North Carolina is among the states with the lowest effective business tax rates in the country. Our state maintains the highest rating (AAA) from all three major bond rating agencies. In North Carolina, only the state has the authority to tax corporate income and there is no state property tax. Additionally, there is no tax, state or local, on inventories or intangibles.
North Carolina Corporate Tax Rate
The North Carolina Corporate Tax Rate is 2.5%. Of the 44 states that levy a corporate income tax, North Carolina has the lowest rate.
Property Tax Rates
Real and personal property are taxed by the local government, with a single property tax assessment in each county. The value determined by the county assessor constitutes the base for all levies, including those of cities and towns on property located within the municipality. Property is assessed at 100% of its appraised value.
County/Municipality – FY 2020-2021
Tax Rate Per
Town of Enfield
Town of Halifax
Town of Hobgood
Town of Littleton
City of Roanoke Rapids
Town of Scotland Neck
Town of Weldon
Rate does not include special assessments, which are location specific.
Inventories are exempt from property taxes.
Recycling equipment and facilities used exclusively for recycling and resource recovery are exempt from property taxes.
Sales & Use Tax
Retail sales of tangible personal property not subject to a reduced rate of tax are subject to the 4.75% general State rate of sales or use tax and a 2.25% local rate (combined 7%).
North Carolina offers tax exemptions and allowances for manufacturers:
Machinery & Equipment – Sales & Use Tax Exemption – Mill (generally manufacturing) machinery including parts and accessories as well as specialized equipment for loading or processing, is exempt from sales and use tax. North Carolina does not levy a sales and use tax on repairs to industrial machinery or service contracts for machinery.
Raw Materials, Sales & Use Tax Exemption – Purchases of ingredients or component parts of manufactured products are exempt from sales or use tax. In addition, packaging items that constitute a part of the sale (retail or wholesale) and delivered with the product to the customer are exempt from sales and use tax.
Electricity, Fuel & Natural Gas Sales & Use Tax Exemption – Retail sales, as well as the use, storage or consumption of electricity, fuel and piped natural gas sold to a manufacturer for use in the manufacturing process are exempt from sales and use tax for use in a manufacturing operation.
Inventory – Property Tax Exclusion – North Carolina and it’s local governments do not levy a property tax on inventory.
Large Fulfillment Facility, Sales & Use Tax Exemption – Sales of equipment, or an accessory, an attachment, or repair part for equipment that is sold to a large fulfillment facility is exempt from sales and use tax. It must also be used at the facility in the distribution process, which includes receiving, inventorying, sorting, repackaging, or distributing finished retail products. Electricity is not eligible for the sales tax exemption. To qualify for this exemption, the Secretary of Commerce must certify that an investment of $100 million dollars (real and tangible personal property) for the facility within 5 years after the date on which the first property investment is made and that the facility will reach an employment level of at least 400 within 5 years.
R&D and Software Publishing, Sales & Use Tax Exemption – Sales of equipment , or an attachment or part for equipment for companies primarily engaging in research and development activities int he physical, engineering, and life sciences, including in the industry group 54171 NAICS Code is exempt from sales and use tax. Additionally, Sales of equipment, or an attachment or repair part for equipment for companies primarily engaging in software publishing activities for software publishers, including in the industry group 5112 NAICS Code is exempt form sales and use tax.
Unemployment Insurance (UI)
1.0% (first 2 years) – New Employer Tax Rate 0.060% – Minimum Tax Rate 5.76% – Maximum Tax Rate $25,200 – Taxable Wage Base (per employee)
C Corporations – $1.50 per $1,0000 with a maximum franchise tax of $200. S Corporations – $200 for the first $1,000,000 of the corporation’s tax base $1.50 per $1,000 thereafter. Holding Companies – the franchise tax rate for holding companies is the same as for general business corporations, including the minimum tax rate. The maximum franchise tax due by a holding company on its net worth tax base is capped at $150,000. Effective January 1, 2017, the minimum franchise tax is $200.
A local occupancy tax on the rental of rooms and lodging is levied in Halifax County primarily for the purpose of generating revenue to promote travel and tourism. Halifax County’s occupancy tax rate is 5%. Within the City of Roanoke Rapids, the occupancy tax rate is 6%.