Navigating North Carolina sales tax can be complex for business owners across the Tar Heel State. With a base state rate plus county and local taxes that vary by location, staying compliant requires vigilance and attention to detail.
Whether you operate a thriving restaurant in Charlotte, a boutique in Asheville, or a service business in Raleigh, understanding your North Carolina sales tax obligations is essential to avoid costly penalties and keep your business running smoothly. Let’s take a look at the specifics.
How much is North Carolina sales tax?
North Carolina’s state sales tax rate is 4.75%, but local counties add their own tax on top of that. The combined rate you collect depends on where the sale takes place.
Here are a few examples:
- Charlotte (Mecklenburg County): State rate of 4.75% + County rate of 2.50% = 7.25% total
- Raleigh (Wake County): State rate of 4.75% + County rate of 2.50% = 7.25% total
- Durham (Durham County): State rate of 4.75% + County rate of 2.75% = 7.50% total
Since rates can differ across counties, always confirm with the North Carolina Department of Revenue to make sure you’re charging the correct sales tax.
What is North Carolina sales tax?
La general state and applicable local and transit rates of sales and use tax, commonly referred to as sales tax, is a tax on goods sold in North Carolina. It applies to most tangible personal property sold at retail, unless a specific exemption applies. Tangible personal property is defined as anything you can see, touch, weigh, or measure, such as furniture, clothing, and electronics. Items like water, gas, electricity, steam, and prewritten software would fall under this category.
Are all goods and services taxable in North Carolina?
Not everything you sell in North Carolina is subject to sales tax. While most tangible goods are taxable, some essentials and certain services are exempt. For example, groceries like bread, milk, and produce are exempt from state sales tax, though some local taxes may still apply. Prescription medications are also exempt from state sales tax.
When it comes to services, North Carolina takes a more selective approach. Some services are taxable, but many are not. Knowing the difference is key to staying compliant.
What services are exempt from sales tax in North Carolina?
Many professional and personal services are exempt from sales tax in North Carolina. Some common examples include:
- Medical services provided by licensed professionals
- Legal and accounting services
- Childcare services
- Educational services like tutoring or classes
- Personal services such as haircuts, manicures, and massages
- Most labor-only services, unless they involve repair, maintenance, or installation of tangible personal property
That said, North Carolina does tax certain services, especially those connected to tangible goods (like car repairs, appliance installation, or equipment maintenance). Double-check the latest guidance from the North Carolina Department of Revenue to confirm if a service is taxable.
Are 501(c)(3) exempt from sales tax in North Carolina?
In North Carolina, 501(c)(3) nonprofit organizations are not automatically exempt from paying sales tax on purchases. They must generally pay sales tax at the time of purchase, just like any other buyer. However, qualifying nonprofits can apply for a semiannual refund of the sales and use tax they have paid on eligible purchases.
It’s important to note that this refund option does not cover all purchases. For example, items used directly in unrelated business activities may not qualify. To claim a refund, nonprofits must file Form E-585, Nonprofit and Governmental Entity Claim for Refund with the North Carolina Department of Revenue.
Nonprofits that sell goods or services may also have to collect and remit sales tax on those sales, unless a specific exemption applies. Always refer to the North Carolina Department of Revenue for the most up-to-date guidance on taxable and exempt items. You can also visit their General Sales and Use Tax page to review the current statute.
How to calculate sales tax in North Carolina?
Calculating sales tax in North Carolina means combining the state’s 4.75% rate with any applicable county and local transit rates. Your total rate will depend on where your business is located and where the sale is sourced. For example, Raleigh (Wake County) has a combined rate of 7.25%, while Charlotte (Mecklenburg County) is also 7.25%, and Durham (Durham County) comes in at 7.5%.
To calculate:
- Find the combined state, county, and local rate for your area.
- Multiply your total taxable sales price by that rate.
- The result is the sales tax you must collect from the customer.
Always confirm the current rate with the North Carolina Department of Revenue, as rates can vary by jurisdiction.
Use our sales tax calculator
Instead of doing the math yourself, use our calculadora de impuestos sobre las ventas. Simply enter your sales amount and the combined state, county, and local rate for your business location, and the calculator will instantly tell you how much sales tax to charge.
What am I responsible for?
As a business owner in North Carolina, you are responsible for collecting sales tax from your customers, ensuring you charge the correct amount, keeping it secure, and remitting it to the state accurately and on time. While North Carolina doesn’t offer a vendor discount for timely payments, some other states provide discounts to businesses that file and pay their sales tax on time. You can view our full guide on states that offer sales tax discounts for more details.
Do I charge sales tax on shipping in North Carolina?
Yes. In North Carolina, sales tax generally applies to shipping and delivery charges if the sale itself is taxable. That means if you’re selling taxable goods, any handling, shipping, or delivery fees you charge your customer are also subject to sales tax. However, if the items being shipped are exempt from tax, then the shipping charges are exempt as well.
How to register for sales tax in North Carolina?
If you plan to sell taxable goods or services in North Carolina, you must register for a sales and use tax account with the North Carolina Department of Revenue (NCDOR). You can register online or by mail, and there is no fee to register. If you register online, you’ll usually receive your account number instantly, and your registration certificate will arrive in the mail within about 10 business days. For registrations submitted by mail, you can expect to receive your account details and certificate within roughly four weeks. Beware of third-party websites that claim to handle registration for you. NCDOR does not work with any third-party services for registration; always register directly through the NCDOR.
When registering, you’ll need the following information:
- Social Security Number (SSN) or Federal Employer Identification Number (FEIN).
- Your business name, address, and phone number.
- Details about your business, including start date and type of business.
If applicable, you also should include:
- A North Carolina Secretary of State (SOS) Number.
- Business partner or responsible person information (name, title, SSN, address).
Once registered, you’ll receive a Sales and Use Tax Account ID that allows you to collect and remit sales tax and determines your filing frequency. Visit NCDOR’s site for more sales tax registration information.
Make your sales tax less taxing with DAVO.
How to file sales tax in North Carolina?
Most businesses in North Carolina file their sales tax online through the NCDOR website and complete the E-500 form. Certain situations, like sales of alcohol or digital products, may require a different form. To file, you’ll need your 9-digit NCDOR account number. Even if you didn’t make any sales during the period, you’re still required to file. Your filing frequency (monthly, quarterly, or annually) is determined when you register.
If you need to file by paper, contact NCDOR directly at 877-252-3052 for assistance. DAVO by Avalara handles filing automatically, ensuring your sales tax is submitted accurately and on time, garantizado,. From connecting with your POS to preparing and sending returns, DAVO removes the stress of remembering deadlines and managing forms, giving you more time to focus on growing your business.
When is sales tax payment due in North Carolina?
North Carolina sets sales tax deadlines based on your filing frequency. Monthly filers, which is the more common method, are required to file by the 20th of the month following the reporting period. Quarterly filers must submit returns by the last day of January, April, July, and October for the previous three-month period. Even if your business didn’t have any taxable sales during that time, you still need to file.
With DAVO, you don’t have to worry about keeping track of deadlines. Our system automatically calculates, collects, and prepares your sales tax, then submits your return on time, so you can focus on running your business rather than chasing dates.
How do I know how much sales tax to charge?
Sales tax rates in North Carolina are a combination of the state, county, and city taxes. The final and definitive answer is always the sales tax rate posted on the North Carolina State Department of Revenue website. Rates posted elsewhere are often not up to date and incorrect. It’s always the merchant’s responsibility to charge the correct sales tax rate.
Where does the sales tax money go?
Sales tax collected in North Carolina is split between the state and local governments to fund public services. These services include education, social services, emergency services, public welfare, and zoning inspections.
How do I manage tax-exempt sales in North Carolina?
If you sell to tax-exempt organizations, it’s your responsibility as a business owner to collect and verify their exemption status. Always request a valid Exemption Certificate from the purchaser and keep a copy on file. If you can’t obtain a certificate at the time of sale, you will need to charge and remit sales tax to avoid liability.
While many 501(c)(3) organizations are exempt, not all are automatically covered. Double-check that the certificate is valid and that the organization is recognized by NCDOR. Keeping accurate records helps protect your business from penalties or interest if an exemption is later questioned.
What are the sales tax penalties if I forget to pay?
Missing a payment or filing late can get expensive. North Carolina imposes penalties and interest on late sales tax filings and payments:
- Late filing penalty: 5% of the tax due per month (or fraction of a month), up to a maximum of 25%.
- Late payment penalty: 5% of the tax due, plus interest. Interest accrues from the original due date until the payment is made in full. Rates can change, so always check the NCDOR website for the latest information. Currently, the interest rate is around 7%.
Staying on top of your filings and payments is key to avoiding these extra costs. If you have a valid reason, you may request a waiver of penalties from the Secretary of Revenue. Keep in mind there’s a time limit for submitting this request, so visit the NCDOR site for the latest policies and guidance on waivers.
Let DAVO handle your North Carolina Sales Tax
Ever miss a North Carolina state sales tax payment? Or struggle with the county-by-county rates? Do you worry about having enough funds set aside to pay your North Carolina sales tax or find yourself overwhelmed by the paperwork during busy seasons?
If so, DAVO is for you. It’s designed to work with, brick and mortar business owners across the Tar Heel State who have more important priorities than collecting, paying, and filing state sales tax. DAVO will help take care of your sales tax obligations.
DAVO brings automation to the North Carolina sales tax process—from daily collection to quarterly filing to on-time payments. It integrates seamlessly with your existing POS system, requiring zero extra work on your part. And because DAVO helps to ensure your North Carolina taxes will be paid on time and in full, you can focus on growing your business instead of worrying about tax compliance.
Choose your POS system to get started with DAVO today.
Ayuda en relación con el impuesto sobre las ventas y el uso de Carolina del Norte:
Departamento de Hacienda de Carolina del Norte
(877) 252-3052
