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North Carolina Basic Business Taxes

Corporate Taxes & Incentives Guide
North Carolina has always offered industry a competitive tax environment as demonstrated by having the second lowest business tax burden in the United States (Council on State Taxation and Ernst & Young). To ensure it remains one of the most tax competitive states, North Carolina policymakers simplified the tax code and lowered tax rates in 2013. Specifically, the state lowered its personal income tax to a flat 5.75%, while the corporate income tax rate fell to 5% in 2015 (with further drops in 2016-17 contingent on meeting revenue targets)

Corporate Income Tax:
North Carolina's corporate income tax is 5%. The rate is expected to decrease to 4% in 2016 and can drop even further if certain state revenue goals are met. North Carolina apportions corporate taxes based on a double-weighted sales method.

Sales and Use Tax:
North Carolina has a state sales tax of 4.75% and a local county sales tax of 2.0%. Some counties are authorized to assess and additional 0.25% to 0.75% for public transit uses.

Sales and Use Tax Discounts, Exemptions and Refunds:
North Carolina offers reduced rate allowances on certain parts, accessories and construction supplies for eligible industries and manufacturing processes. A sampling of important exemptions is included below. If you have questions or need more information, please don’t hesitate to contact the Economic Development Partnership of North Carolina.
  • Manufacturing machinery and equipment is not subject to sales and use tax, but is subject to either a 1% privilege tax or $80 tax, whichever is greater.
  • Raw materials for manufacturing is not subject to sales and use tax.
  • Fuel for manufacturing is not subject to sales and use tax.
  • Pollution abatement and control equipment is not subject to sales and use tax.
  • Aircraft and boats are subject to a 3% (up to $1,500 per article) sales and use tax.
Property Tax
Real and personal property in North Carolina is assessed at the local level. Of note, inventories are not subject to property tax in the state. Please consult the North Carolina Department of Revenue for the most up-to-date rates and additional information.

North Carolina’s Business Advantages
World Class Workforce Training

North Carolina provides the nation’s most-recognized free, customized job training programs for new and expanding businesses. The North Carolina Community College System offers comprehensive training support ranging from its extensive catalogue of established programs to customized curricula tailored to address specific business needs.

The NCWorks Customized Training Program provides customized training to support full-time production and direct customer service positions created in North Carolina.
  • Businesses eligible for free customized training through North Carolina Community College System include, but are not limited to, manufacturing, warehousing, and distribution centers.
  • Training funds may be used for instructional design, instructor training, assessments, and training delivery costs for employees involved in the direct production of goods and services, production support employees, and technology support employees.
  • In order to receive assistance, eligible businesses and industries must demonstrate two or more of the following criteria:
  • Full-time, probationary employees are eligible for training.
  • To use Customized Training funds, the company must pay trainees for all time during training hours.
NCWorks also offers job-applicant screening services including:
  • Professional employment consultants use company-developed job requirements to screen applicants, ensuring that the company’s hiring team talks only to those people who meet the company’s qualifications.
  • Web-based screening via candidate questionnaires, telephone screening by trained recruitment specialists, and job applicant screening by professional recruitment specialists manage applicant flow.
  • Facilities and office equipment at NCWorks Career Centers, University Career Placement offices, or other facilities to conduct job fairs, group orientation and training, and applicant interviews.
  • For more information, please don’t hesitate to contact the Economic Development Partnership of North Carolina or the NC Community College System
Strong Labor Pipeline
A strong workforce starts with strong demographics, and with one of the fastest growing populations in the country, North Carolina has the base to support today and tomorrow’s workforce needs. In higher education, more than 380,000 students are seeking degrees at 41 colleges and universities, including the United States’ first public university (the University of North Carolina – Chapel Hill), and one of the top-ranked schools in the world (Duke University). In 2013, North Carolina’s colleges granted more than 55,000 bachelor’s degrees, 17,000 master’s degrees, and 4,800 doctoral degrees in fields ranging from aerospace engineering to zoology. North Carolina’s nationally recognized 58-campus community college system (i.e. two-year associate’s degrees and vocational training) and related workforce development programs offer employers a steady stream of skilled workers. The state is also home to more than 100,000 active duty military personal. As many soldiers complete their service and enter civilian life (more than 50,000 separations in North Carolina are expected through 2018), they provide North Carolina companies with yet another source of workers with the right technical skills for today’s industry.

Effective Labor Environment
Other states may boast of a low union presence, but at a 1.9% unionization rate, North Carolina has the lowest union presence in the country. With low unionization, “Right-to-Work” laws (meaning no person is forced to join a labor union), and virtually no work stoppages, North Carolina’s labor market remains flexible and productive for employers.

Location and Logistics
With more than 220 million Americans within a two-day drive, North Carolina’s central East Coast location gives business a significant advantage in accessing the eastern U.S. The state’s 90,000 miles of highway includes major, controlled-access arteries including I-95 (running the length of the East Coast), I-85 (running from NC through the manufacturing heart of the Southeast), and I-40 (running from North Carolina to California). North Carolina is also home to two deep-water ports at Wilmington and Morehead City, with easy highway access to other East Coast ports like Norfolk and Charleston. The state’s air connections are led by Charlotte-Douglas International Airport, the country’s 6th busiest airport with non-stop connections to every major U.S. market as well as international destinations such as Toronto, Mexico City, London, Paris, Frankfurt, and Munich.

Low Cost of Doing Business
Whether looking at electricity and natural gas rates, office lease and construction costs, wages, or just overall cost-of-living measures, North Carolina offers companies a cost-effective environment to do business. North Carolina consistently ranks as a top state for business in the most recognized rankings:
  • #3 Best State for Business and Careers – Forbes
  • #4 Best States for Business – Chief Executive
North Carolina State Contact: Economic Development Partnership of North Carolina
Tiffany McNeil, Client Services Manager
919-447-7741 (office)
919-703-5360 (mobile)
Email: tiffany.mcneil@edpnc.com
15000 Weston Parkway
Cary, North Carolina 27513
Incentive and tax information is provided to Area Development by each state's economic development or commerce agency for information purposes only and is subject to revision at any time by the state government. Please contact the state agency directly for full requirements and offerings. This information was last updated October 2015.

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