What Is Sales Tax in NC? Rates, Exemptions, and Use Tax

The sales tax in NC is 4.75% at the state level, with each county adding its own local tax on top. The combined rate you actually pay at the register runs from 6.75% to 7.5%, depending on the county where you receive the item.1NCDOR. Current Sales and Use Tax Rates

How the Rate Is Built

The 4.75% state rate comes from G.S. § 105-164.4 and applies the same way in all 100 counties.2North Carolina General Assembly. North Carolina General Statutes 105-164.4 – Tax Imposed on Retailers and Certain Facilitators Each county then layers on local taxes authorized by the General Assembly for transit, school construction, or general county use. The lowest combined rate in the state is 6.75%; the highest is 7.5%.1NCDOR. Current Sales and Use Tax Rates

Which county’s rate applies isn’t about where the seller sits. North Carolina sources sales to the place the buyer receives the item.3North Carolina General Assembly. North Carolina General Statutes 105-164.4B – Sourcing Principles Walk into a store and the store’s county rate applies. Have the same store ship the item to your home in a different county, and the delivery address controls. A business selling across county lines may be collecting several different rates in the same week.

What Is Taxable

Almost all tangible personal property sold at retail is taxable: electronics, furniture, clothing, household goods, and the like. Certain digital property is taxed at the same combined rate as physical goods, including downloaded movies, music, e-books, and other files you permanently receive.2North Carolina General Assembly. North Carolina General Statutes 105-164.4 – Tax Imposed on Retailers and Certain Facilitators

Several service categories are taxable as well:

  • Telecommunications and streaming, including landline, wireless, and satellite radio.
  • Repair and maintenance of tangible personal property, parts and labor included.
  • Laundry and dry cleaning.
  • Installation of tangible personal property.

Software sits in two different buckets. Prewritten software you download to your device is treated as taxable digital property. Cloud-based software you access through a browser (SaaS) is generally not taxable, because you never download or keep a copy. Custom software built for a single customer is exempt no matter how it’s delivered.

What Is Exempt or Taxed at a Lower Rate

G.S. § 105-164.13 lists the main carve-outs from sales tax.4North Carolina General Assembly. North Carolina General Statutes 105-164.13 – Retail Sales and Use Tax Exemptions The groups below cover most everyday situations.

Groceries

Food bought for home consumption is exempt from the 4.75% state tax but still carries a 2% local tax.5NCDOR. Consumer Use Tax Prepared meals from restaurants, delis, and caterers don’t get this treatment and are taxed at the full combined rate.

Medical Items

Prescription medications, insulin, and certain medical devices such as oxygen equipment are exempt. Over-the-counter drugs generally are not, unless the statute specifically lists them.

Farm Supplies

Seeds, fertilizers, animal feed, and other supplies sold to farmers for planting, cultivating, or raising livestock are exempt.4North Carolina General Assembly. North Carolina General Statutes 105-164.13 – Retail Sales and Use Tax Exemptions The buyer has to actually be farming to claim the exemption at the register.

Manufacturing Machinery

Mill machinery, parts, and accessories sold to a manufacturing plant are exempt, and the exemption extends to contractors and subcontractors buying equipment for work under a contract with a plant.4North Carolina General Assembly. North Carolina General Statutes 105-164.13 – Retail Sales and Use Tax Exemptions Restaurants, cafeterias, and similar food-service businesses are not manufacturing plants for this purpose. Electricity isn’t covered either.

Occasional and Isolated Sales

Selling a personal item you already paid tax on—a used bike, a piece of furniture, a boat—generally doesn’t require you to collect sales tax, as long as you aren’t in the business of selling that kind of item.6North Carolina Office of Administrative Hearings. 17 NCAC 07B .0112 – Occasional and Isolated Sales The same rule covers a business selling off its own equipment, provided it doesn’t regularly sell that kind of property. Sales handled through a marketplace facilitator do not qualify.

Use Tax on Out-of-State Purchases

Buy a taxable item from an out-of-state seller who doesn’t collect North Carolina sales tax, and you owe the state an equivalent use tax. The use tax rate matches the combined sales tax rate for your county.1NCDOR. Current Sales and Use Tax Rates Where you report it depends on your situation:

  • If you file a state income tax return, report use tax on Form D-400.
  • If you don’t file Form D-400, use Form E-554, the Consumer Use Tax Return.
  • For food purchases taxed at the reduced 2% rate, report on Form E-554 even if you also file D-400.
  • For boats and aircraft, use Form E-555.
5NCDOR. Consumer Use Tax

Rules for Sellers and Online Platforms

An out-of-state seller with no physical presence in North Carolina still has to collect and remit sales tax once gross sales into the state cross $100,000 in the current or previous calendar year.7NCDOR. Remote Sales North Carolina used to also apply a 200-transaction threshold, but that was repealed effective July 1, 2024. Sellers who already have a physical presence here collect regardless of volume.

Marketplace facilitators—platforms like Amazon, Etsy, or eBay that process third-party sales—are treated as the retailer for every sale they facilitate into the state. The platform collects and remits the tax, even where the underlying seller wouldn’t have been required to.8North Carolina General Assembly. North Carolina General Statutes 105-164.4J – Marketplace-Facilitated Sales If you sell through one of those platforms, your direct sales outside the marketplace are still your responsibility.