Research Areas
North Carolina
The Facts on North Carolina's Tax Climate
Here are some basic facts on North Carolina's tax system and how it compares to other states:
Tax Freedom Day Arrives on April 6 in North Carolina
Tax Freedom Day is the day when Americans finally have earned enough money to pay off their total tax bill for the year. In 2011, North Carolina taxpayers work until April 6 to pay their total tax bill (ranked 27th highest nationally). That's 6 days earlier than national Tax Freedom Day (April 12). The Tax Freedom Days for neighboring states are: Tennessee, March 27 (ranked 49th nationally); Georgia, April 3 (ranked 37th nationally); South Carolina, March 29 (ranked 48th nationally); and Virginia, April 12 (ranked 14th nationally).
Full study of Tax Freedom Day, nationwide and in each state
North Carolina's State and Local Tax Burden at National Average
North Carolina's state and local tax burden is currently estimated at 9.8% of income (16th nationally), equal to the national average of 9.8%. Compared to the 1977 data, North Carolina had a rate of 9.7% (28th nationally), increasing 0.1% overall. Currently residents pay $3,583 per capita in state and local taxes.
North Carolina's State-Local Tax Burden, 1977-Present
Other States' State/Local Tax Burdens
Map of U.S. Showing all State's Burdens and Ranks
Historical Chart Comparing All States' State/Local Tax Burdens from 1977 to 2009
North Carolina 's 2012 Business Tax Climate Ranks 44th
North Carolina ranks 44th in the Tax Foundation's State Business Tax Climate Index. The Index compares the states in five areas of taxation that impact business: corporate taxes; individual income taxes; sales taxes; unemployment insurance taxes; and taxes on property, including residential and commercial property. Neighboring states rank as follows: Tennessee (14th), Georgia (34th), South Carolina (36th) and Virginia (26th).
50-State Comparison of Business Tax Climates (data only)
2012 State Business Tax Climate Index, Ninth Edition (full study)
North Carolina's Individual Income Tax System
North Carolina's personal income tax system consists of three brackets, with a top rate of 7.75% kicking in at an income level of $60,000. Among states imposing personal income taxes, North Carolina's top rate ranks 11th highest nationally. North Carolina's 2006 state-level income tax collections were $1,201 per person, which ranks 11th highest in the nation.
50-State Table of Individual Income Tax Rates
50-State Table of State Individual Income Tax Collections
50-State Table of State and Local Individual Income Tax Collections Per Capita
North Carolina's Corporate Income Tax System
North Carolina's corporate tax structure consists of a flat 6.9% rate. Among states levying corporate income taxes, North Carolina's top rate ranks 27th highest nationally. In 2008, state-level corporate tax collections (excluding local taxes) were $132 per capita, ranking the state the 26th highest nationally.
50-State Table of Corporate Income Tax Rates, 2000-2009
50-State Table of State and Local Corporate Income Tax Collections Per Capita and Per Household, 2005
50-State Table of State Corporate Income Tax Collections Per Capita, 2006
North Carolina Sales and Excise Taxes
North Carolina's state sales tax rate stands at 5.75%, slightly below the national median of 5.85%. In 2007 combined state and local general and selective sales tax collections were $1,230 per person, which ranks 34th highest nationally. North Carolina's gasoline tax is variable and currently stands at 30.2 cents per gallon, which ranks 14th highest nationally. North Carolina's cigarette tax stands at 45 cents per pack of twenty and ranks 43rd highest nationally. The sales tax was adopted in 1933, gasoline tax in 1921.
50-state table of sales, cigarette, gas, beer, wine, and spirits tax rates.
50-State Table of State and Local General and Selective Sales Tax Collections Per Capita
North Carolina Property Taxes: Comparatively Low
North Carolina's localities collected $796.12 per capita in property taxes in fiscal year 2006, which is the latest year the Census Bureau published state-by-state property tax collections. North Carolina is one of the 13 states that collect no state-level property taxes. Its per capita property tax collections in FY2006 rank 38th nationally.
State property tax collections per capita by state
Federal Tax Burdens and Expenditures: North Carolina is a Beneficiary State
North Carolina taxpayers benefit slightly more than the average state's taxpayer from federal spending. Per dollar of Federal tax collected in 2005, North Carolina citizens received approximately $1.08 in the way of federal spending. This ranks the state 27th nationally. This represents a rise from 1995 when North Carolina received $0.95 per dollar of taxes in federal spending, ranking it 36th nationally. Neighboring states and the amount of federal spending they received per dollar of federal taxes paid are: Tennessee ($1.07), Georgia ($1.01), South Carolina ($1.35) and Virginia ($1.51).
Comparing the amount of federal taxes sent to Washington with the amount of federal spending coming back to the state
