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Launching a business in North Carolina? Feeling overwhelmed by complex sales tax law? This guide breaks down what you need to know to stay updated and compliant. It covers rates, regulations, and practical tips for North Carolina consumers and business owners.
Key takeaways
- The North Carolina 2025 sales tax rate ranges from 4.75% to 7.5%, depending on the location. It comprises a base rate of 4.75% plus a mandatory local rate of up to 2.75% (2.25% plus 0.5% transit tax).
- All businesses with a physical presence in North Carolina are required to collect and remit sales tax.
- All remote businesses with more than $100,000 in sales for the previous or current calendar year are required to collect and remit sales tax.
- The penalty for late filings is 5% per month (up to 25% maximum). The penalty for late payments is 5% plus interest on the amount of tax due until you submit payment.
- Most goods are subject to North Carolina state tax, but the tax rate varies depending on the type of good and the jurisdiction.
The North Carolina sales tax rate for 2025 ranges from 4.75% to 7.5%. It comprises a base rate of 4.75% plus a mandatory local rate of up to 2.75% (2.25% plus transit tax). Some counties add a transit tax of 0.25% - 0.5% above the local tax rate. Depending on the local sales tax jurisdiction, the total tax rate can be as high as 7.5%.
Sales tax 101
If you run a business in North Carolina or you simply buy products or services here in the state, you're responsible for paying sales tax.
As a consumer, you pay sales tax during a purchase transaction.
As a North Carolina business, it’s your responsibility to collect sales tax from your customers and pass it along to the North Carolina Department of Revenue (NCDOR). Late or missed sales tax payments can result in penalties and interest. We will go into more detail on North Carolina business sales tax requirements and penalties later in this article.
Recent tax changes in North Carolina
Before July 1, 2024, North Carolina required remote sellers to collect and remit North Carolina sales tax from North Carolina customers if they exceeded either $100,000 in gross sales or 200 transactions per year. As of July 1, 2024, the state eliminated the 200-transaction requirement.
Remote sellers are now only required to collect and remit sales tax if their gross sales from North Carolina customers exceed $100,000 for the previous or current calendar year.
As of July 1, 2025, North Carolina will also charge a transportation commerce tax on for-hire ground transport services. The tax rate depends on the type of transport service, whether an exclusive-ride service (1.5%) or a shared-ride service (1.0%).
Tax rates are generally updated on January 1st and July 1st each year. However, we recommend visiting the NCDOR website regularly to stay informed about the latest updates.
Sales tax code is complicated, even for professionals, and the laws change frequently, making it challenging to stay compliant and avoid mistakes. If you're tired of the stress and second-guessing and want a set-it-and-forget-it solution, Numeral simplifies the process and takes sales tax management off your plate.
Do I need to collect North Carolina sales tax?
The state of North Carolina requires businesses (local or out-of-state) selling products or services to collect and remit North Carolina sales tax if they have physical or economic nexus.
Nexus: What it means and how it affects your business
Physical nexus
Do you reside in North Carolina? If so, your business has a physical nexus, which means North Carolina requires you to collect and remit sales tax from customers based in North Carolina.
Even if you are not a North Carolina resident, you also have physical nexus if one of the following applies to you:
- You employ a North Carolina resident
- You store inventory in North Carolina
- You sell locally in North Carolina at trade shows, specialty markets, or other events (even temporarily)
- You run your business from a property located in North Carolina
Economic nexus
If you don't have physical nexus, you may still be required to pay North Carolina sales tax.
If you are an out-of-state seller and you meet North Carolina’s economic nexus thresholds, you must register for a seller's permit with the NCDOR and collect state and local sales tax on taxable sales shipped to the state.
The North Carolina economic nexus threshold is $100,000 in sales for the previous or current calendar year.
Is North Carolina sales tax destination-based or origin-based?
North Carolina has a destination-based sales tax system, which means the customer's ship-to address determines the sales tax rate.
What’s the difference between destination-based and origin-based sales tax states?
Destination-based sales tax states determine the sales tax rate by the purchaser's shipping address (the destination). For example, if you operate your business in North Carolina and ship products to customers in North Carolina, you would charge the sales tax rate applicable to the customer's location, not your location.
Origin-based sales tax states determine the sales tax rate by the seller's location or where the sale originated. For example, if you operate your business in Ohio and ship products to customers within Ohio, you would charge the sales tax rate applicable to your business location, regardless of the customer's shipping address.
What's taxable?
Let’s look at the products and services that are taxable and exempt in North Carolina.
Which ecommerce goods are taxable?
North Carolina sales tax applies to sales of most tangible personal property and some services, including:
- Retail sales of goods
- Food sold in restaurants, bars, hotels, etc.
- Telecommunication services
- Admissions to entertainment events
- Accommodation rentals
North Carolina defines tangible personal property as "personal property that may be seen, weighed, measured, felt, or touched or is in any manner perceptible to the senses. The term includes electricity, water, gas, steam, and prewritten computer software."
Are groceries and prepared foods taxable in North Carolina?
Groceries are exempt from state sales tax. However, North Carolina imposes a 2.0% local tax rate on groceries, excluding candy, dietary supplements, soft drinks, and other items. Prepared food is taxed at the state and local levels. See the latest North Carolina tax updates for more information.
Is clothing taxable in North Carolina?
Yes, clothing is generally taxable in North Carolina.
Are digital products taxable in North Carolina?
Yes, North Carolina taxes digital products like ebooks, music downloads, and streaming services. The state applies a tax on digital items that it defines as tangible personal property.
Is software-as-a-service (SaaS) taxable in North Carolina?
No, North Carolina does not tax SaaS. See this article for more information on how North Carolina taxes SaaS and digital goods.
Are services taxable in North Carolina?
Most professional and personal services are not taxable. However, North Carolina exempts telecommunications, accommodation rentals, and repair and maintenance services.
Sales tax exemptions
Some exemptions include:
- Food stamps
- Prescription medicines
- Certain farm equipment & supplies for qualifying farmers
See the NCDOR website for a complete list of taxable and exempt services.
Excise taxes in North Carolina
Excise taxes are taxes levied on specific goods or services. North Carolina charges excise taxes on:
- Alcoholic beverages - 7% sales and use tax combined
- Cigarettes - 45 cents per pack of 20
- Tobacco products other than cigarettes - 12.8% of the product price
- Motor fuel - 40.3 cents per gallon
- Piped natural gas - 7% sales and use tax combined.
How to register for a North Carolina sales tax permit
Below are the steps for registering for a sales and use tax account number in North Carolina.
Register online using the online business registration portal or submit a completed Form NC-BR (or appropriate form for your business type) via mail. You will need to provide:
- Business contact information (name, address, phone number)
- Ownership information
- Social Security Number (SSN) or Federal Employer Identification Number (FEIN), and North Carolina Secretary of State Number (SOS), if applicable
- Business details (start date, type, etc.)
The following businesses are eligible to register online:
- Withholding
- Sales and Use (excluding tax on Spirituous Liquor, Aviation Gasoline and Jet Fuel, and Piped Natural Gas)
- Motor Vehicle Lease and Subscription Tax
All other business types must register by mail using the appropriate paper form.
Once registered, the state requires you to collect and remit sales tax. Visit the NCDOR business registration page to learn more about the registration process and how to submit your application.
Cost of registration for a North Carolina sales tax license
There is no cost to register for a certificate of registration in North Carolina.
Agencies to register within North Carolina
You only need to register with the NCDOR website to obtain a sales tax account number in North Carolina.
Return filing schedule and due dates
The NCDOR assigns a filing frequency to businesses based on their anticipated taxable sales. This schedule is either monthly or quarterly.
If the total tax liability is less than $20,000 and at least $100 per month, you must file monthly. Returns and payments are due by the 20th of the month following the reporting period.
If the monthly tax liability is less than $100, you must file your taxes quarterly.
Good to know: If your monthly tax collection exceeds $20,000, file monthly, but with a prepayment for the next month. The prepayment must be 65% of the tax due for the current month, the tax due for the same month in the previous year, or the average monthly tax during the previous calendar year.
The following due dates apply to North Carolina sales tax returns:
Monthly
Quarterly
If the monthly tax liability is less than $100, you must file your taxes quarterly.
Payment penalties
Businesses that fail to file their North Carolina sales tax returns on time are subject to a penalty of 5% per month (or a fraction with a maximum of 25%).
Businesses that fail to pay on time will incur a 5% penalty. The state also charges interest on the amount of tax due until you submit payment.
I didn't collect any North Carolina sales tax. Do I still have to submit a return?
Yes, you still need to file a North Carolina sales tax return if you didn't collect any sales tax.
Audit & appeals process
If the state finds discrepancies or irregularities in your state tax returns, it might audit your business.
North Carolina sales tax audit process — what to expect during the audit
The auditor will likely issue you a written notice that states the reasons for the audit. You then have 45 days from the notice's mailing date to file a request for review.
Once you file a request, the NCDOR will remove the assessment, request additional information, or schedule a conference to discuss the case. The auditor will review sales records, exempt sales, and use tax payments to identify unreported tax liability.
If after the above concludes, the two parties cannot agree, the NCDOR will issue an NOFD (Notice of Final Determination) which outlines:
- Why its actions should remain
- The tax due (plus any penalties, interest)
- Collections options
- Appeals procedures if you want to contest the actions.
After the audit — appealing the results
If you want to appeal, file a Contested Case Petition at the North Carolina Office of Administrative Hearings (OAH). If you disagree with the OAH decision, you can petition the Superior Court of Wake County.
Learn more about the audit & appeals process.
Sales tax FAQs
How do you calculate North Carolina sales tax?
To calculate North Carolina sales tax, use the formula:
Sales tax = (4.75% + local rate) * purchase price.
For instance, if the local rate is 2%, and the purchase price is $100, the sales tax would be $6.75.
Is North Carolina a streamlined sales tax state?
Created in 2000, the Streamlined Sales and Use Tax Agreement (SSUTA) makes sales tax rules easier to follow by promoting consistency across states. While several states have adopted its standards, participation isn’t nationwide.
North Carolina is a Streamlined Sales Tax state. It joined the Streamlined Sales and Use Tax Agreement (SSUTA) in 2005.
Do I need to register if I’m only a wholesaler?
Wholesalers in North Carolina are required to obtain a Certificate of Registration. If you do not make taxable retail sales, choose "wholesale only" when registering, which exempts you from filing sales and use tax returns.
Visit the NCDOR website for more information on who should register for sales and use tax.
Do I need a North Carolina seller's permit if I only sell temporarily in the state?
Yes, even temporary sellers, such as vendors at craft fairs or specialty markets, need to register so you can collect and remit sales tax.
Should you collect sales tax on shipping charges?
Yes, if the sale is taxable, the shipping charges are also taxable in North Carolina.
Can I request an extension to file my North Carolina sales tax return?
There are no known extensions for North Carolina sales and use tax returns. Late filing and payments are subject to penalties.
Can I amend a North Carolina sales tax return?
Yes, you can file an amended return in North Carolina to correct errors or report additional tax due. However, you still may be charged penalties and interest for late filing or payments.
Are there any North Carolina sales tax holidays?
No, North Carolina currently does not have any sales tax holidays.
Information & contacts
For sales tax information in North Carolina, contact:
- North Carolina Department of Revenue
- Phone number: 1-877-252-3052
- Website: www.ncdor.gov
There you have it, a comprehensive guide on North Carolina's sales tax rules and regulations. We know tax laws can feel confusing (even to the pros), and you’ve got enough on your plate already. If you'd rather spend your time growing your business instead of stressing over sales tax, let Numeral take it off your hands.
