North Carolina State Income Tax in 2025: A Guide

North Carolina has a flat state income tax rate of 4.5%. This makes it similar to states like Arizona, which also don’t have tax brackets. The fixed rate applies to all individual taxpayers regardless of income level, making tax calculations more predictable.

North Carolina’s individual income tax rate is set to decline annually under recent tax changes, reaching 3.99% by the 2026 tax year.

Whether you’re a full-time resident, a part-year resident, or earn income from North Carolina sources, this flat rate frees you up to focus more on maximizing deductions and credits instead of navigating complex tax questions.

Here’s what you can expect when filing an NC state income tax during the 2024 tax year (the taxes you file in 2025).

Note: Future adjustments to the tax rate in taxable years beginning in 2025 and beyond are possible. In addition, you are still responsible for filing a federal income tax return if you meet the IRS income filing threshold. This article addresses NC state-specific taxes only.

Who has to file North Carolina state income tax?

Anyone who makes money in North Carolina (or from a North Carolina source) might need to file a state income tax return. The biggest determining factors are your adjusted gross income (AGI), filing status, and residency status.

Gross income includes all money you earn before deductions. Wages, tips, interest and rental income are included. North Carolina residents, part-year residents, or nonresidents who work in the Tar Heel State may need to file a North Carolina income tax return if their AGI exceeds a specific amount.

North Carolina’s taxable income filing requirements

Below, you’ll find the minimum gross income requirements for filing a North Carolina state income tax return in 2024. Check the income threshold for your filing status to determine if you need to complete a state tax return.  Note: North Carolina requires married residents to file a joint state income tax return if they filed a joint federal return and both spouses are residents of North Carolina or both had taxable income in North Carolina.  

Filing status	A return is required if federal gross income exceeds
Single	$12,750
Qualifying widow(er)/surviving spouse	$25,500
Nonresident alien	$0
Married filing separate return	$12,750 if spouse does not claim itemized deductions$0 if spouse claims itemized deductions
Married filing joint return	$25,500
Head of household	$19,125

Source: North Carolina Department of Revenue

How North Carolina residency impacts tax filing

North Carolina recognizes three types of residency for tax purposes: resident, part-year resident, and nonresident. Each status determines how much of your income is taxable by the state and which forms you need to file.

The table below explains who qualifies under each residency type and how North Carolina taxes each group:

Residency status	Definition	How North Carolina taxes income
Resident	You lived in North Carolina for the entire tax year or considered it a permanent home.	All income, regardless of where you earn it, is taxed by North Carolina.
Part-year resident	You moved into or out of North Carolina during the tax year.	Any income earned during residency and any North Carolina-sourced income earned while a nonresident is taxed.
Nonresident	You lived outside the state for the entire year.	Only North Carolina-sourced money is taxed.

Source: North Carolina Department of Revenue

Other income tax considerations in North Carolina

North Carolina has specific tax rules on different types of income, including retirement benefits, investments, Social Security, and military income. Here’s a quick look at how North Carolina approaches taxation for each one:

• Retirement and pension income tax: Certain federal, state, and local retirement benefits may be exempt from taxation under the Bailey Decision.
• Investment income tax: Investment income, such as interest, dividends, and capital gains, is generally taxable.  Certain municipal interest and dividends taxable on the federal return may be tax-free on the NC state tax return.  
• Social Security income tax: Social Security and railroad retirement benefits taxed on a federal return may be deducted from your North Carolina state tax return.
• Military income tax: Active-duty military pay is exempt if you are a legal resident of another state. Legal residents of North Carolina include their active-duty military pay on their North Carolina state tax return.

North Carolina state tax deductions and credits

Like other states, North Carolina gives you the opportunity to reduce your tax burden with targeted deductions and credits. The following chart shows some common credits and deductions:

Tax credit/deduction	Description	Amount
North Carolina Child Deduction	Deduction for qualifying dependents, based on filing status and income level.	Up to $3,000 per qualifying child.
North Carolina Standard Deduction	Standard deduction based on filing status.	Up to $25,500 for married filers and $12,750 for singles.
Income taxes paid to another state	Credit for taxes paid to another state to prevent double taxation.	Varies, based on taxes paid.
Historic Rehabilitation Tax Credit	Credit for expenses on qualifying historic property rehabilitation.	Up to 15% of rehabilitation expenses, depending on the total amount.

Visit North Carolina’s Department of Revenue website for a complete list of tax credits and deductions.

How to file North Carolina state income tax

Navigating North Carolina’s tax requirements, deductions, and credits can feel overwhelming, but you don’t have to tackle your NC state income tax return alone. TurboTax offers expert support when filing your taxes on your own or with professional help. We offer expert guidance along the way, and you don’t have to know anything about tax laws or forms.

Our platform helps North Carolina taxpayers maximize deductions and credits no matter whether they call the Tar Heel State home on a full- or part-time basis. With TurboTax, you can find every tax deduction you qualify for while also meeting all requirements.

Need one-on-one guidance or want to completely hand off your taxes? Connect with a TurboTax expert in North Carolina today.