We are a Naperville, Illinois CPA firm, and we serve Charlotte-area clients remotely; we do not have an office in North Carolina. Charlotte taxpayers benefit from a flat state income tax that is scheduled to fall, and North Carolina cities and counties do not levy their own income taxes. Two 2026 developments, though, change the picture for residents and business owners: a higher sales tax in Mecklenburg County and new state tax law that departs from the federal rules.
North Carolina's flat income tax
North Carolina taxes individuals at a single rate on North Carolina taxable income. The statute sets 4.25% for taxable years beginning in 2025 and 3.99% after 2025. It also contains a trigger: if General Fund revenue in specified fiscal years exceeds set amounts, the rate for later years drops by half a percentage point from the prior year, down to a floor of 2.49%. The first trigger year is the 2025-2026 fiscal year, affecting tax year 2027. North Carolina starts from federal adjusted gross income, so its add-backs and subtractions matter as much as the rate. Example: for a Charlotte resident with $100,000 of North Carolina taxable income in 2025, the tax at 4.25% is $4,250.
The Mecklenburg sales tax increase
On July 1, 2026, Mecklenburg County added another 1.00% local sales and use tax. The Department of Revenue's chart shows the pieces: 4.75% state, 2.00% county, 0.50% transit and the new 1.00% additional county rate, for a total of 8.25%. Retailers must collect the new rate on retail sales and leases sourced to Mecklenburg County, and buyers owe use tax if the seller does not collect. Prepared meal taxes are separate. Retailers and online sellers delivering to Charlotte addresses should update their systems, and our sales and use tax service can review rates by address.
The 2026 changes to North Carolina conformity
In July 2026 the governor signed Session Laws 2026-31 and 2026-41. The state now follows the Internal Revenue Code as of July 5, 2025, rather than January 1, 2023, so it picks up many recent federal changes. It does not follow one of them: full expensing of domestic research and experimental costs. Individuals and corporations that expensed these costs federally must add back 80% of the amount to North Carolina income, and may deduct 25% of that add-back in each of the next four years. Example: a company that deducted $100,000 of domestic research costs in 2025 adds back $80,000 for North Carolina and deducts $20,000 in each of 2026 through 2029. The laws also created a gambling loss itemized deduction and a deduction for Hurricane Helene timber losses. For the federal side, see our guide to startup costs and research expenses. Some provisions are retroactive, so prior-year returns may need review.
Working across state lines
Charlotte sits near the South Carolina border, so some residents work or own property across it. A job, move or rental house in another state can create two filings. Our multi-state tax work and our guide to state income tax withholding explain how credits and withholding fit together.
The community
The Charlotte-Concord-Gastonia metro area has about 59,000 residents who identify as Asian Indian alone or in combination (roughly 2.1%), and the city of Charlotte has about 26,100 (2.9%), according to the American Community Survey for 2020 to 2024. We support families with the US-India tax treaty, India account reporting and small-business payroll.
How we can help
We prepare federal and North Carolina returns, track the state's add-back and deduction rules, set up sales tax collection for Mecklenburg sales and run payroll, all remotely from Naperville. See our North Carolina page for more. For your own situation, talk with a qualified professional.
Frequently asked questions
What is the North Carolina income tax rate?
It is a flat 4.25% for 2025 and 3.99% for years after 2025, subject to a revenue trigger that can lower it further.
What is the sales tax in Charlotte?
Since July 1, 2026, Mecklenburg County's general rate is 8.25%. Prepared meal taxes are separate.
Does Charlotte have a city income tax?
No. North Carolina cities and counties do not impose their own income taxes.
Does North Carolina allow immediate expensing of research costs?
No. The state requires an 80% add-back of domestic research costs expensed federally, with a four-year recovery.
Official sources
- North Carolina General Statutes 105-153.7: individual income tax imposed
- North Carolina Department of Revenue: Mecklenburg County sales and use tax increase
- North Carolina Department of Revenue: impact of recently enacted laws on income tax returns
- North Carolina Department of Revenue: current sales and use tax rates
- U.S. Census Bureau: ACS 2020-2024 5-year, Table B02018 (Charlotte metro area and city)
This page is a plain-language summary. The official source controls if there is any difference.
General information only, not tax, legal or accounting advice for your situation. Rules, limits and deadlines change; confirm the current rules with the official source or a qualified professional before you act. Reading this page does not create a professional relationship with CPA Tax Payroll and Accounting Corp.