At a glance
- Corporate tax
- 2.00% (2026)
- Tax on wages
- 3.99% flat
- Sales tax
- 4.75% + county and transit
- Economic nexus
- $100,000 in gross sales
- Minimum wage
- $7.25/hr
- UI wage base
- $34,200
- New-employer UI rate
- 1.0%
- Paid leave program
- None
- Annual report
- Apr 15, $18 online ($25 paper)
2026 figures, each explained with its source on the area’s page. On top of the federal baseline.
Setup, in order
Qualify with the Secretary of State
Before transacting business in North CarolinaApply to the Secretary of State for a certificate of authority, $250, with a North Carolina registered agent.
Open a withholding account
Before the first North Carolina payrollRegister with NCDOR for wage withholding (and, if you pay nonresident performers, speakers or ITIN contractors, a separate non-wage withholding number).
Open an unemployment insurance account
Before the first North Carolina payrollRegister with the Division of Employment Security; beginning employers pay 1.0% on $34,200 in 2026.
Report new hires
Within 20 days of each hireReport each new or rehired employee to NC New Hire Reporting.
Arrange workers’ compensation
At three employees, counting officersBuy workers’ compensation coverage; corporate officers count toward the three-employee threshold.
Register for sales tax if you have nexus
When taxable North Carolina sales startRegister for sales and use tax if you sell taxable goods or cross $100,000 of gross sales into North Carolina.
Set up E-Verify
At 25 employees in North CarolinaEnroll in E-Verify and verify each new permanent hire.
Calendar the April filings
Every yearFile the annual report with the Secretary of State and Form CD-405 with NCDOR, both by April 15 for a calendar-year company.
The six areas
- AccountingAccounting and state tax in North CarolinaNorth Carolina taxes C-corporations at 2.00% for 2026 on a single, market-sourced sales factor, but its 2026 conformity update decoupled from federal R&D expensing and it still adds back 85% of bonus depreciation.Corporate income tax rate2.00% (2026)
- ReceivablesReceivables and sales tax in North CarolinaNorth Carolina’s rate is 4.75% plus county and transit tax, remote sellers register at $100,000 of gross sales with a 60-day lag from July 2026, and remotely accessed SaaS is not taxed.State sales tax rate4.75%
- PayablesPayables and contractors in North CarolinaNorth Carolina requires 4% withholding on some nonresident contractor payments, mostly speakers and performers over $1,500, and state 1099 filing only where tax was withheld.Nonresident personal services withholding4% over $1,500
- PayrollPayroll taxes and employer rules in North CarolinaNorth Carolina payroll is flat 3.99% withholding on Form NC-4 and NC-5, unemployment insurance at 1.0% on $34,200 for new employers, workers’ comp from three employees counting officers, and E-Verify from 25.State income tax withholding3.99%
- ComplianceCompliance and filings in North CarolinaNorth Carolina compliance is a $250 certificate of authority, an annual report and a combined franchise and income tax return both due April 15, a franchise tax with a $200 minimum, and a November 1 unclaimed property report.Certificate of authority fee$250
- AdvisoryAdvisory: credits and decisions in North CarolinaNorth Carolina’s rates are among the lowest and still falling, but there is no state R&D credit, the 2026 conformity change reaches back to 2025 returns, and E-Verify applies from 25 employees.Corporate rate pathTo 0% from 2030
Who you register with
- North Carolina Department of Revenue (NCDOR)Corporate income and franchise tax, withholding, and sales and use tax
- NC Division of Employment Security (DES)Unemployment insurance registration and quarterly reports
- North Carolina Secretary of StateCertificate of authority and the annual report
- NC New Hire Reporting (NCDHHS)New hire reports
- NC Department of State Treasurer — Unclaimed PropertyAnnual holder report
Hiring across the border
An employee who lives in one state and works in another is the most common way a startup ends up registered in two. These are North Carolina’s neighbors.
- GAGeorgiaA flat 4.99% for 2026, single-factor apportionment, an R&D credit that offsets payroll.
- SCSouth CarolinaA 5% tax plus a capital-based license fee, SaaS taxed, and 2% on nonresident contracts.
- TNTennesseeNo wage tax, but franchise, excise and gross-receipts taxes on the entity, and taxed SaaS.
- VAVirginiaFlat 6% tax, no tax on SaaS, local BPOL licenses, and SCC fees priced by shares
Common questions
What North Carolina rate goes in our 2026 tax provision?
2.00% for tax years beginning in 2026, down from 2.25% in 2025 and 2.5% for 2019 through 2024. Under G.S. 105-130.3 it stays 2% for 2027, drops to 1% for 2028 and 2029, and to 0% for tax years beginning after 2029. Bills to repeal the phase-out were filed in 2026 but none has been enacted, so deferred taxes should be measured at the rate for the year each difference reverses — which, for anything reversing after 2029, is zero.
Is our SaaS taxable in North Carolina?
Not as North Carolina currently applies its law. The Department of Revenue has ruled, most recently in a 2021 private letter ruling, that North Carolina does not impose sales and use tax on access to cloud-based software over the internet. Downloaded software and digital products are a different matter, and bundling SaaS with taxable items can change the answer.
Do we withhold North Carolina tax from out-of-state contractors?
Usually not. North Carolina’s 4% withholding on nonresidents applies only to personal services connected with a performance, an entertainment or athletic event, a speech, or a film, radio or television program, and only above $1,500 a year. A nonresident software contractor is outside it, but a paid speaker at your Raleigh customer event is not. Separate rules require withholding from contractors who have an ITIN, or who fail to give you a taxpayer identification number.
When do we need workers’ comp in North Carolina?
Earlier than most founders expect. The Industrial Commission counts corporate officers toward the three-employee threshold even if they opt out of coverage, so two founders who are officers and one hire already make three. The Commission’s own example is a corporation with two officers and one employee, which must have coverage.
Do we owe franchise tax if we have no profits?
Yes. North Carolina’s franchise tax is a tax on doing business here, measured by apportioned net worth, and it has a $200 minimum. A startup whose losses have pushed its net worth below zero still owes $200 a year, on the same CD-405 as the income tax.
Is there a North Carolina R&D tax credit?
No. North Carolina’s research credit expired years ago, and the state’s current incentives for growing companies are discretionary, negotiated programs administered by the Department of Commerce, generally tied to job creation commitments at a scale above a handful of people.
Sources
Checked against each agency’s own page on . Rates and thresholds change, usually on January 1.
- NCDOR — Corporate Income and Franchise Tax Rates
- NCDOR — Corporate Filing Requirements
- NCDOR — Corporate Extensions
- NCDOR — Market-Based Sourcing
- NCDOR — Important Notice: Impact of Recently Enacted Laws (S.L. 2026-31, 2026-41)
- N.C. Gen. Stat. § 105-130.3 — corporate income tax rate schedule
- NCDOR — Important Notice: Extended Compliance Period for Certain Remote Sellers
- N.C. Gen. Stat. § 105-130.5B — bonus depreciation add-back
- N.C. Gen. Stat. § 105-130.8A — net loss carryforward
- N.C. Gen. Stat. § 105-122 — franchise tax on corporations
- NCDOR — Individual Income Tax Rate Schedules
- NCDOR — Remote Sales
- NCDOR — Sales and Use Tax Rates & Other Information
- NCDOR — Private Letter Ruling SUPLR 2021-0005, remote access computer software
- NCDOR — Withholding Tax Frequently Asked Questions
- NC Division of Employment Security — Tax rate information (2026)
- NC New Hire Reporting — Reporting fundamentals
- North Carolina Industrial Commission — FAQs (workers’ compensation)
- NC Department of Labor — E-Verify FAQ
- N.C. Gen. Stat. § 55-1-22 — Secretary of State filing fees
- N.C. Gen. Stat. § 55-16-22 — annual report
- NC Department of State Treasurer — Holder Information and Reporting
General information for US companies, not tax, legal or accounting advice for yours. Rules and thresholds change; confirm the specifics with a CPA or the agency before you act on them.