North Carolina Income Tax Calculator
North Carolina’s flat 4.25% rate is dropping to 3.99% next year — and it pairs with a separate, often-missed NC Child Deduction that has nothing to do with the federal Child Tax Credit. This tool covers federal, North Carolina state, FICA, and the child deduction tiers in one place.
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How North Carolina Income Tax Actually Works
North Carolina replaced its old progressive system (rates from 6% to 7.75%) with a single flat rate back in 2014, and the rate has been falling steadily since. For the 2025 tax year it sits at 4.25%; starting with the 2026 tax year, it drops again to 3.99%, with the General Assembly able to trigger further reductions in future years based on state revenue targets. Instead of a federal-style bracket system, North Carolina simply applies that one rate to your taxable income after the standard deduction — $12,750 for single filers and those married filing separately, $19,125 for head of household, and $25,500 for married filing jointly.
The detail many parents miss entirely: North Carolina has its own Child Deduction, a separate benefit from the federal Child Tax Credit, claimed on Form D-400 Schedule S. Rather than a flat dollar amount, it’s tiered by your adjusted gross income — the deduction shrinks in steps as your income rises, and disappears completely above roughly $70,000 (single) to $140,000 (married filing jointly). Because it’s a deduction against North Carolina taxable income rather than a credit against tax owed, its value depends on your income level, not just your filing status.
A timely wrinkle for the 2025 tax year specifically: North Carolina uses “static” conformity to the federal tax code as of January 1, 2023 — meaning new federal deductions enacted after that date are not automatically recognized at the state level unless the legislature separately adopts them. That includes several One Big Beautiful Bill Act provisions taking effect for 2025 federal returns, such as the new deductions for tip income, overtime pay, and auto loan interest. If you claimed any of those federally, your North Carolina taxable income will run higher than your federal AGI, and you’ll need to reconcile the difference on Form D-400 Schedule S.
Frequently Asked Questions
North Carolina applies a flat 4.25% rate to taxable income for the 2025 tax year, the same rate regardless of filing status. The rate drops to 3.99% starting with the 2026 tax year under current law.
No. They are entirely separate. The federal Child Tax Credit reduces your federal tax owed dollar-for-dollar; the NC Child Deduction reduces your North Carolina taxable income before the 4.25% rate is applied, and its amount shrinks as your AGI rises.
No. North Carolina’s tax code conforms to federal law only as it existed on January 1, 2023, so the 2025 federal deductions for tips, overtime pay, and auto loan interest are not recognized on your NC return unless the General Assembly separately adopts them.
Social Security benefits are fully exempt from North Carolina tax. Pension, 401(k), and IRA distributions are generally taxable at the flat rate, though certain government retirees may qualify for the Bailey settlement exemption on specific public-sector retirement benefits.
No. North Carolina does not permit any city, county, or local government to levy its own income tax, so the state flat rate is the entire income-tax picture.
North Carolina applies a flat 4.25% rate to taxable income for the 2025 tax year, the same rate regardless of filing status. The rate drops to 3.99% starting with the 2026 tax year under current law.
No. They are entirely separate. The federal Child Tax Credit reduces your federal tax owed dollar-for-dollar; the NC Child Deduction reduces your North Carolina taxable income before the 4.25% rate is applied, and its amount shrinks as your AGI rises.
No. North Carolina’s tax code conforms to federal law only as it existed on January 1, 2023, so the 2025 federal deductions for tips, overtime pay, and auto loan interest are not recognized on your NC return unless the General Assembly separately adopts them.
Social Security benefits are fully exempt from North Carolina tax. Pension, 401(k), and IRA distributions are generally taxable at the flat rate, though certain government retirees may qualify for the Bailey settlement exemption on specific public-sector retirement benefits.
No. North Carolina does not permit any city, county, or local government to levy its own income tax, so the state flat rate is the entire income-tax picture.
Methodology: Calculations use North Carolina’s 2025 flat 4.25% Personal Income Tax rate, standard deduction ($12,750 single/MFS, $19,125 HOH, $25,500 MFJ), an approximate tiered NC Child Deduction by AGI (verify your exact tier with NCDOR Form D-400 Schedule S), the 2025 IRS federal tax brackets and Child Tax Credit rules, and 2025 Social Security (6.2% to the $176,100 wage base) and Medicare (1.45% + 0.9% additional Medicare tax) rates. North Carolina permits no local income tax and uses static IRC conformity as of January 1, 2023, so several 2025 federal OBBBA deductions are not reflected at the state level. This tool provides estimates for planning purposes only and is not tax, legal, or financial advice.