North Carolina has a range of taxes that its citizens must pay, including state sales and property taxes. The state has a base sales tax rate of 4.75%, with most counties adding an additional 2% or more to local taxes. Retirees with investment income outside of a retirement account should know that capital gains in North Carolina are treated as regular income. Homeowners over the age of 65 or those with disabilities who meet certain income limit requirements can receive breaks on their property taxes in North Carolina.
Compared to the average for all states, North Carolina increases relatively more from individual income taxes and general sales taxes and receives relatively less from property taxes and corporate profits, as well as other taxes and fees. If we add all this together, North Carolina's overall tax burden is generally intermediate compared to that of other states. Income from a pension, 401(k), IRA, or any other type of retirement account is taxed at the North Carolina state income tax rate of 5.25%. But in terms of the dollar amount, the combined state and local tax bill in North Carolina increased, even after adjusting for inflation. So, are North Carolina taxes high? It depends on your perspective.
North Carolina has a lower overall tax burden than many other states, but it does have higher individual income and sales taxes than some states. Seniors with significant income from sources other than Social Security will have a higher tax bill in North Carolina. Ultimately, it's important to understand the different types of taxes in North Carolina and how they affect you.