NC's flat income tax dropped to 3.99% in 2026 — the final step in a five-year phasedown from 4.99%. See exactly what you take home after federal tax, state tax, Social Security, and Medicare.
Under Session Law 2021-180, North Carolina systematically reduced its flat income tax rate each year. The 3.99% rate effective January 1, 2026 is the final scheduled step in that phasedown. NC uses its own standard deduction ($12,750 single / $25,500 married / $19,125 HOH), which is lower than the federal standard deduction — meaning your NC taxable income is slightly higher than your federal taxable income. No North Carolina city levies a local income tax on wages.
Estimates only. NC flat rate: 3.99% on NC taxable income. NC standard deduction: $12,750 single / $25,500 married / $19,125 HOH. Consult a tax professional for advice.
| Gross Pay (this check) | $0.00 |
| Federal Income Tax | −$0.00 |
| North Carolina State Tax (3.99%) | −$0.00 |
| Social Security (6.2%) | −$0.00 |
| Medicare (1.45%) | −$0.00 |
| Net Take-Home Pay | $0.00 |
North Carolina has a flat 3.99% state income tax rate for 2026. This is the final step in a five-year phasedown enacted under Session Law 2021-180: 4.99% (2022), 4.75% (2023), 4.5% (2024), 4.25% (2025), and 3.99% (2026 and beyond). The flat rate applies to all income equally regardless of how much you earn — North Carolina has no income brackets. Future changes below 3.99% would require additional legislation or revenue trigger conditions.
Four taxes come out of a North Carolina paycheck: federal income tax (progressive brackets based on your W-4), North Carolina state income tax (3.99% flat), Social Security (6.2% up to $184,500), and Medicare (1.45% on all wages). Charlotte, Raleigh, Durham, Greensboro, Winston-Salem, Fayetteville, and every other North Carolina city and county do not add a local income tax on wages.
North Carolina's standard deduction is $12,750 for single filers, $25,500 for married filing jointly, and $19,125 for head of household — set by NC General Statutes § 105-153.5. These amounts are lower than the 2026 federal standard deduction ($16,100 single / $32,200 married / $24,150 HOH). That gap means your NC taxable income is higher than your federal taxable income. For example, a single filer earning $75,000 has $58,900 in federal taxable income but $62,250 in NC taxable income — paying 3.99% on that $3,350 difference.
The North Carolina General Assembly passed Session Law 2021-180, which created an automatic multi-year rate reduction schedule as part of a broader fiscal reform. The goal was to make NC more competitive with no-tax states like Tennessee and Florida for attracting residents and businesses. The rate dropped from 5.25% in 2021 to 4.99% in 2022, then continued falling each year to the current 3.99% for 2026. The law also included triggers that could reduce the rate further in future years depending on state revenue conditions, though no further reductions are currently scheduled.
No. Charlotte, Raleigh, Durham, Greensboro, Winston-Salem, Fayetteville, Cary, and every other North Carolina city and county cannot levy a local income tax on wages. North Carolina state law does not authorize local income taxes. Every NC worker pays only the state flat rate of 3.99% — no city surcharge, no county add-on. This is a significant advantage over states like New York, where New York City residents pay an additional 3.876% local income tax on top of the state rate.
Tennessee has no state income tax on wages, saving a $75,000 earner roughly $2,500 per year compared to North Carolina. Virginia uses a progressive system with rates from 2% to 5.75%, and a $75,000 Virginia earner pays roughly $3,200–$3,800 in state income tax depending on deductions — comparable to or more than North Carolina's 3.99%. Georgia, a neighboring flat-tax state, has a slightly higher 4.99% rate. For many moderate-income earners, NC's position is competitive within the Southeast, especially compared to states that have not reduced their rates.
Yes. The One Big Beautiful Bill (2026) exempts overtime premiums and up to $25,000 in tips from federal income tax only. North Carolina still taxes overtime and tip income at the standard 3.99% state rate. Use our Overtime Tax Calculator to see the combined federal savings and remaining North Carolina state tax on overtime pay.
Pre-tax 401(k) contributions reduce both your federal and North Carolina taxable income. NC starts from federal adjusted gross income (AGI), so any pre-tax deduction that lowers your federal AGI also lowers your NC taxable income. On a $500/month 401(k) contribution, you save about $20/month in NC state tax (3.99% × $500) on top of the larger federal savings of $110–$132/month depending on your bracket. Over a year that's about $240 in state tax savings — real money that compounds alongside your retirement contributions.