STATE RANKING #22

Quick facts: 

-North Carolina is one of few states with a Franchise tax on top of corporate income tax.

-North Carolina has a flat income tax rate for both individual and corporate tax

5.25%

State Income Tax

State
Income
Tax

2.50%

Cost of Setting Up A Business

state
business
tax

AVERAGE

Property
Taxes

6.97%

Sales
Tax (average)

State Income Taxes in North Carolina

The state of North Carolina is one of few states with a flat individual income tax (similar to Colorado and Kentucky). North Carolina’s individual tax rate is 5.25%.

State Business Taxes in North Carolina

The state of North Carolina has a low flat Corporate Tax rate of 2.5%. The Corporate tax rate is only assessed on C Corporations. For other business entities that are flow-thru entities (such as S Corporations, LLCs, etc.) they are taxed at the individual tax rate.

Franchise Tax in North Carolina

In addition to the corporate tax, North Carolina has a Franchise Tax. The Franchise tax is assessed on both C Corps and S Corps. It is a minimum tax of .15% of asset values or $200. The asset values are based on the largest of either capital stock, appraised value of tangible property, or investment in tangible property.

Sales Taxes in North Carolina

Like many states, North Carolina has multiple tax rates. One at the state level and another at the local level. The state rate is 4.75% the average local rate is 2.22% (total average rate for North Carolina Sales Tax is 6.97%).

Property Taxes in North Carolina

The average property tax rate for residential property in the state of North Carolina is 0.85%. North Carolina has a low property tax per capita with collections being at only $974. This makes it a preferable place to own property.

Unemployment taxes in North Carolina

Unemployment taxes usually consist of three factors. They are the wage base, range of rates, number of schedules. Below is an outline of the three:

  • Wage Base – North Carolina has a wage base of $24,300 for 2020
  • UI Rates – range from 0.06% to 5.76%
  • Schedules – North Carolina has a single rate schedule regarding UI.

North Carolina Business Entities - LLCs

North Carolina one of the more expensive states to set up your LLC. Here are some important facts:

  • North Carolina has an annual fee of $200.
  • When you register with the state, you pay a one time fee of $125
  • Secretary of State of North Carolina website – click here
  • If you would like help setting up your LLC, we recommend using IncFile.com. They are simple and easy to use.

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