Sales and Use Tax
Retail sales of tangible personal property not subject to a reduced rate of tax are subject to the general 4.75% State rate of sales and use tax. The general 4.75% State rate of sales and use tax also applies to the gross receipts derived from the rental of an accommodation, the sales price of or the gross receipts derived from a prepaid meal plan, the sales price of or the gross receipts derived from a service contract to maintain or repair tangible personal property or a motor vehicle, the gross receipts derived from an admission charge to an entertainment activity, the gross receipts derived from cleaning, pressing, hat blocking, and laundering of linens and apparels, the sale or recharge of a prepaid telephone calling service, the gross receipts derived from providing satellite digital audio radio service, the sales price of non-household personal property sold at a specialty market, and the sales price of certain digital property. The lease or rental of tangible personal property is subject to the applicable percentage rate and the maximum tax, if any that applies to a sale of the property that is leased or rented. Items subject to the general 4.75% State rate are also subject to the 2% (2.25% in Alexander, Anson, Ashe, Buncombe, Cabarrus, Catawba, Cumberland, Davidson, Duplin, Durham, Edgecombe, Greene, Halifax, Harnett, Haywood, Hertford, Lee, Martin, Montgomery, New Hanover, Onslow, Orange, Pitt, Randolph, Robeson, Rowan, Sampson, Surry, and Wilkes Counties) local sales and use tax rate. Mecklenburg County has an additional 0.50% transit county tax for public transportation in addition to the 2% local sales and use tax rate. Durham and Orange Counties have an additional 0.50% transit county tax for public transportation in addition to the 2.25% local sales and use tax rate.
A 3% State rate of sales or use tax applies to retail sales of aircraft and boats with a maximum tax of $1,500 per article. Fifty percent (50%) of the sales price of each modular home or manufactured home sold at retail, including all accessories attached to a modular home or manufactured home when delivered to a purchaser, is subject to the general 4.75% State rate of sales and use tax. Aircraft, boats, modular homes and manufactured homes are not subject to the local and transit sales and use taxes.
A 2% local rate of sales or use tax applies to retail sales and purchases of qualifying food; the 0.50% transit county sales and use tax for public transportation and the additional 0.25% local rate in the counties listed above does not apply. Purchases of non-qualifying food are subject to the general 4.75% State and applicable local and transit rates of sales and use tax. For additional information on the taxation of food, refer to Section 19 of the Sales and Use Tax Technical Bulletins.
In those instances where a sales tax has not been paid on taxable items, a use tax at the applicable rate applies on taxable items purchased or received from within or without this State for storage, use, or consumption in this State.
Every person engaged in business in North Carolina is required to register with the Department and collect and remit the tax due on all taxable tangible personal property, taxable services or certain digital property sold or delivered for storage, use, or consumption in North Carolina. Every person who purchases any taxable tangible personal property, taxable services or certain digital property for storage, use, or consumption in North Carolina for business use from out-of-state vendors upon which the tax has not been fully paid must register with the Department and remit the tax due on such purchases. Use tax is also due on tangible personal property removed from inventory by a retailer-contractor to fulfill a real property contract. For sales and use tax purposes you must register online or complete the Registration Application, Form NC-BR, and mail to the Department. All registrants will be furnished returns to be used in reporting and remitting all sales and use taxes due.
The tax is to be reported to the Department on the Sales and Use Tax Return, Form E-500. Information about the filing frequency and due date requirements can be found in: Filing Frequency and Due Dates. For additional information on sales and use tax, refer to the Sales and Use Tax Technical Bulletins.
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