How North Carolina taxes your paycheck
North Carolina taxes income at a flat 3.99% for 2026, down from 4.25% in 2025, part of a series of scheduled cuts. A further cut, to 3.49%, can start in 2027 only if state revenue meets targets set in law.
The standard deduction is $12,750 single, $19,125 head of household and $25,500 married filing jointly. There is no personal exemption, no state payroll tax on employees and no local income tax, so your paycheck shows just one state line.
North Carolina income tax = 3.99% × (wages − 401(k) − health premiums − standard deduction)
- Standard deduction: $12,750 single, $25,500 married filing jointly, $19,125 head of household.
North Carolina's rate cuts
North Carolina moved to a single rate in 2014 and has cut it most years since. The 2023 budget law set the steps below and allows more after 2026: each further cut of half a point happens only once the state's General Fund revenue for the previous fiscal year passes a target written into the law.
| Tax year | Rate |
|---|---|
| 2022 | 4.99% |
| 2023 | 4.75% |
| 2024 | 4.5% |
| 2025 | 4.25% |
| 2026 | 3.99% |
The state budget office's May 2026 revenue forecast expects both of the next two targets to be met, which would bring the rate to 3.49% in 2027 and 2.99% from 2028. New legislation can change that path, so treat those as forecasts until the Department of Revenue confirms them.
The North Carolina child deduction
Instead of a dependent exemption, North Carolina gives a deduction for each child who qualifies for the federal child tax credit. It is set in law, not indexed, and steps down as federal adjusted gross income rises, faster for single filers than for couples:
| Per child | Married filing jointly, AGI up to | Head of household | Single |
|---|---|---|---|
| $3,000 | $40,000 | $30,000 | $20,000 |
| $2,500 | $60,000 | $45,000 | $30,000 |
| $2,000 | $80,000 | $60,000 | $40,000 |
| $1,500 | $100,000 | $75,000 | $50,000 |
| $1,000 | $120,000 | $90,000 | $60,000 |
| $500 | $140,000 | $105,000 | $70,000 |
Above the last line there is no deduction. At 3.99%, the full $3,000 is worth about $120 of tax a year for each child; the calculator above leaves it out.
Retirement income in North Carolina
Social Security benefits aren't taxed by North Carolina, but most other retirement income, including 401(k) and IRA withdrawals and pensions, is taxed at the same 3.99% as wages.
The exception is the Bailey settlement: people who had five or more years of creditable service by August 12, 1989 in North Carolina's state or local government retirement systems, or in a federal or military retirement plan, can exclude those benefits from state tax entirely. For the state's 401(k) and 457 plans, the test is whether you had contributed before that date. Benefits from other states' public pensions don't qualify.
Worked example
You earn $75,000 a year in North Carolina, file single and are paid every two weeks. Federal income tax is $7,670 and Social Security and Medicare $5,738, the same in every state.
North Carolina taxes $62,250 of it, for $2,484 of state income tax. You keep $59,109 a year, or $2,273.41 per paycheck: $2,484 a year less than in a state with no income tax.
The same salary takes home $58,599 in Georgia and $61,593 in Florida.
Take-home pay in North Carolina by salary
Single filer, paid every two weeks, no 401(k) or premiums.
| Salary | North Carolina tax | Take-home per year | Per paycheck |
|---|---|---|---|
| $40,000 | $1,087 | $33,233 | $1,278.18 |
| $60,000 | $1,885 | $48,505 | $1,865.57 |
| $80,000 | $2,683 | $62,427 | $2,401.03 |
| $100,000 | $3,481 | $75,699 | $2,911.49 |
| $150,000 | $5,476 | $108,315 | $4,165.95 |
Things to know
- Withholding is set slightly high. The 2026 employer withholding tables use 4.09% rather than 3.99%, so most people get a small refund when they file.
- Overtime and tips stay taxable. North Carolina didn't adopt the new federal deductions for tips and overtime, so that pay is fully taxed by the state.
- This estimates what you owe, not what's withheld. Withholding follows your W-4 and North Carolina's own withholding form, so paychecks can differ a little; the difference comes back as a refund or is due when you file. The W-4 withholding calculator checks the federal side.
Questions people ask
What is North Carolina's income tax rate in 2026?
A flat 3.99% on taxable income after the standard deduction, down from 4.25% in 2025.
Does North Carolina tax overtime and tips?
Yes. Unlike the federal return, North Carolina gives no deduction for overtime pay or tips.
Are there local income taxes in North Carolina?
No. Counties and cities rely on property and sales taxes; the state income tax is the only one on wages.
Paycheck calculators for other states
California · Florida · Georgia · Illinois · Michigan · New York · Ohio · Pennsylvania · Texas. For any other state, the paycheck calculator takes your state's rate.
Sources
- North Carolina Department of Revenue: NC-30 income tax withholding tables and instructions for employers (2026)
- North Carolina Department of Revenue: tax rate schedules
- North Carolina Department of Revenue: standard deduction
- North Carolina Department of Revenue: child deduction
- North Carolina Office of State Budget and Management: scheduled income tax cuts (May 2026 forecast: 3.49% in 2027, 2.99% in 2028)
- North Carolina Department of Revenue: Bailey decision concerning federal, state and local retirement benefits
- IRS: tax inflation adjustments for tax year 2026 (federal brackets and standard deduction)
- Social Security Administration: contribution and benefit base ($184,500 in 2026)
Reviewed October 11, 2026 by The Dollars World team. How we build and check our calculators · Our data and formulas. This is general information, not financial advice.