North Carolina's rate fell to 3.99% on 1 January 2026, completing a phase-down that began at 5.75%. Paired with a generous standard deduction, it is now one of the lighter income tax regimes in the southeast.
| Gross pay | — |
| Federal income tax | — |
| Social Security6.2% up to $184,500 | — |
| Medicare1.45%, no cap | — |
| State income tax | — |
| 401(k) contribution | — |
| Health and HSA | — |
Useful if you are comparing a job that pays monthly against one that pays every two weeks, or working out what a raise is worth per paycheck.
| Pay schedule | Gross | Take-home |
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North Carolina legislated a multi-year reduction of its flat individual income tax rate, stepping down through 4.75%, 4.5% and 4.25% before reaching 3.99% at the start of 2026. That was the final scheduled step of the enacted schedule, though further reductions contingent on revenue triggers remain a live possibility.
The transformation is substantial in context. North Carolina ran a graduated system topping out at 7.75% little more than a decade ago. It now has one of the lowest flat rates among states that tax wages, behind only Pennsylvania, Ohio, Indiana, Arizona and Louisiana.
North Carolina's standard deduction is $12,750 for a single filer and $25,500 for a couple — close to the federal figure and far above what most flat-tax states offer.
There is no personal exemption, so the deduction is the entire allowance. But at these levels it removes a large share of a modest income from tax entirely. A single filer earning $35,000 is taxed on $22,250, giving an effective state rate of about 2.5% rather than the nominal 3.99%.
No North Carolina county or municipality levies an income tax. Charlotte, Raleigh and Durham residents pay the state rate and nothing further on income.
This matters for comparison against the other states people weigh North Carolina against. Virginia to the north has a top rate of 5.75% reached at just $17,000 of taxable income, which is far more punishing for a middle earner. South Carolina's structure is more favourable at the bottom but reaches 6% quickly. Tennessee to the west takes nothing at all but funds itself through one of the highest sales tax rates in the country.
A flat 3.99%, down from 4.25% in 2025. This was the final step of the legislated phase-down, though further revenue-triggered reductions remain possible.
No. No county or city levies one.
Social Security is exempt. Other retirement income is generally taxable at the flat rate, though certain government pensions covered by the Bailey settlement are exempt.
No. North Carolina offers a standard deduction of $12,750 single or $25,500 joint, and no separate personal exemption.