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Use Tax

General Information

North Carolina use tax is due by individuals and businesses on tangible personal property and certain digital property purchased, leased or rented inside or outside this State for storage, use, or consumption in North Carolina pursuant to N.C. Gen. Stat. § 105-164.6. Use tax is also due on taxable services sourced to North Carolina. Individuals and businesses must pay use tax to the Department when retailers or facilitators do not collect sales or use tax on taxable transactions.

Retailers or facilitators that are not "engaged in business" in this State are not required to collect North Carolina sales and use tax.  Some out-of-state retailers or facilitators voluntarily collect North Carolina use tax as a convenience to their customers.  Retailers or facilitators that are not "engaged in business" who collect sales and use taxes may include mail-order companies, television shopping networks, firms selling over the internet, and online marketplaces. 

Common items on which sales and use tax may not have been collected and where use tax may be due by the purchaser include, but are not limited to:

  • Tangible personal property including, but not limited to:
    • Computers and other electronic equipment;
    • Home furnishings;
    • Clothing;
    • Jewelry;
    • Sporting goods;
    • Audio compact discs (CDs), tapes, and records.
    • ATVs (All Terrain Vehicles)
  • Digital property, which includes the following when delivered or accessed electronically:
    • An audio work. Examples include, but are not limited to, ringtones, digital music, readings of books or other written materials, speeches, and other sound recordings.
    • An audio visual work. Examples include, but are not limited to, movies, motion pictures, musical videos, news and entertainment programs, and live events.
    • A book, magazine, newspaper, newsletter, report, or another publication.
    • A photograph or a greeting card.
  • Prewritten software including electronic downloads of software.
  • Purchases of or recharges of prepaid telephone calling cards and phones.
  • Certain service contracts.
  • Admission tickets to an entertainment activity purchased outside the State where admission to the activity may be gained in the State.
  • Repair, maintenance, and installation services performed outside the State where the item is returned to the owner or owner's designee inside the State.

Calculate your use tax liability on your 2018 State individual income tax return. Please see the instructions on Page 14 in the North Carolina Individual Income Tax Instructions (Form-D401).

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