Free North Carolina Payroll Tax Calculator

The landscape of payroll taxes in North Carolina for 2025 presents a relatively straightforward structure, particularly concerning state income tax. A key feature is the flat income tax rate of 4.25%. This single rate applies to all levels of taxable income within the state, which simplifies the calculation process for both individuals and businesses. This uniformity in the state income tax system means that the percentage of income taxed by North Carolina remains constant regardless of how much an individual earns.  

In contrast to the state income tax, the State Unemployment Insurance (SUI) tax in North Carolina is primarily the responsibility of the employer. Employees are generally not required to contribute to this tax. For the year 2025, the taxable wage base for SUI has been set at $32,600. This represents an increase from the $31,400 threshold in 2024. This adjustment means that employers will be obligated to pay SUI tax on the first $32,600 of each employee’s wages during 2025.  

The actual SUI tax rates for experienced employers in North Carolina for 2025 fall within a range, from a minimum of 0.06% to a maximum of 5.76%. These specific rates are not uniform across all employers but are instead determined by an employer’s individual experience rating. This rating system takes into account various factors, including the employer’s history of payroll, the amount of taxes paid, the timeliness of their payments, and the unemployment insurance benefits that have been charged against their account. For businesses that are new to North Carolina, a standard beginning SUI tax rate of 1.0% is applied for the initial year of operation. This provides a degree of predictability for new businesses as they navigate their first year of payroll obligations.  

It is also important to note that a potential 20% surtax on SUI contributions could be levied if the balance of the North Carolina Unemployment Insurance Trust Fund drops below $1 billion. This surtax is not certified under the Federal Unemployment Tax Act (FUTA). While this is a contingent factor based on the fund’s financial status, it represents a potential additional cost for employers in North Carolina.  

At the state level, North Carolina does not impose any local income taxes. This absence of local income taxes simplifies the calculation of state-level payroll taxes, as only the flat state income tax rate needs to be considered.  

In addition to these state-level taxes, federal payroll taxes are also applicable to both employees and employers in North Carolina. These include federal income tax, the amount of which is determined by the employee’s W-4 form and the prevailing federal tax brackets. Social Security tax is levied at a rate of 6.2% on the employee’s gross wages up to the annual limit of $176,100 for 2025. Medicare tax is applied at a rate of 1.45% to all of the employee’s gross wages, with an additional 0.9% for those earning over $200,000. Lastly, the Federal Unemployment Tax (FUTA) is an employer-only tax, set at 6% on the first $7,000 of each employee’s wages. However, employers can typically receive a credit of up to 5.4% for making timely payments of their state unemployment taxes, which can effectively reduce the FUTA rate to 0.6%.  

For the purpose of creating a payroll tax calculator geared towards employees in North Carolina, the most critical tax components to incorporate are the state income tax at the flat rate of 4.25%, along with the standard federal taxes for income, Social Security, and Medicare. The SUI tax, while important, is primarily an employer responsibility, and its fluctuating rates based on experience make it challenging to include accurately in a general-purpose calculator for employees.