North Carolina charges a 4.75% state sales tax on most goods and some services

North Carolina's base sales tax rate is 4.75%. This is the state portion only. Most counties add their own local sales tax on top, which ranges from 2% to 2.75%, bringing your total to somewhere between 6.75% and 7.5% depending on where you shop. The rate you pay depends on the county where the sale happens, not where you live.

Sales tax applies to tangible goods — things you can touch and take home. It also applies to some services, though fewer than you might think. Groceries for home consumption are not taxed. Prepared food, restaurant meals, and food you eat on premises are taxed. Medicine prescribed by a doctor is not taxed, but over-the-counter drugs and vitamins are.

Key Takeaways

  • North Carolina's state sales tax is 4.75%, and most counties add 2% to 2.75% on top, for a total between 6.75% and 7.5%.
  • Groceries for home use are not taxed, but restaurant meals, prepared food, and food eaten on premises are taxed.
  • Prescription medicine is not taxed, but over-the-counter drugs, vitamins, and supplements are taxed.
  • Clothing and shoes under $100 per item are not taxed; items $100 or more are taxed on the full price.
  • Services like haircuts, repairs, and labor are generally taxed, but professional services like accounting and legal advice are not.

What is and is not taxed in North Carolina

The state maintains a list of what is taxed and what is not, and some categories are surprising. Clothing and footwear under $100 per item are exempt from tax. If you buy a shirt for $75, you pay no sales tax. If you buy one for $150, you pay tax on the full $150. This applies per item, not per purchase.

Services are taxed differently depending on what they are. A haircut is taxed. Car repair is taxed. Appliance repair is taxed. But accounting services, legal services, and medical services performed by a licensed professional are not taxed. A plumber's labor is taxed; a doctor's visit is not.

Digital goods and subscriptions are taxed. If you buy an e-book, a song download, or a streaming subscription, you pay sales tax. Software licenses are taxed. Newspapers and magazines are not taxed, whether print or digital.

Local county sales tax rates vary across the state

North Carolina allows each county to set its own local sales tax rate on top of the state rate. This means the total you pay depends on which county you are in when you make the purchase. A purchase in Wake County (Raleigh) is taxed at 7.25% total. A purchase in Mecklenburg County (Charlotte) is taxed at 7.25% total. A purchase in Guilford County (Greensboro) is taxed at 7%. Some rural counties have lower rates.

If you buy something online from a North Carolina retailer, the tax rate applied is usually based on the shipping address, not the retailer's location. If you live in a county with a 2% local rate and order from a Charlotte retailer, you still pay the tax rate for your county.

Who collects and pays North Carolina sales tax

The retailer — the store or business you buy from — collects the sales tax from you at the point of sale and sends it to the North Carolina Department of Revenue. You do not file sales tax yourself as a consumer. The tax is built into the price you see at checkout or added at the register.

Businesses that sell taxable goods or services must register with the Department of Revenue and file sales tax returns. The frequency depends on how much tax they collect — high-volume sellers file monthly, smaller businesses may file quarterly or annually. Businesses that fail to register or file can face penalties and interest.

Sales tax on vehicles, fuel, and other specific items

Motor vehicles are taxed at 3% of the sale price, not the full 4.75% state rate. This is a lower rate than regular sales tax. Gasoline and diesel fuel are not subject to sales tax, but they are subject to a separate state excise tax and federal excise tax. The excise tax is included in the price you see at the pump.

Electricity and natural gas used in your home are not taxed. Telecommunications services — phone and internet — are taxed. Rental of tangible property, like equipment rental, is taxed. Leasing a vehicle is taxed, but the rate and calculation depend on the terms of the lease.

What happens if you buy something out of state

If you buy something from an out-of-state retailer and have it shipped to North Carolina, you may owe sales tax depending on whether the retailer has a physical presence or economic nexus in North Carolina. Most large online retailers now collect North Carolina sales tax on orders shipped to the state. If they do not, you may be required to pay use tax — which is essentially the same as sales tax — when you file your state income tax return. In practice, most individuals do not report use tax on personal purchases.

If you travel out of state and buy something there, you pay that state's sales tax. You do not owe North Carolina sales tax on items purchased and used outside the state.

Frequently Asked Questions

Do I pay sales tax on groceries in North Carolina?

No, groceries for home consumption are not taxed. This includes bread, milk, vegetables, meat, and other food you buy to cook and eat at home. However, prepared foods, hot foods, and food you eat at a restaurant or on the premises are taxed.

What is the total sales tax rate where I live?

The total is 4.75% state tax plus your county's local rate. County rates range from 2% to 2.75%. To find your exact rate, search online for "[your county name] North Carolina sales tax rate" or contact your county tax assessor's office. The rate applies where you make the purchase, not where you live.

Are clothes and shoes always tax-free in North Carolina?

Clothing and shoes under $100 per item are tax-free. Items priced at $100 or more are taxed on the full price. This is per item, so a $99 shirt is not taxed, but a $101 shirt is taxed on all $101.

Do I owe North Carolina sales tax on online purchases from out-of-state sellers?

Most large online retailers now collect North Carolina sales tax on orders shipped to the state. If a retailer does not collect it, you may owe use tax when you file your state income tax return, though most individuals do not report this on personal purchases.

Is sales tax charged on services like haircuts and car repair?

Yes, most services are taxed in North Carolina. Haircuts, car repair, appliance repair, and labor are all taxed. However, professional services like accounting, legal advice, and medical services performed by licensed professionals are not taxed.