Income Taxes in North Carolina
North Carolina's income tax is genuinely different from Florida's or Texas's: a real, current, single flat rate on a legislated multi-year phase-down -- 4.99% in 2022, cut every year since to 3.99% in 2026, with further cuts to 3.49% (2027) and 2.99% (2028) scheduled but contingent on the state continuing to hit statutory revenue triggers each year.
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Learn moreA single flat rate, not graduated brackets -- and it applies statewide with no local add-on
Unlike some states, North Carolina's individual income tax is a single flat rate applied to all taxable income, not graduated brackets that rise with income -- and unlike Ohio, North Carolina has no separate municipal or local income tax layered on top; the state rate is the whole story. That rate fell from 4.99% (2022) to 4.75% (2023), 4.5% (2024), 4.25% (2025), and 3.99% (2026), per NC Office of State Budget and Management's Consensus Revenue Forecast (May 15, 2026) and Tax Foundation reporting.
The 2027 and 2028 cuts are scheduled, but genuinely not guaranteed
Further cuts to 3.49% in 2027 and 2.99% in 2028 are written into state law, but both are statutorily contingent on the state hitting specific General Fund net-tax-collection revenue-growth triggers each year -- they are not automatic. The May 15, 2026 Consensus Revenue Forecast projected both triggers would likely be met, but this record treats that as a projection, not a locked-in figure, until each year's revenue actually closes. Anyone budgeting multiple years ahead on the assumption of a 2.99% rate by 2028 should understand that assumption carries real, disclosed uncertainty.
What this means relative to no-income-tax and higher-income-tax states
North Carolina's flat, falling rate sits in the middle of the national spectrum -- a real, ongoing cost relative to Florida or Texas (which levy no state personal income tax at all), but a genuinely lower and simpler burden than states with steep graduated top brackets. In exchange for having an income tax at all, North Carolina's property tax burden runs comparatively low (see the property-taxes topic) -- the opposite tradeoff pattern from Texas's no-income-tax-but-high-property-tax model.
North Carolina does not tax Social Security income
For retirees specifically, North Carolina does not tax Social Security benefits at the state level, even though its flat income tax rate does apply to other retirement income (pensions, 401(k)/IRA withdrawals) at the standard 3.99% rate -- see the retiring topic for the fuller retirement-income tax picture.
Key takeaways
- North Carolina's state income tax is a single flat rate (3.99% in 2026), down from 4.99% in 2022 -- with no separate local/municipal income tax layered on top, unlike some other states.
- Further legislated cuts to 3.49% (2027) and 2.99% (2028) are scheduled but contingent on the state hitting statutory General Fund revenue triggers each year -- not guaranteed.
- North Carolina's income tax is a real, ongoing cost relative to no-income-tax states like Florida or Texas, offset by a comparatively low property tax burden -- the inverse of Texas's tradeoff.
- North Carolina does not tax Social Security benefits at the state level, though other retirement income (pensions, 401(k)/IRA withdrawals) is taxed at the standard flat rate.
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