North Carolina pay stubs: state taxes and withholding

State income tax

North Carolina has a flat individual income tax. For 2026 the rate is 3.99%, down from 4.25% in 2025 under the schedule the legislature set in 2023. Employees complete Form NC-4, the state withholding allowance certificate. The Department of Revenue's withholding method accounts for the state standard deduction, so the amount taken from each check is a bit less than 3.99% of gross pay.

Further cuts are possible in later years if the state hits certain revenue targets, so check the rate each January.

Other state payroll deductions

North Carolina keeps employee payroll simple:

• No state disability insurance
• No paid family and medical leave payroll contribution
• No employee unemployment tax. State unemployment insurance is paid by employers.

Local taxes

North Carolina cities and counties do not tax wages, from Charlotte and Raleigh to the smallest towns. Moving an employee between locations inside the state won't change their withholding.

Federal withholding still applies

Every North Carolina paycheck also has the federal deductions:

• Federal income tax, based on the employee's Form W-4
• Social Security at 6.2% of wages up to the annual Social Security wage base
• Medicare at 1.45% of all wages, plus an additional 0.9% on wages above $200,000 in a year

Creating a North Carolina pay stub with PayStubNest

Start a new pay stub, enter the salary or the hourly rate and hours, and choose North Carolina. The calculator applies federal withholding and the North Carolina flat rate and carries year-to-date totals from one stub to the next. The exact amounts depend on pay, pay frequency, the employee's W-4 choices, any deductions and year-to-date totals. PayStubNest works all of that out automatically. Preview everything for free. You pay only when you download.

Contractors and side businesses

If you're self-employed or pay contractors, no state tax is withheld on contractor payments unless a special rule applies. For example, North Carolina has withholding rules for certain payments to nonresident contractors. Check with the North Carolina Department of Revenue if you pay people who live outside the state.

Record-keeping tip

At the start of each year, look over your first January stub next to the last December one. With North Carolina's rate changing, a quick side-by-side confirms the new rate took effect. Our FAQ covers year-end questions.