What is North Carolina Income Tax? Rates & Tax Brackets

Updated for tax year 2025.

If you live or work in North Carolina, you’ll likely need to file a North Carolina state income tax return along with your federal return. North Carolina uses a flat income tax system, so the same rate applies to your taxable income regardless of filing status.

This guide explains North Carolina’s 2025 income tax rate, standard deduction, available exemptions, deductions, and credits, and the updates for the current tax year. When you’re ready to file, TaxAct® automatically applies North Carolina’s tax rules to help you accurately prepare your North Carolina return alongside your federal return.

What is the North Carolina state income tax?

North Carolina taxes individual income on a flat-rate basis rather than using progressive brackets. State income tax is collected by the North Carolina Department of Revenue and helps fund state services.

North Carolina income tax rates and tax brackets

North Carolina collects income taxes from its taxpayers at a flat rate. The flat income tax rate for 2025 is 4.25% (decreasing to 3.99% in 2026) and applies to all filers regardless of their income levels.

If you need more information on how federal tax brackets work, you can use our tax bracket calculator for federal taxes.

North Carolina standard deduction

All filer types can take advantage of the North Carolina standard deduction, as long as you are eligible for the federal standard deduction. The North Carolina standard deduction amounts for 2025 are:

Filing status	Standard deduction
Single	$12,750
Married filing jointly and surviving spouse	$25,500
Married filing separately (spouse does not claim itemized deductions)	$12,750
Married filing separately (spouse does claim itemized deductions)	$0
Head of household	$19,125

All filers should complete Form D-400 to claim the standard deduction.

Tax tip: In North Carolina, taxpayers who wish to itemize deductions on their state tax return must also itemize deductions on their federal tax return. However, if you choose to itemize deductions on your federal return, you have the option to either itemize deductions or claim the standard deduction on your state return.

North Carolina exemptions, deductions, and credits

North Carolina offers several deductions and credits that may reduce what you owe. Common items include:

North Carolina child deduction — a deduction for each qualifying child for whom you claim the federal child tax credit. The amount depends on your filing status and federal adjusted gross income (up to $3,000 per child).
Credit for income tax paid to another state or country — for North Carolina residents who paid tax to another state or country on income also taxed by North Carolina.
Bailey retirement benefits exclusion — certain retirement benefits received by retirees (or their beneficiaries) may be excluded from North Carolina taxable income.

For a full list of North Carolina income tax credits and deductions, see the North Carolina Department of Revenue.

North Carolina tax changes for 2025

The flat income tax rate decreased from 4.50% to 4.25% for tax year 2025.

FAQs

Does North Carolina have a state income tax?

Yes, North Carolina has a state income tax.

What is the North Carolina income tax rate?

North Carolina’s individual income tax rate is 4.25% for tax year 2025. Because North Carolina uses a flat tax, the same rate applies regardless of your income level or filing status.

What are the North Carolina income tax brackets for 2025?

North Carolina does not have income tax brackets for tax year 2025, as the state uses a flat rate of 4.25% for all filers. See the North Carolina income tax rates table above for filing-status details.

How does North Carolina state income tax work?

North Carolina state income tax generally starts with your federal adjusted gross income, then applies North Carolina additions and subtractions, and either the North Carolina standard deduction or North Carolina itemized deductions. After you determine your North Carolina taxable income, North Carolina applies the flat income tax rate. Credits on Form D-400TC may further reduce your tax.

Do I have to file a North Carolina state tax return?

You may need to file a North Carolina state tax return if you are a North Carolina resident, part-year resident, or nonresident with North Carolina-source income and you meet North Carolina’s filing requirements. North Carolina generally requires filing if your income exceeds the standard deduction for your filing status. Check the North Carolina Department of Revenue guidance for your situation.

What is the North Carolina standard deduction for 2025?

For tax year 2025, North Carolina’s standard deduction is $12,750 for single and married filing separately filers, $25,500 for married filing jointly, and $19,125 for head of household filers.

How much is North Carolina state income tax?

There isn’t one North Carolina state income tax amount that applies to everyone. How much North Carolina state income tax you owe depends on your taxable income, filing status, standard deduction vs. itemized deductions, child deduction, and credits. North Carolina applies a flat 4.25% rate to your North Carolina taxable income after those adjustments.

Why is my North Carolina tax return different from my federal return?

North Carolina generally uses federal adjusted gross income as a starting point, but North Carolina uses different rules for standard deductions, tax rates, and certain income adjustments. North Carolina has also not yet adopted several new tax deductions included in the Working Families Tax Cut Act (One Big Beautiful Bill or OBBB). As a result, your North Carolina taxable income, deductions, or credits may differ from your federal return.

The good news is that our tax software automatically applies North Carolina’s current tax rules when preparing your state return, so you don’t have to calculate these differences yourself.

For more information on how federal law affects North Carolina returns, visit the North Carolina Department of Revenue. If you’d like to learn more about recent federal tax law changes, see our OBBB tax changes guide.

The bottom line

North Carolina has a flat state income tax rate and an available standard deduction for taxpayers. Understanding how North Carolina calculates taxable income, the child deduction, and available credits can help you estimate what you may owe — and what you may get back.

When you’re ready to file, TaxAct can help you prepare your federal and North Carolina returns in one place so you can file with confidence.

Already filed your taxes and waiting for your refund? Learn more about where your North Carolina state tax refund is.

This article is for informational purposes only and not legal or financial advice.

All TaxAct offers, products and services are subject to applicable terms and conditions.

The OBBB is now also being referred to by lawmakers as the Working Families Tax Cut Act. You may see one or both names used here, but they refer to the same set of tax changes.

Citations

North Carolina Department of Revenue. “2025 D-401 Individual Income Tax Instructions.” Accessed 27 July 2026.
North Carolina Department of Revenue. “2025 Personal Taxes Bulletin.” Accessed 27 July 2026.
North Carolina Department of Revenue. “Tax Rate Schedules.” Accessed 27 July 2026.
North Carolina Department of Revenue. “Questions and Answers About the Impact of Federal Law on N.C. Individual and Corporate Income Tax Returns for Tax Year 2025.” Accessed 27 July 2026.
TaxAct. “Working Families Tax Cuts Act: 2025 Tax Reform Explained.” TaxAct Blog.
TaxAct. “Where’s My North Carolina State Tax Refund?” TaxAct Blog.

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Tags: Filing StatusState TaxesTax DeductionsUpdated for tax year 2025

Meghen Ponder: Meghen Ponder is an editorial writer for TaxAct who specializes in writing content about finance and taxes. She enjoys decoding the intricacies of the tax world and helping others answer their tax questions.