Corporate Income and Franchise Tax Rates
An income tax is levied on the net taxable income of all corporations chartered in North Carolina or doing business in North Carolina, unless they are specifically exempt from tax under G.S. 105-130.11. Net taxable income shall be the same as taxable income as defined in the Internal Revenue Code in effect for the income year for which the returns are to be filed, subject to the adjustments provided in G.S. 105-130.5.
To calculate your North Carolina tax liability, multiply your North Carolina taxable income by the tax rate.
| Tax Year | Tax Rate | Surtax Rate |
|---|---|---|
| 2025 | 2.25% | |
2019 through 2024 | 2.50% | |
| 2017 and 2018 | 3.00% | |
| 2016 | 4.00% | |
| 2015 | 5.00% | |
| 2014 | 6.00% | |
| 2011 through 2013 | 6.90% | |
| 2009 and 2010 | 6.90% | 3.00% (applied to amount of tax) |
| 2003 through 2008 | 6.90% |
Franchise Tax Rate for General Business Corporations
C Corporations:
The franchise tax rate is one dollar and fifty cents ($1.50) per one thousand dollars ($1,000) and is applied as set forth in the law. For tax years beginning on or after January 1, 2017, the minimum franchise tax is two hundred dollars ($200). For tax years beginning prior to January 1, 2017, the minimum franchise tax was thirty-five dollars ($35).
S Corporations:
Effective for tax years beginning on or after January 1, 2019, the franchise tax rate for S corporations is two hundred dollars ($200) for the first one million dollars ($1,000,000) of the corporation’s tax base and one dollar and fifty cents ($1.50) per one thousand dollars ($1,000) of its tax base that exceeds one million dollars ($1,000,000) and is applied as set forth in the law. For tax years beginning prior to January 1, 2019, the franchise tax rate is one dollar and fifty cents ($1.50) per one thousand dollars ($1,000) and is applied as set forth in the law.
For tax years beginning on or after January 1, 2017, the minimum franchise tax is two hundred dollars ($200). For tax years beginning prior to January 1, 2017, the minimum franchise tax was thirty-five dollars ($35).
Tax Rate for Holding Companies
The basis of the tax for a holding company as defined in G.S. 105-120.2(c) is the same as for general business corporations. The minimum franchise tax is also the same. However, the maximum amount of franchise tax due by a holding company on its net worth tax base (formally the capital stock, surplus, and undivided profits tax base) is capped.
For tax years beginning on or after January 1, 2017, franchise tax payable by a qualified holding company on its net worth tax base is limited to an amount not to exceed one hundred and fifty thousand dollars ($150,000). For tax years beginning prior to January 1, 2017, franchise tax payable by a qualified holding company on its capital stock, surplus, and undivided profits tax base was limited to an amount not to exceed seventy-five thousand dollars ($75,000).
Any corporation that qualifies as a holding company for franchise tax should fill in the circle next to Line 1 on Page 1 of the appropriate form, CD-405 or CD-401S. There is no limitation on the amount of franchise tax payable where the tax produced by the investment in tangible property or appraised value of property exceed the tax produced by the net worth tax base (formally the capital stock, surplus, and undivided profits tax base).