North Carolina state income tax
North Carolina has a state income tax. It is flat, with a top marginal rate of 3.99%. Flat rate for tax years after 2025 is 3.99% (down from 4.25% in 2025), per Session Law 2023-134. NCDOR's own rate-schedule page notes additional rate reductions may apply for tax years beginning with 2027 based on statutory revenue-growth triggers (a further cut toward 3.49% is possible but not guaranteed). Capital gains are taxed as ordinary income (no special lower rate).
Does North Carolina have a state income tax?
Yes. North Carolina taxes individual income on a flat schedule topping out at 3.99%. Flat rate for tax years after 2025 is 3.99% (down from 4.25% in 2025), per Session Law 2023-134. NCDOR's own rate-schedule page notes additional rate reductions may apply for tax years beginning with 2027 based on statutory revenue-growth triggers (a further cut toward 3.49% is possible but not guaranteed).
| Item | North Carolina |
|---|---|
| State income tax | Yes, flat |
| Top marginal rate | 3.99% |
| Capital gains | Taxed as ordinary income, up to 3.99% |
| State sales tax | 4.75% (plus local) |
| Avg. property tax rate | 0.66% of home value |
| Estate / inheritance tax | None |
How does North Carolina tax capital gains?
North Carolina has no separate, lower rate for capital gains. They are taxed as ordinary income at the same rates as your wages, up to 3.99%, on top of federal capital gains tax. See how capital gains tax works in 2026.
What about retirement income in North Carolina?
Retirement income is taxed differently from wages in many states. For how North Carolina treats Social Security, pensions, and 401(k)/IRA withdrawals, see North Carolina retirement taxes.
Sources
- North Carolina income tax rates and brackets: North Carolina Department of Revenue / Taxation.
- North Carolina capital gains treatment: North Carolina tax authority.
- North Carolina sales tax: North Carolina Department of Revenue.