North Carolina
NC · state · 20 cited facts
| Category | Provision | Value | Source |
|---|---|---|---|
| trust-nexus | Incomplete-gift nongrantor trust / ING (income tax reach) | GRAY: the beneficiary-based statute was struck as applied in Kaestner (contingent, no-distribution beneficiary), but an ING grantor is a CURRENT-permissible beneficiary, the case SCOTUS expressly reserved | sources (1)N.C.G.S. Sec. 105-160.2, as limited by North Carolina Dept. of Revenue v. Kaestner, 139 S. Ct. 2213 (2019) · high confidence · as of 2026-07-13 · TY 2026 North Carolina taxes trust income for the benefit of a resident; Kaestner struck it as applied to a no-distribution discretionary beneficiary The tax is computed on the amount of the taxable income of the estate or trust that is for the benefit of a resident of this State, or for the benefit of a nonresident to the extent that the income (i) is derived from North Carolina sources and is attributable to the ownership of any interest in real or tangible personal property in this State or (ii) is derived from a business, trade, profession, or occupation carried on in this State. Note: Kaestner: 'the presence of in-state beneficiaries alone does not empower a State to tax trust income that has not been distributed' where the beneficiary had no right to demand and might never receive it (supremecourt.gov/opinions/18pdf/18-457_2034.pdf). The ING settlor CAN currently receive distributions via the committee, a distinguishable posture. NCDOR's 2019 Kaestner notice concedes only 'particular facts and circumstances' refunds. https://www.ncleg.gov/EnactedLegislation/Statutes/HTML/BySection/Chapter_105/GS_105-160.2.html |
| estate-none | Estate and inheritance tax | None | sources (1)N.C. Gen. Stat. 105-32.1 repeal note · high confidence · as of 2026-07-02 · TY 2025 NC estate tax repealed by S.L. 2013-316 for deaths on or after Jan 1 2013 Repealed by Session Laws 2013-316, s.7(a), effective January 1, 2013, and applicable to the estates of decedents dying on or after that date. Note: NCDOR's estate-tax page contained no repeal sentence when fetched; the statute repeal note is the better authority. https://www.ncleg.gov/EnactedLegislation/Statutes/HTML/BySection/Chapter_105/GS_105-32.1.html |
| rate | Top income tax rate (TY2025) | 4.25% flat (3.99% after 2025) | sources (1)G.S. 105-153.7(a) · high confidence · as of 2026-07-12 · TY 2025 North Carolina flat income tax rate is 4.25% for TY2025, falling to 3.99% thereafter Except as otherwise provided in subsection (a1) of this section, the tax is a percentage of the taxpayer's North Carolina taxable income computed as follows: Taxable Years Beginning Tax In 2022 4.99% In 2023 4.75% In 2024 4.5% In 2025 4.25% After 2025 3.99%. Note: Rate table transcribed from the live HTML with whitespace normalized. Rate falls to 3.99% after 2025, with a trigger-contingent further reduction to a 2.49% floor under (a1). Standard deduction is $25,500 MFJ ($12,750 single) for TY2025. https://www.ncleg.gov/EnactedLegislation/Statutes/HTML/BySection/Chapter_105/GS_105-153.7.html |
| rate | Top income tax rate (TY2026) | 3.99% flat (trigger-based 0.5-point steps toward a 2.49% floor) | sources (1)G.S. 105-153.7(a), (a1) · high confidence · as of 2026-07-12 · TY 2026 North Carolina flat income tax rate is 3.99% for taxable years after 2025, with (a1) revenue triggers stepping toward a 2.49% floor Except as otherwise provided in subsection (a1) of this section, the tax is a percentage of the taxpayer's North Carolina taxable income computed as follows: Taxable Years Beginning Tax In 2022 4.99% In 2023 4.75% In 2024 4.5% In 2025 4.25% After 2025 3.99%. Note: Rate table transcribed from the live HTML with whitespace normalized. Under (a1), if General Fund revenue exceeds the listed triggers the rate steps down by up to 0.50 points per year toward a 2.49% floor; no trigger reduction below 3.99% is in effect as of the read date. https://www.ncleg.gov/EnactedLegislation/Statutes/HTML/BySection/Chapter_105/GS_105-153.7.html |
| rate | Top income tax rate (TY2024) | 4.50% flat (fell to 4.25% in TY2025) | sources (1)N.C.G.S. §105-153.7 (TY2024) · medium confidence · as of 2026-06-21 · TY 2024 North Carolina flat income tax rate is 4.50% for TY2024 For Tax Year 2024, the North Carolina individual income tax rate is 4.50% (0.0450). Note: TY2024 flat rate; fell to 4.25% in TY2025 per G.S. 105-153.7. https://www.ncdor.gov/taxes-forms/individual-income-tax/tax-rate-schedules |
| deduction | Standard deduction (MFJ, TY2025) | $25,500 | sources (1)G.S. 105-153.5(a)(1) · high confidence · as of 2026-06-10 · TY 2025 North Carolina standard deduction is $25,500 (MFJ) for TY2025 The standard deduction allowed to a married couple filing jointly under this subsection is twenty-five thousand five hundred dollars ($25,500) for taxable year 2025.https://www.ncleg.gov/EnactedLegislation/Statutes/HTML/BySection/Chapter_105/GS_105-153.5.html |
| conformity | Loss carryforward | Conforms to IRC §1212 indefinite federal carryforward applies | sources (1)IRC §1212(b) · high confidence · as of 2026-06-21 · TY 2025 IRC §1212(b): capital losses carry forward only for non-corporate taxpayers; no carryback In the case of a taxpayer other than a corporation, if there is a net capital loss for any taxable year: (1) the excess of the net short-term capital loss over the net long-term capital gain for such year shall be a short-term capital loss in the succeeding taxable year, and (2) the excess of the net long-term capital loss over the net short-term capital gain for such year shall be a long-term capital loss in the succeeding taxable year. Note: IRC §1212(b) limits non-corporate taxpayers to carrying losses forward only ('succeeding taxable year'). IRC §1212(a), which allows a 3-year carryback, applies only to corporations. For conformity states, the federal carryforward amount flows to the state return unchanged. https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title26-section1212&num=0&edition=prelim |
| muni-instate | In-state muni bond interest | Exempt: N.C. Gen. Stat. §105-153.5(b)(1) subtraction for interest on NC state and local obligations | sources (1)N.C. Gen. Stat. §105-153.5(b)(1) (NC exempt) and §105-153.5(c)(1) (out-of-state taxable) · high confidence · as of 2026-06-18 · TY 2025 NC exempts NC-issued bonds; out-of-state muni bond interest is NC income addition per §105-153.5(c)(1) Interest upon the obligations of any of the following: This State, a political subdivision of this State, or any agency of this State or a political subdivision of this State. Note: §105-153.5(b)(1) provides the NC-bond subtraction (quoted). §105-153.5(c)(1) is the complementary addition clause: 'Interest upon the obligations of states other than this State, political subdivisions of those states'; out-of-state muni bond interest is added back to NC taxable income. https://www.ncleg.gov/EnactedLegislation/Statutes/HTML/BySection/Chapter_105/GS_105-153.5.html |
| muni-outstate | Out-of-state muni bond interest | Taxable: N.C. Gen. Stat. §105-153.5(c)(1) requires addition of other-state muni interest to NC income | sources (1)N.C. Gen. Stat. §105-153.5(b)(1) (NC exempt) and §105-153.5(c)(1) (out-of-state taxable) · high confidence · as of 2026-06-18 · TY 2025 NC exempts NC-issued bonds; out-of-state muni bond interest is NC income addition per §105-153.5(c)(1) Interest upon the obligations of any of the following: This State, a political subdivision of this State, or any agency of this State or a political subdivision of this State. Note: §105-153.5(b)(1) provides the NC-bond subtraction (quoted). §105-153.5(c)(1) is the complementary addition clause: 'Interest upon the obligations of states other than this State, political subdivisions of those states'; out-of-state muni bond interest is added back to NC taxable income. https://www.ncleg.gov/EnactedLegislation/Statutes/HTML/BySection/Chapter_105/GS_105-153.5.html |
| qoz-conformity | QOZ conformity (IRC §1400Z-2) | Non-conforms to IRC §1400Z-2; QOZ gain deferral not recognized, gain taxable at state level | sources (1)N.C. Gen. Stat. §105-153.5(c2); §105-130.5 · high confidence · as of 2026-06-19 · TY 2025 North Carolina does not conform to IRC §1400Z-2 QOZ gain deferral and exclusion The taxpayer must add the amount of gain that would be included for federal income tax purposes without regard to section 1400Z-2(a) of the Code. ... The taxpayer must add the amount of gain that would be included in the taxpayer's adjusted gross income but for the step-up in basis under section 1400Z-2(c) of the Code. Note: N.C. Gen. Stat. §105-153.5(c2)(5) adds back gain the taxpayer deferred federally under IRC §1400Z-2(a), so deferred QOZ gain is taxable in North Carolina in the year of reinvestment; subdivision (7) adds back the gain that §1400Z-2(c) would exclude via basis step-up. Subdivision (6) prevents double taxation when the deferred gain is later federally recognized. NC therefore decouples from both QOZ deferral and the QOZ exclusion. https://www.ncleg.gov/EnactedLegislation/Statutes/HTML/BySection/Chapter_105/GS_105-153.5.html |
| qsbs-conformity | QSBS conformity (IRC §1202) | Conforms: §1202-excluded gain never enters the federal AGI starting point (G.S. 105-153.4(a)) and G.S. 105-153.5 adds none back; IRC fixed as of January 1, 2023, so OBBBA post-7/4/2025 QSBS enhancements are not yet conformed | sources (1)N.C. Gen. Stat. §105-228.90(b) (Code definition); §105-153.4(a); §105-153.5 · high confidence · as of 2026-07-12 · TY 2025 North Carolina conforms to IRC §1202: excluded QSBS gain never enters the federal AGI starting point and G.S. 105-153.5 adds none of it back; the Code is fixed as of January 1, 2023 Code. - The Internal Revenue Code as enacted as of January 1, 2023, including any provisions enacted as of that date that become effective either before or after that date. Note: G.S. 105-153.4(a) verbatim: 'For an individual who is a resident of this State, the term "North Carolina taxable income" means the taxpayer's adjusted gross income as modified in G.S. 105-153.5 and G.S. 105-153.6.' A live scan of G.S. 105-153.5 finds zero references to section 1202, so federally excluded QSBS gain stays out of the NC base. Because the conformity date is January 1, 2023, OBBBA's post-July 4, 2025 QSBS enhancements (tiered 3/4/5-year exclusion, $15M cap, $75M asset ceiling) are NOT conformed until the General Assembly updates the date; classic pre-OBBBA section 1202 treatment applies meanwhile. https://www.ncleg.gov/EnactedLegislation/Statutes/HTML/BySection/Chapter_105/GS_105-228.90.html |
| agency-obligations | GSE bond interest (FNMA/FHLMC) | Taxable: N.C. Gen. Stat. §105-153.5(b)(2) subtraction limited to interest 'exempt from state income taxes under the laws of the United States'; FNMA and FHLMC have no such federal bondholder exemption | sources (1)N.C. Gen. Stat. §105-153.5(b)(1) · high confidence · as of 2026-07-03 · TY 2025 NC subtraction for U.S. obligation interest requires exemption under federal law; FNMA and FHLMC have no such federal bondholder exemption In calculating North Carolina taxable income, a taxpayer may deduct from the taxpayer's adjusted gross income any of the following items that are included in the taxpayer's adjusted gross income: (1) Interest upon the obligations of any of the following: a. The United States or its possessions. Note: G.S. §105-153.5(b)(1) allows a deduction only for interest on obligations of the United States or its possessions. FNMA and FHLMC are not obligations of the United States and carry no federal bondholder exemption, so their interest stays in the North Carolina base. The catalog id retains the earlier (b)(2) label; the U.S. obligation deduction is at (b)(1). https://www.ncleg.gov/EnactedLegislation/Statutes/HTML/BySection/Chapter_105/GS_105-153.5.html |
| dividend-qualified | Qualified dividend income | Ordinary rate: North Carolina has no modification creating a preferential rate for qualified dividends; taxed at the flat 4.25% rate (IRC §1(h)(11) preference not adopted) | sources (1)G.S. 105-153.7(a) · high confidence · as of 2026-07-12 · TY 2025 North Carolina flat income tax rate is 4.25% for TY2025, falling to 3.99% thereafter Except as otherwise provided in subsection (a1) of this section, the tax is a percentage of the taxpayer's North Carolina taxable income computed as follows: Taxable Years Beginning Tax In 2022 4.99% In 2023 4.75% In 2024 4.5% In 2025 4.25% After 2025 3.99%. Note: Rate table transcribed from the live HTML with whitespace normalized. Rate falls to 3.99% after 2025, with a trigger-contingent further reduction to a 2.49% floor under (a1). Standard deduction is $25,500 MFJ ($12,750 single) for TY2025. https://www.ncleg.gov/EnactedLegislation/Statutes/HTML/BySection/Chapter_105/GS_105-153.7.html |
| treasury | U.S. Treasury interest | Exempt: 31 U.S.C. §3124(a) prohibits state taxation of U.S. government obligations (T-bills, T-notes, T-bonds, TIPS, I-bonds) | sources (1)31 U.S.C. §3124(a) · high confidence · as of 2026-06-20 · TY 2025 U.S. Treasury interest exempt from North Carolina income tax: 31 U.S.C. §3124(a) prohibits state taxation of U.S. government obligations Stocks and obligations of the United States Government are exempt from taxation by a State or political subdivision of a State. The exemption applies to each form of taxation that would require the obligation, the interest on the obligation, or both, to be considered in computing a tax. Note: 31 U.S.C. §3124(a) preempts state income taxation of U.S. government obligations. Covers T-bills, T-notes, T-bonds, TIPS, and I-bonds. Most states allow a deduction or subtraction by statute cross-referencing this federal preemption. https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title31-section3124 |
| fhlb-ffcb | FHLB and FFCB bond interest | Exempt: 12 U.S.C. §1433 (Federal Home Loan Bank Act) and 12 U.S.C. §2023 (Farm Credit Act) mandate state tax exemption for FHLB and FFCB securities | sources (2)12 U.S.C. §1433 (Federal Home Loan Bank Act) · high confidence · as of 2026-06-20 · TY 2025 FHLB and FFCB bond interest exempt from North Carolina income tax: federal enabling statutes mandate state tax exemption Any security issued under this chapter by a Federal home loan bank, including the stock thereof, shall be exempt from taxation, except taxes upon real estate, by any State, county, municipality, or local taxing authority. Note: 12 U.S.C. §1433 (FHLB) and 12 U.S.C. §2023 (FFCB/Farm Credit Act) both mandate state tax exemption for securities issued under their chapters. Contrasts with FNMA (12 U.S.C. §§1719(e), 1723a(c)) and FHLMC (12 U.S.C. §1455(a)) which have no bondholder exemption statute and whose interest is taxable by income-tax states. https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section1433&num=0&edition=prelim12 U.S.C. §2023 (Farm Credit Act) · high confidence · as of 2026-06-20 · TY 2025 Farm Credit Act: notes, bonds, debentures, and other obligations of Farm Credit Banks are instrumentalities of the United States exempt from all State, municipal, and local taxation The mortgages held by the Farm Credit Banks and the notes, bonds, debentures, and other obligations issued by the banks shall be considered and held to be instrumentalities of the United States and, as such, they and the income therefrom shall be exempt from all Federal, State, municipal, and local taxation, other than Federal income tax liability of the holder thereof under the Public Debt Act of 1941 (31 U.S.C. 3124). Note: 12 U.S.C. §2023 explicitly covers 'the income therefrom' (i.e., interest payments to bondholders), exempting it from all State and local taxation. The only carve-out is federal income tax on the holder. Parallel to 12 U.S.C. §1433 (FHLB Act), which exempts FHLB securities from state taxation. Together §1433 and §2023 mandate state and local tax exemption for both FHLB and FFCB bond interest. Shared across all jurisdictions: a single object reference satisfies buildCitationIndex() identity check. https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section2023&num=0&edition=prelim |
| carryback | Capital loss carryback | None: IRC §1212(b) provides carryforward only for non-corporate taxpayers; no carryback to prior years | sources (1)IRC §1212(b) · high confidence · as of 2026-06-21 · TY 2025 IRC §1212(b): capital losses carry forward only for non-corporate taxpayers; no carryback In the case of a taxpayer other than a corporation, if there is a net capital loss for any taxable year: (1) the excess of the net short-term capital loss over the net long-term capital gain for such year shall be a short-term capital loss in the succeeding taxable year, and (2) the excess of the net long-term capital loss over the net short-term capital gain for such year shall be a long-term capital loss in the succeeding taxable year. Note: IRC §1212(b) limits non-corporate taxpayers to carrying losses forward only ('succeeding taxable year'). IRC §1212(a), which allows a 3-year carryback, applies only to corporations. For conformity states, the federal carryforward amount flows to the state return unchanged. https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title26-section1212&num=0&edition=prelim |
| character | Long-term capital gains treatment | Ordinary rate: no preferential long-term rate; capital gains taxed as ordinary income at the flat 4.25% rate (N.C.G.S. §105-153.7) | sources (1)G.S. 105-153.7(a) · high confidence · as of 2026-07-12 · TY 2025 North Carolina flat income tax rate is 4.25% for TY2025, falling to 3.99% thereafter Except as otherwise provided in subsection (a1) of this section, the tax is a percentage of the taxpayer's North Carolina taxable income computed as follows: Taxable Years Beginning Tax In 2022 4.99% In 2023 4.75% In 2024 4.5% In 2025 4.25% After 2025 3.99%. Note: Rate table transcribed from the live HTML with whitespace normalized. Rate falls to 3.99% after 2025, with a trigger-contingent further reduction to a 2.49% floor under (a1). Standard deduction is $25,500 MFJ ($12,750 single) for TY2025. https://www.ncleg.gov/EnactedLegislation/Statutes/HTML/BySection/Chapter_105/GS_105-153.7.html |
| filing-status-flat | Filing status irrelevant: flat rate state | Yes: flat 4.25% rate on North Carolina taxable income regardless of filing status (G.S. §105-153.7; TY2025) | sources (1)G.S. 105-153.7(a) · high confidence · as of 2026-07-12 · TY 2025 North Carolina flat income tax rate is 4.25% for TY2025, falling to 3.99% thereafter Except as otherwise provided in subsection (a1) of this section, the tax is a percentage of the taxpayer's North Carolina taxable income computed as follows: Taxable Years Beginning Tax In 2022 4.99% In 2023 4.75% In 2024 4.5% In 2025 4.25% After 2025 3.99%. Note: Rate table transcribed from the live HTML with whitespace normalized. Rate falls to 3.99% after 2025, with a trigger-contingent further reduction to a 2.49% floor under (a1). Standard deduction is $25,500 MFJ ($12,750 single) for TY2025. https://www.ncleg.gov/EnactedLegislation/Statutes/HTML/BySection/Chapter_105/GS_105-153.7.html |
| marital-udcprda | Uniform Community Property Disposition at Death Act | Yes: N.C.G.S. §§30-41 to 30-52 preserves community property character of assets acquired in CP states at death of a North Carolina resident (effective January 1, 2026, successor to former Ch. 31C from 1981); surviving spouse retains one-half CP interest | sources (1)N.C.G.S. §§30-41 to 30-52 (Ch. 30, Art. 5) · medium confidence · as of 2026-06-22 · TY 2025 North Carolina Uniform Community Property Disposition at Death Act (effective January 1, 2026; successor to former Ch. 31C) This Article may be cited as the Uniform Community Property Disposition at Death Act. Note: NC originally adopted the UDCPRDA as Ch. 31C in 1981. Session Laws 2025-25 repealed Ch. 31C and replaced it with Ch. 30, Art. 5, effective January 1, 2026 (name changed to 'Uniform Community Property Disposition at Death Act', dropping 'Rights'). Protects the community property character of assets acquired in community property states when a couple moves to North Carolina. URL resolves to Chapter 30 table of contents; §§30-41 through 30-52 are within this chapter. https://www.ncleg.gov/EnactedLegislation/Statutes/HTML/ByChapter/Chapter_30.html |
| migration-loss-conformity | Migration loss carryforward conformity | Full conform (structural inference): North Carolina computes its income tax from the federal base, so an imported federal section 1212 capital-loss carryforward flows through to offset post-residency gains; no published guidance addresses the imported pre-residency carryforward. | sources (1)G.S. 105-153.7 · medium confidence · as of 2026-07-03 · TY 2025 North Carolina conforms to the federal capital-loss base; treatment of an imported pre-residency section 1212 carryforward is a structural inference A tax is imposed for each taxable year on the North Carolina taxable income of every individual. Note: G.S. 105-153.7 imposes the tax on North Carolina taxable income, which starts from federal adjusted gross income, so the federal section 1212 capital-loss base carries through. No published guidance addresses the imported pre-residency carryforward; that piece stays a structural inference. https://www.ncleg.gov/EnactedLegislation/Statutes/HTML/BySection/Chapter_105/GS_105-153.7.html |