North Carolina is a great place to live and work, with a technology-ready workforce, world-class universities, quality of life, and a friendly business regulatory environment. It also has a fixed state income tax rate of 5.25%, and an effective average property tax rate that is below the national average. In addition to the state rate, each county in North Carolina collects a separate sales tax, ranging from 2% to 2.25%. The new law introduced a fixed-rate income tax and more than doubled the standard deduction for North Carolina taxpayers.
This makes it one of the most competitive states for corporations in the United States when it comes to collecting corporate taxes. The Tax Foundation estimates that North Carolina will eventually become the first best state when it comes to corporate tax collection and the fifth best state overall in the ranking of the Tax Foundation's State Business Tax Climate Index. Individual income tax increases more than half of all tax collections in North Carolina. Poole College of Management adjunct professor of accounting Nathan Goldman explains the impact for North Carolina corporations.
He states that if North Carolina continues to incorporate startups and their employees due to the state's favorable business tax environment, then lost tax collections of a 0% corporate income tax rate could be overshadowed by increased tax revenues from a greater number of people who pay individual income taxes. In addition to income and property taxes, North Carolina also has a state sales tax rate of 4.75 percent, with a maximum local sales tax rate of 2.75 percent, and a combined average state and local sales tax rate of 6.98 percent. Furthermore, under North Carolina law, anyone who “possesses an unauthorized substance, such as marijuana, cocaine, moonshine, mashed potatoes and illicit mixed drinks, will have the substances confiscated and then must pay an excise tax within 48 hours. A financial advisor in North Carolina can help you understand how taxes fit your overall financial goals. They can provide advice on how to maximize your deductions and credits so you can pay the least amount of taxes possible.
