North Carolina taxes

North Carolina taxes personal income at a flat 4.25%. A sole proprietor owes no separate business tax, but an LLC pays a $200 annual report fee every year, even in a year it does nothing. Partnerships and S corporations are not taxed on their profit at the business level. Corporations pay a $200 minimum franchise tax, and C corporations also pay 2.25% corporate income tax for 2025.

Personal income tax

North Carolina residents file Form D-400. There is one rate, 4.25%, on every dollar of taxable income for every filing status.

The standard deduction is $12,750 single, $25,500 married filing jointly and $19,125 head of household. There is no extra amount for being 65 or older or blind. Married filing separately, it is $12,750, or zero if your spouse itemizes. Social Security and railroad retirement are not taxed.

Return

Form D-400

Rate

4.25% for every filing status

Standard deduction

$12,750 single or married filing separately, $25,500 married filing jointly, $19,125 head of household

Child deduction

Up to $3,000 per qualifying child, getting smaller as income rises and ending above $140,000 married filing jointly, $105,000 head of household, $70,000 single

Not taxed

Social Security and railroad retirement

Itemized deductions

North Carolina's own list: mortgage interest and property taxes together up to $20,000, charitable gifts, and medical costs above 7.5% of income

Sole proprietor

A sole proprietor with no LLC owes North Carolina nothing at the business level. The annual report is required of corporations, LLCs, LLPs and LLLPs, so you file none and pay no fee.

Your business profit is taxed on your own Form D-400. North Carolina does not follow federal bonus depreciation or the federal Section 179 limits: it adds back 85% of your federal bonus depreciation and 85% of any Section 179 deduction above its own limits of $25,000 and $200,000 of property, then gives 20% of it back as a deduction on each of the next 5 returns.

Single-member LLC

Every North Carolina LLC files an annual report with the Secretary of State, however few members it has. The fee is $200, due April 15, from the year after the LLC was formed. North Carolina says it is due whether or not the company is actually doing business, so a dormant LLC still pays it every year.

The LLC's profit is taxed on your own Form D-400, with the same depreciation add-back as a sole proprietor.

Partnership

A North Carolina partnership files Form D-403, the partnership income tax return. The partnership is not taxed on its profit; the profit passes through to the partners.

If any partner lives outside North Carolina, the partnership pays tax on that partner's behalf. Each such partner gets a Form D-403 NC K-1 to claim credit for what was paid for them.

A partnership set up as an LLC files the same $200 LLC annual report. LLPs and LLLPs file an annual report as well.

S corporation

A North Carolina S corporation files Form CD-401S. It is not taxed on its profit at the business level.

Any North Carolina corporation with assets owes a minimum franchise tax of $200 a year and must file a return, whatever its profit. Skipping it can cost more than money: the state can suspend the corporation's articles. Corporations also file the Secretary of State annual report.

C corporation

A C corporation files Form CD-405 and pays corporate income tax of 2.25% for 2025, down from 2.5% in 2024. The rate falls to 2% in 2026 on the way to being phased out. A corporation selling into other states counts only its North Carolina share, measured by sales.

It also pays the franchise tax, alongside the income tax rather than instead of it. The minimum is $200 a year for any corporation with assets; above that the tax is $1.50 per $1,000 of its franchise tax base. Corporations also file the Secretary of State annual report.

Return

Form CD-405

Corporate income tax

2.25% for 2025, 2% for 2026

Franchise tax

At least $200 a year, owed alongside the income tax

Multi-state profit

North Carolina sales over total sales

Estimate your state tax

Pick your business type and enter this year's numbers to see the state business tax North Carolina charges. It assumes all your sales are in North Carolina.

An estimate for planning, not tax advice.

Sources

• North Carolina Individual Income Tax Instructions (Form D-401), 2025
• North Carolina Form D-400 Schedule S, N.C. Adjustments for Individuals, 2025
• ncdor.gov Corporate Income and Franchise Tax Rates
• ncdor.gov 2025 CD-405 C-Corporation Tax Return Instructions
• ncdor.gov 2025 D-403A Partnership Tax Return Instructions
• ncdor.gov Corporate Income and Franchise Tax Rates (read 2026-08-13)

Last reviewed August 2026.