(The Center Square) – Third in corporate tax rank, North Carolina is 13th among 50 states in competitive taxes as judged by the Tax Foundation’s analysis.
Policymakers, taxpayers and business leaders can gauge tax systems state to state many ways, including through the 2026 State Tax Competitiveness Index. It compares more than 150 variables in five major areas: corporate taxes; individual income taxes; sales and excise taxes; property and wealth taxes; and unemployment insurance taxes.
In other categories, the state is seventh in unemployment insurance taxes, 15th in sales taxes, 21st in property taxes and 22nd in individual income taxes. The overall mark is down one, individual income taxes down two, property taxes improves by two, and the other three remain unchanged in ranking against other states.
In its analysis, the foundation says there is room for improvement particularly in treatment of business net operating losses.
“The state allows only 15 years of net operating loss carryforwards, whereby past losses can be deducted from current or future profits to ensure the tax falls on average long-run profitability and to avoid subjecting cyclical businesses to a penalty,” the report says. “Additionally, North Carolina’s bonus depreciation allowance is only 15%, substantially lower than the federal allowance.”
North Carolina has a flat 4.25% individual income tax, and a 2.25% corporate income tax rate on the way to repeal. The analysis notes the reforms of the past decade, a period with Republican leadership in both chambers of the General Assembly since the 2010 midterms.
Within the 16-state South as defined by the U.S. Census Bureau, North Carolina is fourth; it is second to Florida of the eight South Atlantic states.
