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North Carolina spends about $34 billion of taxpayer money every year, and cities, counties and other localities spend billions more.
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To help fund all that, you pay personal income tax to the state government and property taxes to your local government. But for sales tax, shoppers in North Carolina are paying both the state and local authorities.
There are two constitutional amendments on voters’ November ballots that would cap the income tax and limit property taxes, respectively. But nothing about sales tax.
Here’s what you should know about what sales taxes you pay in North Carolina. The total amount of sales tax depends on where you live, as the amount of local taxes imposed varies. And there are exceptions, too.
The total amount of sales tax you pay on most purchases varies by county. Every county has local rates, and some also have a 0.5% sales tax that goes to transit. Businesses pay sales taxes to DOR, which doles out the taxes to local governments, including those cities that collect a transit tax.
This map shows the total sales tax rate by county.
Here’s the NC Department of Revenue’s breakdown of total state and local sales tax in the three points of the Triangle region:
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The highest combined local and state sales tax is in Mecklenburg County, which added an additional 1% sales and use tax this summer, totaling 8.25% overall. Voters approved that increase last fall to pay for roads and transit.
North Carolina also has a long and varied list of sales and use tax exemptions.
Most non-prepared food is exempted from the statewide sales tax of 4.75%, but subject to a portion, 2%, of local sales tax. Prescription drugs are also exempted from sales tax.
The Department of Revenue lists exemptions, including certain exemptions for farmers, logging, broadcast towers, mill machinery, equipment sold to recycling facilities and more, in 19 pages of exemptions in state law. Buyers of manufactured and modular homes and aircraft and qualified jet engines only pay the statewide 4.75% sales tax, not local sales and transit tax.
The General Assembly repealed one sales tax exemption this summer: for electricity purchased by data centers. Some other things that data centers buy continue to qualify for tax exemptions. The data center exemptions were once part of data center incentive packages.
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