North Carolina is among the states with the lowest effective business tax rates in the country and according to the State and Local Business Taxes report released in 2013 by the Council on State Taxation (COST), North Carolina ranks #1 in the U.S. for the lowest state and local tax burden on business.
North Carolina maintains the highest rating (AAA) from all three major bond rating agencies. In North Carolina, only the state has the authority to tax corporate income and there is no state property tax. Additionally, there is no tax, state or local, on inventories or intangibles.
North Carolina Corporate Tax Rate
The North Carolina Corporate Tax Rate is 3.0% and will be reduced to 2.5% in 2019. Of the 44 states that levy a corporate income tax, North Carolina has the lowest rate.
Property Tax Rates
Real and personal property are taxed by the local government, with a single property tax assessment in each county. The value determined by the county assessor constitutes the base for all levies, including those of cities and towns on property located within the municipality. Property is assessed at 100% of its appraised value.
|County/Municipality||Tax Rate Per
|Town of Enfield||$0.838|
|Town of Halifax||$0.66|
|Town of Hobgood||$0.72|
|Town of Littleton||$0.80|
|City of Roanoke Rapids||$0.651|
|Town of Scotland Neck||$0.785|
|Town of Weldon||$0.77|
|Rate does not include special assessments, which are location specific.|
- Inventories are exempt from property taxes.
- Recycling equipment and facilities used exclusively for recycling and resource recovery are exempt from property taxes.
Sales & Use Tax
Retail sales of tangible personal property not subject to a reduced rate of tax are subject to the 4.75% general State rate of sales or use tax and a 2.25% local rate (combined 7%).
North Carolina offers reduced rate allowances on certain parts, accessories and construction supplies for eligible industries and manufacturing processes:
- Industrial machinery and equipment is exempt from sales and use tax but is subject to an excise tax. This rate is 1 percent with a maximum of $80 per item.
- Parts and accessories to manufacturing machinery, which include most supplies used in the manufacturing process but not becoming a part of the manufactured product, including pollution abatement equipment, are taxed at 1 percent.
- Purchases of ingredients or component parts of manufactured products are exempt from sales or use tax.
- Packaging containers and items that become part of a manufactured product and are delivered with the product to the customer are exempt from sales and use tax.
- Air courier services; Aircraft manufacturing; Bioprocessing; Financial services, securities operations and related systems development; Motor vehicle manufacturing; Paper-from-pulp manufacturing; Pharmaceutical and medical manufacturing and distribution; Semiconductor manufacturing; Solar electricity generating materials manufacturing; and Turbine manufacturing companies may receive a refund of sales taxes on purchases of building materials, fixtures and equipment if the facility costs at least $50 million in Tier 1 counties and $100 million in Tier 2 and 3 counties.
- Sales of electricity to manufacturers and farmers are exempt from sales and use tax.
- Sales of electricity and eligible business property to an internet datacenter or software publishing datacenter business that invests at least $250 million in private funds are exempt from sales and use tax.
- Piped natural gas is exempt from sales and use tax but is subject to an excise tax. This tax rate is based on the number of therms of gas consumed in a month.
- Fuel purchased by a manufacturer for use in connection with the operation of a manufacturing facility is not subject to the privilege tax.
- Motor vehicles are exempt from sales and use tax but are subject to the highway use tax. Highway use tax is 3 percent of the retail value of the motor vehicle with a maximum tax of $1,500 per recreational vehicle and $1,000 maximum per Class A or B motor vehicles.
- Aircraft and boats are taxed at 3 percent with a maximum tax of $1,500 per item.
- Computer software or digital property that becomes a component part of other computer software or digital property is exempt from sales and use tax.
Unemployment Insurance (UI)
1.0% (first 2 years) - New Employer Tax Rate
0.060% - Minimum Tax Rate
5.76% - Maximum Tax Rate
$23,500 - Taxable Wage Base (per employee)
$1.50 per $1,000 of the largest base, either:
a) Net worth apportioned to North Carolina;
b) 55% of appraised value of property in the state subject to local taxation; or
c) Book value of real and tangible personal property in the state less accumulated depreciation for tax
purposes. For an S Corporation, the tax rate is $200 for the first $1 million dollars of the corporation’s tax base and $1.50 per $1,000 of the largest tax base that exceeds $1 million.
North Carolina Personal Income Tax
The North Carolina Personal Income Tax Rate is 5.499% and will reduce to 5.25% in 2019. Please refer to the the NC Department of Revenue for information on personal income taxes and exemptions at https://www.ncdor.gov/taxes/individual-income-tax.
A local occupancy tax on the rental of rooms and lodging is levied in Halifax County primarily for the purpose of generating revenue to promote travel and tourism. Halifax County's occupancy tax rate is 5%. Within the City of Roanoke Rapids, the occupancy tax rate is 6%.