North Carolina has a flat 3.99 percent individual income tax rate. North Carolina has a flat 2.00 percent corporate income tax rate—one of the lowest in the nation and scheduled to phase down further, a 4.75 percent state sales tax rate, and an average combined state and local sales tax rate of 6.99 percent. North Carolina has a 0.66 percent effective property tax rate on owner-occupied housing value. North Carolina does not have an estate tax or inheritance tax. North Carolina’s gas tax is 41.25 cents per gallon, and its cigarette excise tax is $0.45 per pack of 20 cigarettes.
North Carolina raises tax revenue primarily through individual income taxes (29.0 percent of total state and local tax revenue), general sales taxes (28.8 percent), and property taxes (22.3 percent). North Carolina collects $5,378 in state and local tax collections per capita, carries $4,214 in state and local debt per capita, and has a 94 percent funded ratio of public pension plans. North Carolina’s tax system ranks 13th overall on the 2026 State Tax Competitiveness Index.
Each state’s tax code is a multifaceted system with many moving parts, and North Carolina is no exception. Use the tabs below to compare North Carolina taxes with other states and to see how North Carolina raises tax revenue. You can also browse our tax maps, which are compiled from our annual publication, Facts & Figures 2026: How Does Your State Compare?
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The State Tax Competitiveness Index enables policymakers, taxpayers, and business leaders to gauge how their states’ tax systems compare. While there are many ways to show how much state governments collect in taxes, the Index evaluates how well states structure their tax systems and provides a road map for improvement.
122 min read
Facts & Figures serves as a one-stop state tax data resource that compares all 50 states on over 40 measures of tax rates, collections, burdens, and more.
2 min read
Individual income taxes are a major source of state government revenue, accounting for more than a third of state tax collections. How do income taxes compare in your state?
9 min read
Retail sales taxes are an essential part of most states’ revenue toolkits, responsible for nearly a quarter of combined state and local tax collections.
18 min read
Forty-four states levy a corporate income tax, with top rates ranging from a 2 percent flat rate in North Carolina to an 11.5 percent top marginal rate in New Jersey. Four states—Georgia, Nebraska, North Carolina, and Pennsylvania—reduced their corporate income tax rates effective January 1, 2026.
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Property taxes are the primary tool for financing local governments. While no taxpayers in high-tax jurisdictions will be celebrating their yearly payments, property taxes are largely rooted in the benefit principle of taxation: the people paying the property tax bills are most often the ones benefiting from the services.
9 min read
Legal sports betting has grown rapidly since the Supreme Court granted states the ability to establish online sports betting markets in Murphy vs. NCAA in 2018.
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The latest IRS and Census data show that people and businesses favor states with low and structurally sound tax systems, which can impact the state’s economic growth and governmental coffers.
8 min read
States would do better to broaden the sales tax base to include currently exempt classes of final consumption than to impose disproportionate taxes on prepared foods.
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While many factors influence business location and investment decisions, sales taxes are something within policymakers’ control that can have immediate impacts—especially as a large number of major cities have combined rates of 9 percent or more.
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Property taxes are the primary tool for financing local governments and generate a significant share of state and local revenues.
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Though gas taxes are intended to serve as user fees and pollution deterrents, they vary widely across states. How does your state’s burden compare?
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As much as 98 percent of vaping products sold in the US are illicit. Most states levy an excise tax on vaping products, but these tax systems vary substantially. The result is a messy tax system covering largely illicit products, and no one knows whether taxes are being collected and remitted on most products sold nationwide.
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However well-intended they may be, sales tax holidays remain the same as they always have been—ineffective and inefficient.
11 min read
An ideal sales tax is imposed on all final consumption, both goods and services, but excludes intermediate transactions to avoid tax pyramiding.
15 min read
Retail sales taxes are an essential part of most states’ revenue toolkits, responsible for 32 percent of state tax collections and 13 percent of local tax collections (24 percent of combined collections).
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