferred.
  • Personal Property Tax: Yes. Rates and exemptions vary.

 

Inheritance & Estate Taxes: None

 

Department of Revenue website: www.dor.state.nc.us

More Financial Guidance From MOAA 

Premium and Life members can consult our financial staff for education and consumer advice.

 

Looking to get more out of your membership? MOAA has more than 400 chapters around the country. Get involved in your community by finding the one closest to you and joining today!