Matthews, NC Sales Tax: Rate, Exemptions, and Use Tax

The sales tax rate in Matthews, NC is 7.25% through June 30, 2026, and climbs to 8.25% on July 1, 2026, when Mecklenburg County adds a new 1% local tax.1North Carolina Department of Revenue. Important Notice: Mecklenburg County Sales and Use Tax Increase Matthews sits entirely within Mecklenburg County, so the town rate tracks the county rate on nearly every retail purchase.

How the Rate Is Built

The total combines a fixed state rate with several local layers. The state portion is 4.75% everywhere in North Carolina and does not change.2North Carolina General Assembly. North Carolina Code 105-164.4 – Tax Imposed on Retailers and Certain Facilitators The local layers are what move.

Effective July 1, 2026, the breakdown is:

Before the increase, the local share was 2.50% (2.00% county plus 0.50% transit), for the current 7.25% total.

What the Tax Applies To

North Carolina applies sales tax broadly to physical goods, many services, and digital products. Tangible items you buy in Matthews — clothing, furniture, electronics, a vehicle — are taxed at the full combined rate at checkout.2North Carolina General Assembly. North Carolina Code 105-164.4 – Tax Imposed on Retailers and Certain Facilitators

Services get taxed when they involve work on a physical or digital item. Repair, maintenance, and installation services on tangible property fall under the general rate, as do dry cleaning, laundry, and telecommunications.2North Carolina General Assembly. North Carolina Code 105-164.4 – Tax Imposed on Retailers and Certain Facilitators Personal services like haircuts and legal advice generally are not taxed.

Digital property is also in the tax base. Digital audio and audiovisual works, digital books, electronically transferred publications, photographs, and greeting cards are taxed at the same combined rate as their physical counterparts.4North Carolina Department of Revenue. Taxable Items Download a movie or buy an e-book to a Matthews address and you pay the full rate. Educational and information services are carved out and are not taxed.

Groceries, Prescriptions, and Other Breaks

Groceries Are Not Fully Tax-Free

Unprepared food — bread, produce, meat, dairy — is exempt from the 4.75% state sales tax.5North Carolina General Assembly. North Carolina General Statutes 105-164.13B – Food Exempt from Tax Local tax still applies, however. The local rate on qualifying groceries is 2%, so your Matthews grocery receipt will show a 2% charge rather than zero.6North Carolina General Assembly. North Carolina General Statutes 105-467 – Scope of Sales Tax

Prepared food is taxed at the full combined rate. That covers restaurant meals, deli sandwiches, and anything sold with eating utensils.5North Carolina General Assembly. North Carolina General Statutes 105-164.13B – Food Exempt from Tax Candy, soft drinks, and dietary supplements also lose the reduced rate and get the full rate.

Prescription Drugs and Medical Equipment

Prescription medications, insulin, and over-the-counter drugs sold on a prescription are fully exempt from sales tax.7North Carolina General Assembly. North Carolina Code 105-164.13 – Retail Sales and Use Tax The same statute exempts prosthetic devices for human use, durable medical equipment sold on a prescription, and prescription medical supplies. Over-the-counter medications bought without a prescription remain taxable.

Use Tax on Online and Out-of-State Purchases

When you buy something online or from out of state and the seller does not collect North Carolina sales tax, you owe the equivalent amount as consumer use tax. The rate matches your local sales tax rate, so Matthews buyers owe the full combined rate.8North Carolina Department of Revenue. Consumer Use Tax

Most people report use tax on their state income tax return, Form D-400. If you are not required to file an income tax return, or if the purchase is food subject to the 2% rate, use Form E-554 instead. Boats and aircraft have their own form, E-555.8North Carolina Department of Revenue. Consumer Use Tax Large online retailers now collect North Carolina tax automatically in most cases, which has narrowed the gap considerably, but smaller sellers and private-party purchases still trigger the obligation.

If You Run a Business in Matthews

Before making a taxable sale, you need a Certificate of Registration from the North Carolina Department of Revenue. There is no fee.9North Carolina General Assembly. North Carolina Code 105-164.29 – Application for Certificate of Registration You can register online at ncdor.gov, through the Streamlined Sales Tax Registration System, or by paper form.10North Carolina Department of Revenue. Business Registration

The Department assigns a filing frequency based on your monthly tax liability: quarterly if consistently under $100, monthly if consistently at least $100 but under $20,000, and monthly with prepayment if consistently $20,000 or more.11North Carolina Department of Revenue. Filing Frequency and Due Dates Returns go on Form E-500, filed electronically for most businesses.12North Carolina Department of Revenue. Frequently Asked Questions for Online File and Pay Filers Whose Sales and Use Tax Filing Frequency Changed Effective October 1st

Point-of-sale systems need updating before July 1, 2026. Sellers who fail to collect the correct rate owe the difference themselves. Late filing carries a 5% penalty per month or partial month, capped at 25%, with a separate 5% penalty for paying late and interest running from the due date until payment.13North Carolina General Assembly. North Carolina Code 105-236 – Penalties14North Carolina Department of Revenue. Penalties and Fees Overview The Department can waive penalties for reasonable cause such as serious illness or a natural disaster.