How to File the North Carolina Partnership Income Tax Return (Form D-403)

North Carolina Form D-403 is the annual partnership income tax return filed with the North Carolina Department of Revenue (NCDOR). Any partnership doing business in the state or earning income from North Carolina sources uses it to report the entity’s income and each partner’s distributive share, and to pay tax on behalf of nonresident partners who haven’t opted out. Calendar-year partnerships file by April 15.

Who Has to File

Any partnership doing business in North Carolina and required to file a federal return must file Form D-403.¹ That covers general partnerships, limited partnerships, and LLCs treated as partnerships for federal tax purposes. It applies even when every partner lives outside the state, as long as the business has North Carolina-source income.

The return does double duty. For resident partners it’s an information return. When the partnership has nonresident partners, it also reports each nonresident’s share of North Carolina income and pays tax on that share at the applicable rate.¹ A nonresident partner can take themselves out of that arrangement by signing Form NC-NPA, the Nonresident Partner Affirmation, affirming they’ll file their own NC return or aren’t subject to NC income tax.²

When It’s Due

The D-403 is due on the 15th day of the fourth month after the partnership’s tax year ends. For a calendar-year partnership, that’s April 15.² If the due date is a weekend or holiday, it shifts to the next business day.

Note the gap with the federal deadline. Form 1065 is due March 15 for calendar-year filers, a full month earlier. That sequencing works in your favor: finish the 1065 first, then use those figures on the D-403.

You can get a six-month extension by filing Form D-410P before the original due date. If you already have an automatic federal extension, you don’t need to file D-410P separately; the federal extension carries over to North Carolina. The extension buys time to file, not time to pay. Any tax owed on behalf of nonresident partners is still due by the original deadline, and unpaid amounts start accruing interest and a failure-to-pay penalty from that date.³

What to Have Ready Before You Start

Completed federal Form 1065 and all Schedules K-1. The D-403 pulls its starting income figure from the 1065, and each partner’s federal K-1 feeds the state-level allocations.²
The partnership’s full nine-digit Federal Employer Identification Number. A missing or incomplete FEIN can delay processing.²
Form NC-PE, NC Adjustments for Partners and Shareholders. Any partnership with North Carolina additions to or deductions from federal income must complete NC-PE and attach both pages to the D-403.⁴
Any 1099s or other income documents the partnership received during the year.
A completed Form NC-NPA from each nonresident partner who wants to opt out of entity-level tax. The NC-NPA must be on file by the return’s due date, including extensions.²

The current D-403, the D-403A instructions, and every supporting schedule are on the NCDOR website under Partnership Tax Forms and Instructions.⁵

Filling Out the Return

The top of page 1 collects the partnership’s legal name, address, FEIN, date organized, principal business activity code, and tax year. You also indicate on page 1 whether you’re making the Taxed Partnership election, discussed below.

Income and North Carolina Adjustments

Lines 1 through 7 handle the income calculation. Start with federal ordinary income (loss) from line 1 of Form 1065, then apply North Carolina adjustments. Line 4 captures additions, such as interest income from bonds issued by other states. Line 6 captures deductions, such as interest from North Carolina state or local government bonds.

Review Form NC-PE before entering anything on those lines. Not every NC adjustment that applies to individual filers applies to partnerships.⁴ If you make any adjustment at all, both pages of NC-PE have to be attached.

Apportionment for Multistate Partnerships

Part 2 handles apportionment when the partnership operates both inside and outside North Carolina. If all business activity is in-state, skip Part 2 and enter 100% as the apportionment factor on Part 4, Line 12 for each partner.⁶

For multistate partnerships, the factor is North Carolina receipts divided by total receipts everywhere. That percentage sets how much income is attributed to the state.⁶ Banks, electric power companies, air and water transportation companies, pipeline companies, and railroads use special formulas; if one applies, attach a schedule showing the calculation.

Nonapportionable Income

Part 3 is only for partnerships with nonapportionable income, meaning income unrelated to regular business operations that gets allocated to a specific state instead of spread by the apportionment formula.⁶ Capital gains from the sale of real property in a particular state are a typical example. If none of that applies, skip Part 3.

Tax on Behalf of Nonresident Partners

Part 4 is where the partnership computes tax owed for each nonresident partner who hasn’t filed Form NC-NPA. Multiply that partner’s share of North Carolina income by the applicable individual income tax rate. For tax year 2025 returns filed in 2026, the rate is 4.25%.² For tax year 2026 returns filed in 2027, the rate drops to 3.99%.⁷

A nonresident individual partner whose only North Carolina income is their share from the partnership does not need to file a separate NC individual return, provided the partnership pays the full tax shown due.² That convenience is a common reason nonresident partners choose not to file the NC-NPA.

Schedule NC K-1 for Each Partner

Prepare a Form D-403 NC K-1 for every partner, showing their share of income or loss, North Carolina adjustments, and NC tax credits. Partners keep the NC K-1 for their records and use it when filing their individual NC return. They aren’t required to attach the NC K-1 to their personal return unless specifically instructed to.⁸

Signature

The managing partner signs the return. For a limited partnership, the signature must come from a general partner. A paid preparer, if one was used, also signs.⁴

The Taxed Partnership Election

Since tax year 2022, eligible partnerships can elect to pay North Carolina income tax at the entity level rather than passing the tax obligation through to individual partners. This is the Taxed Partnership election, often called PTET.

Eligible entities include domestic partnerships, foreign partnerships, and LLCs classified as partnerships for federal purposes. Publicly traded partnerships are ineligible, and so is any partnership with a partner that isn’t an individual, estate, qualifying trust, tax-exempt organization, partnership, or corporation.⁴

To make the election, fill in the circle on page 1 of Form D-403. The election has to be made by the due date, including extensions. Once you file the original return, you can neither make nor revoke the election.⁴ One important limit: a Taxed Partnership cannot pay entity-level tax for partners that are corporations or other partnerships. Those partners’ shares stay out of the entity-level calculation.

How to File and Pay

You can file the D-403 electronically or by mail. Electronic filing is available through NCDOR’s eFile system or through approved third-party tax software, and it gives faster confirmation of receipt.⁹

Paper returns go to:

North Carolina Department of Revenue
P.O. Box 25000
Raleigh, NC 27640-0640¹⁰

The same address applies whether or not the return includes a payment. If tax is owed for nonresident partners, include the payment with the return.

Penalties for Filing or Paying Late

North Carolina applies two different penalty structures depending on whether the D-403 is treated purely as an information return or carries tax due.

For the information-return component, NCDOR assesses $50 per day the return is late, up to a maximum of $1,000, regardless of whether any tax is owed.¹¹

When the partnership owes tax on behalf of nonresident partners and files late, the failure-to-file penalty is 5% of the net tax due for each month or partial month the return is overdue, capped at 25%.¹² If an extension was filed, the late-filing clock starts from the extended due date.¹¹ Interest runs separately on any unpaid balance from the original due date.

1
North Carolina General Assembly. North Carolina Code 105-154 – Information at the Source Returns
2
North Carolina Department of Revenue. 2025 D-403A Partnership Tax Return Instructions
3
North Carolina Department of Revenue. Form D-410P Instructions
4
North Carolina Department of Revenue. 2024 D-403A Partnership Tax Return Instructions
5
North Carolina Department of Revenue. Partnership Tax Forms and Instructions
6
North Carolina Department of Revenue. D-403 2024 Partnership Income Tax Return
7
North Carolina Department of Revenue. Tax Rate Schedules
8
North Carolina Department of Revenue. D-403 NC K-1 – Partner’s Share of North Carolina Income
9
North Carolina Department of Revenue. Electronic Filing Options and Requirements
10
North Carolina Department of Revenue. NCDOR Mailing Addresses
11
North Carolina Department of Revenue. Penalties and Fees Overview
12
North Carolina General Assembly. North Carolina Code 105-236 – Penalties, Situs of Violations, Penalty Disposition