Retirement Taxes in North Carolina (2026)
North Carolina taxes income at an effective 4.50%, exempts Social Security entirely, and taxes pension income in full. On our standard retiree profile it ranks 20 of 50 for total state tax burden at $9,714 a year, with property tax at an effective 0.61% and combined sales tax at 7.00%.
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North Carolina at a glance
State income tax
4.50%
After a $12,750 standard deduction
Social Security
Fully exempt
State treatment only; federal rules still apply
401(k) / IRA withdrawals
Fully taxable
Pension income
Fully taxable
Effective property tax
0.61%
$3,075 on a $500,000 home
Combined sales tax
7.00%
State plus average local rate
Homeowners insurance
$1,621/yr
Average annual HO-3 premium
Cost index (goods & services)
97.5
US average = 100, BEA 2024. Housing excluded.
Estate / inheritance tax
Neither
Cost index compares goods and services only — housing is excluded because it's captured separately in property tax. Source: BEA Regional Price Parities, 2024, US average = 100.
Rankings and dollar figures on this page use one documented profile: $126,000 of gross retirement income ($36,000 Social Security, $45,000 in 401(k)/IRA withdrawals, $18,000 pension, $12,000 dividends, $15,000 part-time earnings), a $650,000 home, and $32,000 of taxable annual spending. It is the same profile the calculator loads with, so you can reproduce every number here.
Where North Carolina ranks
North Carolina places 20 of 50 states by total state tax burden on the standard profile — $9,714 a year against a $10,910 50-state average, or 11% below the 50-state average.
- State income tax rate4.50%4% above the 50-state average
- Effective property tax rate0.61%32% below the 50-state average
- Combined sales tax rate7.00%5% above the 50-state average
- Homeowners insurance premium$1,621/yr9% above the 50-state average
- Cost of goods & services97.53% below the 50-state average
Comparisons are unweighted averages across the 50 states on our standard retiree profile, not population-weighted national figures.
How it compares to its peers
The states closest to North Carolina on total burden, using the same profile:
Alabama
Rank 18 · $9,515/yr
$199 less than North Carolina
New Hampshire
Rank 19 · $9,705/yr
$9 less than North Carolina
Maryland
Rank 21 · $9,838/yr
$124 more than North Carolina
What this means for a move
On the standard profile, 41% of the $9,714 annual burden in North Carolina is property tax — $3,998, against $3,476 of income tax and $2,240 of sales tax. Raising or lowering taxable withdrawals changes the 4.50% income tax line directly, so the total is sensitive to how much you draw each year.
Every $100,000 of home value costs $615 a year in North Carolina property tax, so a $500,000 house carries roughly $3,075. Average homeowners insurance runs $1,621 a year, 9% above the 50-state average. Goods and services price 2.5% below the US average (BEA 2024, housing excluded), which sits on top of the tax figure rather than inside it.
North Carolina retirement tax FAQ
Does North Carolina tax Social Security benefits?
No. North Carolina does not tax Social Security benefits at the state level. Federal taxation of benefits still applies based on your combined income.
How does North Carolina tax 401(k) withdrawals and pension income?
401(k) and IRA withdrawals: fully taxable. Pension income: fully taxable. Anything left over is taxed at an effective 4.50%.
What is the property tax rate in North Carolina?
North Carolina's effective property tax rate is 0.61% of home value — 32% below the 50-state average. On a $500,000 home that is about $3,075 a year.
Where does North Carolina rank for retirement taxes?
North Carolina ranks 20 of 50 states, lowest total burden first, on our standard retiree profile: $9,714 a year in combined state income, property and sales tax, versus a $10,910 unweighted average across the 50 states.
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