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North Carolina · the numbers
North Carolina figures at a glance, 2026
The North Carolina numbers for the 2026 return in one place: the rate and where it goes next, the standard deduction, the child deduction table, the itemized cap, what retirees deduct, the estimated-payment rules, the dates, the property-tax relief limits, and the short list of what changed since 2025. For anyone who files here, and for anyone checking a preparer’s work.
By Charles Trautman, EA, editor
Need to Know Tax · written from North Carolina Department of Revenue sources, November 3, 2026; updated November 12, 2026 after the election · not yet reviewed by a North Carolina practitioner
North Carolina publishes few numbers because its income tax has few moving parts: one rate, three standard deduction figures, one child deduction table, one itemized cap, and almost no credits. The rate is 3.99% for 2026, down from 4.25%, and that is the only figure on the return that moved. The standard deduction is set in statute and not indexed, so it is the same $12,750, $25,500 and $19,125 it has been since 2022; the Department of Revenue has confirmed no increase was enacted, and the 2026 instructions that will print the final figures are due in January 2027. Everything on this page is a 2025 figure carried forward unless it says otherwise, and the ones the Department has not yet confirmed for 2026 are marked.
The core figures
| Item | 2025 | 2026 | Note |
|---|---|---|---|
| Tax rate, all filing statuses | 4.25% | 3.99% | Confirmed on the Department’s rate page; 3.49% scheduled for 2027–2029 |
| Starting point | Federal AGI | Federal AGI | Form D-400, line 6; Code as of July 5, 2025 |
| Standard deduction, single or married filing separately | $12,750 | $12,750 | Statute; not indexed; $0 if a separate-filing spouse itemizes |
| Standard deduction, married filing jointly or surviving spouse | $25,500 | $25,500 | Federal joint figure is $32,200, so the state choice is separate |
| Standard deduction, head of household | $19,125 | $19,125 | |
| Extra standard deduction for age 65 or blindness | None | None | North Carolina has no age-based deduction |
| Personal exemptions | None | None | Replaced by the standard deduction in 2014 |
| Child deduction, per child qualifying for the federal child tax credit | $3,000 to $500 | $3,000 to $500 | A deduction, not a credit; by AGI, table below |
| Itemized cap, mortgage interest plus real estate tax combined | $20,000 | $20,000 | Department FAQ 16: not raised with the federal SALT cap |
| Social Security and railroad retirement | 100% deducted | 100% deducted | Schedule S, Part B, Line 19; any age, any income |
| Bailey government retirement; 20-year or medical military retirement | 100% deducted | 100% deducted | Lines 20 and 21; all other pensions and IRAs taxed |
| Capital gains rate | 4.25% | 3.99% | No exclusion, no preferential rate |
| Local income tax | None | None | No city, county or school district tax |
The 2026 standard and child deduction figures are the 2025 figures, which the statute (G.S. 105-153.5) carries forward unchanged; the Department’s own pages are still labeled tax year 2025. Expect the 2026 D-401 in January 2027 to print the same amounts.
Because the rate is flat and the deductions are fixed, the whole return can be checked in one line: federal AGI, less Schedule S deductions, less $12,750 or $25,500 or $19,125 (or North Carolina itemized deductions), less the child deduction, times 3.99%. At that rate the standard deduction is worth $509 to a single filer and $1,017 to a couple, and each $3,000 child deduction is worth $120.
The child deduction, by AGI
| Married filing jointly, AGI up to | Head of household, AGI up to | Single or separate, AGI up to | Deduction per child | Tax saved at 3.99% |
|---|---|---|---|---|
| $40,000 | $30,000 | $20,000 | $3,000 | $120 |
| $60,000 | $45,000 | $30,000 | $2,500 | $100 |
| $80,000 | $60,000 | $40,000 | $2,000 | $80 |
| $100,000 | $75,000 | $50,000 | $1,500 | $60 |
| $120,000 | $90,000 | $60,000 | $1,000 | $40 |
| $140,000 | $105,000 | $70,000 | $500 | $20 |
| over $140,000 | over $105,000 | over $70,000 | $0 | $0 |
Each band runs from one dollar above the previous line to the figure shown. A child qualifies if the federal child tax credit is allowed for that child. The steps are small enough that crossing a line costs at most $20 per child.
Credits
| Credit | Figure | Refundable? | Form |
|---|---|---|---|
| Income tax paid to another state or country | Lesser of the other state’s tax or the North Carolina tax on the same income; residents only | No | D-400TC, Part 1, with the other return attached |
| Historic rehabilitation (Article 3L) and remaining installments of expired Article 3D and 3H credits | Project-based | No | NC-Rehab, D-400TC |
| Business incentive credits | Limited to 50% of tax | No | NC-478 series |
| Earned income credit | None; repealed after 2013 | ||
| Child tax credit | None; the child deduction above takes its place | ||
| Child and dependent care credit | None; repealed 2014 | ||
| Education, tuition or 529 credit or deduction | None | ||
| Renter, property tax or senior credit | None on the income tax return; property-tax relief runs through the county |
The short version: a North Carolina household gets its relief before the rate is applied, through the standard deduction and the child deduction, and nothing after it. A family that owes no state tax gets nothing back from the state. See Credits and breaks for North Carolina families.
Worked example: what the 2026 rate cut is worth, three households
Each household takes the standard deduction and has no Schedule S adjustments. The only thing that changes between the columns is the rate.
| Single, AGI $60,000 | Head of household, one child, AGI $48,000 | Married, no children, AGI $150,000 | |
|---|---|---|---|
| Standard deduction | −$12,750 | −$19,125 | −$25,500 |
| Child deduction | $0 | −$2,000 | $0 |
| North Carolina taxable income | $47,250 | $26,875 | $124,500 |
| Tax at 4.25% (2025) | $2,008 | $1,142 | $5,291 |
| Tax at 3.99% (2026) | $1,885 | $1,072 | $4,968 |
| Saving from the rate cut | $123 | $70 | $323 |
The saving is 0.26% of taxable income in every case, $260 per $100,000. Withholding tables changed on January 1, 2026, so for most wage earners the saving has already arrived in the paycheck rather than in the refund.
Estimated payments, penalties and interest
| Item | Figure | Note |
|---|---|---|
| Estimated payments required when tax after withholding and credits is | $1,000 or more | Form NC-40 or pay online; four installments |
| Safe harbor, each installment | 25% of the least of 90% of this year’s tax, 100% of last year’s, or 90% annualized | No 110% tier for high earners; farmers and fishermen 66⅔% |
| Underpayment interest | Figured on Form D-422 | None if last year’s tax was zero |
| Late-filing penalty | 5% a month, maximum 25% | Of the net tax due; runs from the extended date if extended |
| Late-payment penalty | 5%, one time | Avoided if 90% is paid by April 15 under a valid extension; becomes 2% a month to 10% for payments late after July 1, 2027 |
| Interest | 7% a year, January–June 2026 | Set each half year; the 2027 rate is to come |
| Collection assistance fee | 20% | If unpaid 60 days after a Notice of Collection |
Filing and payment dates
| Date | What |
|---|---|
| Friday, January 15, 2027 | Fourth 2026 estimated payment (skipped if the return is filed and paid by January 31, which is a Sunday, so Monday, February 1 (verify)) |
| Thursday, April 15, 2027 | Form D-400 and payment due; Form D-410 if no federal extension; first 2027 estimated payment |
| Tuesday, June 15, 2027 | Second 2027 estimated payment |
| Wednesday, September 15, 2027 | Third 2027 estimated payment |
| Friday, October 15, 2027 | Extended due date, six months |
Beyond the income tax
| Item | 2026 |
|---|---|
| Estate, inheritance and gift tax | None; the estate tax was repealed for deaths after 2012 |
| Elderly or disabled homestead exclusion, age 65 or disabled | Income limit $38,800; excludes the greater of $25,000 or 50% of the home’s value; apply on Form AV-9 by June 1 |
| Circuit breaker property tax deferment | Income limit $58,200; tax capped at 4% or 5% of income, excess deferred as a lien; reapply yearly |
| Disabled veteran exclusion | First $45,000 of value; no age or income test |
| Sales tax | 4.75% state plus 2.00% to 3.50% county and transit; 6.75% in most counties, 7.25% Wake, 7.5% Durham and Orange, 8.25% Mecklenburg from July 1, 2026 |
| Reciprocal states for wages | None; commuters file in both states and take the D-400TC credit at home |
| Residency presumption | More than 183 days in the state, rebuttable |
What changed from 2025
The rate, 3.99%. Down from 4.25%, the last step of the 2023 schedule. The 2026 budget (S.L. 2026-41) then fixed 3.49% for 2027–2029, 3.24% for 2030–2032 and 2.99% from 2033, with no revenue trigger.
Conformity date, July 5, 2025. S.L. 2026-31 moved the state’s reference to the Internal Revenue Code from January 1, 2023, adopting the July 2025 federal act for everything above the AGI line. Tips, overtime, the senior deduction, car-loan interest and the bigger federal standard deduction are below the line and do not reach the state return; the Department’s FAQ says so.
Gambling losses, new Schedule A line. An itemized deduction for losses allowed under section 165(d), retroactive to tax years beginning in 2025. Schedule A, Line 9.
Research expenses, new add-back. 80% of domestic research costs expensed federally under section 174A, recovered 25% a year over four years. Schedule S, Part A, Line 15 and Part B, Line 40. Business filers only.
Bonus depreciation, unchanged rule, bigger number. The 85% add-back and 20%-a-year recovery continue, now off the restored federal 100% figure.
Late-payment penalty, scheduled change. The flat 5% becomes 2% a month up to 10% beginning July 1, 2027, which will affect 2026 balances paid late in the second half of 2027.
Not changed: the standard deduction, the child deduction, the $20,000 itemized cap, the retirement deductions, the $1,000 estimated threshold, the absence of credits, the absence of local income tax.
Behind the scenes: why nothing is indexed
The 2013 tax reform that created the flat tax also replaced personal exemptions and a graduated schedule with a single standard deduction and a child credit, later turned into the child deduction. Nothing in that package was indexed to inflation. The legislature has raised the standard deduction by statute several times since, most recently for 2022, and has otherwise let the falling rate do the work. The result is a return whose figures stay put for years at a time and then jump. For a reader that means last year’s numbers are a reliable guide to this year’s unless the budget says otherwise, and in 2026 the budget changed only the rate schedule.
What to bring
- Last year’s D-400, so the lines can be compared; only the rate moved
- Federal AGI from the Form 1040, line 11, which is where the state return begins
- Forms 1099-R and SSA-1099, marked for which pensions are Bailey or military and which are not
- Mortgage interest and property tax statements, in case North Carolina itemized deductions beat the small state standard deduction
- The children’s dates of birth and the federal child tax credit figure, for the child deduction
- Estimated payment confirmations with dates, for the $1,000 test and Form D-422
- For a business, farm or rental: the federal depreciation schedule, for the 85% add-back
Questions people ask
What is the North Carolina tax rate for 2026?
3.99% of North Carolina taxable income, for every filing status. It was 4.25% for 2025 and is scheduled to be 3.49% for 2027.
What is the North Carolina standard deduction for 2026?
$12,750 single or married filing separately, $25,500 married filing jointly or surviving spouse, $19,125 head of household, the same as 2025. There is no extra amount for age or blindness, and no personal exemptions. The 2026 instructions, due January 2027, will confirm.
Is the child deduction a credit?
No. It reduces taxable income, so it is worth 3.99% of its face: at most $120 per child, and $20 per child at the top of the table. A family with no state tax gets nothing from it.
Is my pension taxed in North Carolina?
Yes, unless it is Social Security, a Bailey-protected government pension (five years of service by August 12, 1989), or military retirement after 20 years or a medical retirement. Everything else, including IRAs and 401(k)s, is taxed at 3.99% with no age exclusion. See North Carolina for retirees.
Does North Carolina have an earned income credit?
No. It was repealed after 2013, and there is no state child tax credit or dependent care credit either. The federal credits are unaffected.
When is the North Carolina return due?
Thursday, April 15, 2027, with a six-month extension to October 15 if you have a federal extension or file Form D-410. Payment is still due April 15. See North Carolina calendar and forms.
One rate, three deduction figures, one table
AGI less Schedule S, less the standard or itemized deduction, less the child deduction, times 3.99%. That is the North Carolina return.
Written by Charles Trautman, EA, editor · Need to Know Tax, Lone Tree, Colorado
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Forms and official pages named in this article
- Forms D-400, Schedule S, Schedule A, D-400TC, NC-40, D-410, D-422 and Schedule AM, on the Department’s individual forms page
- 2025 D-401 instructions (filing thresholds, line references, penalties)
- Form NC-40 instructions and worksheet (safe harbor rules)
- North Carolina child deduction table
- North Carolina standard deduction or itemized deductions
Sources and where to check
- NCDOR: Tax Rate Schedules
- NCDOR: FAQs Regarding Recent Session Law Changes, September 11, 2026, updated October 9, 2026
- NCDOR: Penalties and Fees Overview
- NCDOR: interest rate memo, January 1 to June 30, 2026 (7%)
- NCDOR: Estimated Income Tax
- N.C. Fiscal Research Division: fiscal note on S.B. 257 (rate schedule 2027–2040)