How Much State Income Tax Does North Carolina Withhold From Paychecks?

by Grace Ferguson

    As an employee in North Carolina, your employer is supposed to take state income tax out of all your paychecks, unless you’re exempt from the tax. The withholding amount varies, as it depends on your wages, pay period and the data you put on your state tax form.

    Withholding Conditions

    Your employer should give you a NC-4 form to complete when it first hires you. You put your state income tax withholding conditions on the form; this helps your employer to determine the amount of tax to withhold. You use the worksheet on page 2 of the NC-4 to figure your allowances, which you put on line 1 of page 1. You also include your filing status and any additional tax you want withheld from your paychecks on the form. Your employer uses the NC-4 and the state withholding tax tables in Publication NC-30 to figure the amount to deduct from your pay.


    Assume that you earn $515 weekly and claim single filing status and two allowances on the NC-4. Page 21 of the 2012 NC-30 says you would pay $23 in state income tax. The more allowances you claim the less state income tax you pay, and the fewer allowances you claim the more tax you pay. Let’s say you claim one allowance instead of two. As of 2012, you would pay $26 in state income tax. If you elect additional taxes to be withheld on line 2 of the NC-4, add the extra amount to the amount you get from Publication NC-30 to arrive at your total withholding.

    Taxable Wages

    State income tax withholding is based on your taxable wages; this is your compensation after pretax deductions such as section 125 medical and dental insurance and qualified 401(k) contributions. Before your employer calculates state income tax, it subtracts the benefit from your gross pay. The rest of your pay is your taxable wages for North Carolina income tax purposes. If you do not have these types of deductions, all of your pay is subject to the tax.


    If you fail to complete and submit the NC-4 to your employer, North Carolina Department of Revenue requires that your employer withhold a single filing status with zero allowances, the highest tax bracket. This continues until you submit the form.

    Exempt Status

    Your employer does not withhold any state income tax from your paychecks if you qualify for -- and claim -- exempt on the NC-4. Read the conditions on the form to see if you qualify for exempt status. For example, as of 2012, you may claim exempt on line 3 if in the previous year you were entitled to a full refund of your state income tax withheld because you owed no state income tax, and if in the present year you anticipate a full refund because you don’t foresee yourself owing any tax.

    About the Author

    Grace Ferguson has been writing professionally since 2009. With 10 years of experience in employee benefits and payroll administration, Ferguson has written extensively on topics relating to employment and finance. A research writer as well, she has been published in The Sage Encyclopedia and Mission Bell Media.

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