General State and Local Taxes
The State levies a general retail sales and use tax of 4.75%. The general rate applies to purchases of tangible commodities, certain digital property, room and cottage rentals, admission charges to an entertainment activity, service contracts, and laundry and dry cleaning services. The tax does not apply to prescription drugs, insulin, prosthetic devices, gasoline, coin-operated laundries, or motor vehicles.
Effective October 1, 2016, twenty-nine counties (Alexander, Anson, Ashe, Buncombe, Cabarrus, Catawba, Cherokee, Cumberland, Davidson, Duplin, Edgecombe, Greene, Halifax, Harnett, Haywood, Hertford, Jackson, Lee, Martin, Montgomery, New Hanover, Onslow, Pitt, Randolph, Robeson, Rowan, Sampson, Surry, and Wilkes) have levied an additional 0.25% local sales and use tax, bringing their local rate to 2.25%. The local rate of tax in Mecklenburg County is 2.5% (due to a 0.5% local Public Transit Tax); the local tax rate in Durham and Orange Counties is 2.75% (additional 0.25% local sales and use tax and 0.5% local Public Transit Tax); the local rate of tax in the other counties remains at 2%. As a result, the combined general State and county tax rate in twenty-nine counties is 7.0%; Mecklenburg County has a rate of 7.25%; Durham and Orange Counties have a rate of 7.5%; and in all other counties the rate is 6.75%.
The State exempts food from sales and use tax except for certain classifications including dietary supplements, food sold from vending machines, soft drinks, candy, and prepared food (other than certain bakery items sold by qualifying artisan bakeries). Alcoholic beverages are not food items. A local sales and use tax of 2% applies to all food that is exempt from the State sales and use tax.
Sales of electricity to farmers and manufacturing plants are exempt. Sales of electricity for all other purposes are taxed at the combined general rate of 7% as is piped natural gas. Telecommunications services and ancillary services, video programming, satellite digital audio radio service, and spirituous liquor are also taxed at the combined general rate of 7%.
Aircraft and boats are taxed at 4.75% with a $2,500 maximum tax on each item.
Purchases of the following items by manufacturers are exempt from sales tax: manufacturing fuel, mill machinery, and mill machinery parts and accessories. “Accessories” include most supplies used in the manufacturing process but not becoming a part of the manufactured product and also include pollution abatement equipment. Purchases of mill machinery by contractors or subcontractors for use in performance of contracts with a manufacturing industry or plant are also exempt. Although these items are exempt from sales tax, purchasers of these items may be subject to the privilege taxes described previously.
Raw materials, labels, packaging and shipping materials sold to manufacturers are exempt from sales and use tax.
Individuals and businesses that purchase items of tangible personal property outside North Carolina and bring these items, or have them sent, into the State are subject to use tax on these items. This tax is levied at the same rate as the sales tax that would have been charged had the item been purchased in-state. The purchaser is responsible for calculating and remitting this tax.
The principal source of local revenue is a property tax on real estate and tangible personal property, including all machinery and equipment. The State does not levy a tax on such property.
Property Tax Assessment
There is only one assessment in each county. The value as determined by the county assessor constitutes the base for all levies, including those of cities and towns on property located within the municipality. Property is to be assessed at 100% of appraised value. Although appraised value is to be “market value,” this standard is not always achieved for real property. This is largely because real property is required to be reappraised at least every eight years, although counties may choose to reappraise more frequently. Property appraised at market value at the time of reappraisal may appreciate or depreciate in the years between property tax reappraisals resulting in a tax appraised value that may be more or less than the current market value. Actual ratios vary from county to county.
Real property owned by businesses and individuals consists of land and buildings and is permanently listed for property tax. The owner is only required to list the construction or acquisition of improvements on and separate rights in real property.
There are three primary residential property tax relief programs. An owner can receive benefits from only one of the three programs even if qualified for more than one program. The elderly or disabled program excludes the greater of the first $25,000 or 50% of the appraised value of the permanent residence of a qualifying owner. A qualifying owner must either be at least 65 years of age or be totally and permanently disabled. The owner cannot have an income amount for the previous year that exceeds the income eligibility limit for the current year. The income eligibility is indexed to a cost-of-living adjustment. For the 2016 tax year the income eligibility limit is $29,500.
The circuit breaker property tax deferment limits the property taxes for each year to a percentage of the qualifying owner’s income. A qualifying owner must either be at least 65 years of age or be totally and permanently disabled and owned and occupied the property as a permanent residence for 5 years. For an owner whose income amount for the previous year does not exceed the income eligibility limit for the current year, the owner’s taxes will be limited to four percent (4%) of the owner’s income. For an owner whose income exceeds the income eligibility limit but does not exceed 150% of the income eligibility limit, the owner’s taxes will be limited to five percent (5%) of the owner’s income. The income eligibility limit is the same limit used in the elderly and disabled program above.
However, the circuit breaker property tax deferment requires that the taxes over the limitation amount be deferred and remain a lien on the property. Only the last three years of deferred taxes prior to a disqualifying event will become due and payable, with interest, on the date of the disqualifying event. Interest accrues on the deferred taxes as if they had been payable on the dates on which they would have originally been due. Disqualifying events are death of the owner, transfer of the property, and failure to use the property as the owner’s permanent residence. Exceptions and special provisions apply.
The disabled veteran program excludes up to the first $45,000 of the appraised value of the permanent residence of a disabled veteran. A disabled veteran is defined as a veteran whose character of service at separation was honorable or under honorable conditions and who has a total and permanent service-connected disability or who received benefits for specially adapted housing under 38 U.S.C. 2101. There is no age or income limitation for this program. This benefit is also available to a surviving spouse (who has not remarried) of either 1) a disabled veteran as defined above, 2) a veteran who died as a result of a service-connected condition whose character of service at separation was honorable or under honorable conditions, or 3) a service member who died from a service-connected condition in the line of duty and not as a result of willful misconduct.
Household tangible personal property in the personal residence of the owner is exempt from property taxation.
Every business is required to list their tangible personal property during January with the county assessor of the county in which the property is located. In order to receive the standard forms and other listing information, businesses should contact the county assessor to make sure they are on the roster of taxpayers or “tax roll.”
Non-business owners and individuals are also required to annually list, during January, certain tangible personal property including unregistered motor vehicles, multi-year or permanently registered trailers, watercraft and engines for watercraft, and aircraft. A manufactured home (single or double-wide) also must be listed if it meets any one or more of the following conditions: 1) is not placed on a permanent foundation; 2) is on land owned by someone other than the owner of the manufactured home; 3) still retains the moving hitch, wheels, and axles; or 4) is not a residential structure.
New manufacturing machinery is generally appraised at cost and is depreciated annually until it reaches a minimum value, frequently 25% of cost. The annual depreciation varies but a common figure is 10% per year. Most counties have adopted the “trending” procedure to value machinery and equipment. Under this procedure the machinery is valued at replacement cost each year and then depreciated according to its age and expected life.
Property taxes are based on assessments as of January 1, are due September 1, but may be paid at par as late as January 5 of the following year.
The tax rates vary from county to county and from town to town. In much of the State, only county-wide rates apply outside of cities and towns.
Property Tax Exemptions and Exclusions
Excluded from property taxation are manufacturers’ inventories (raw materials, goods in process, finished goods, materials or supplies consumed in processing), contractors’ inventories (goods held by contractors to be furnished in the course of building, installing, repairing, or improving real property), livestock, poultry, and feed used in production of livestock and poultry, and inventories of retail and wholesale merchants (tangible personal property held for sale and not manufactured, processed, or produced by the merchant).
Computer software is exempt from taxation. This exemption does not apply to embedded software and capitalized software purchased or licensed from an unrelated entity.
Property which has been imported from a foreign country and is stored at the seaport terminal while awaiting further shipment is exempt for the first year of storage.
“Bill and hold” goods manufactured in North Carolina and held by the manufacturer for shipment to a nonresident customer are exempt.
Motor vehicle chassis belonging to nonresidents which enter the State temporarily for the purpose of having a body mounted thereon are exempt from taxation.
Nuclear materials held for the purpose of, or in the process of, manufacture or processing, or held by the manufacturer for delivery are exempt from taxation.
Improvements on brownfields properties are partially excluded from property taxation. The exclusion is for a five-year period beginning when the improvements are made and declines during the period from 90% of the appraised value for the first year to 10% for the fifth year. The improvements are fully taxable in the sixth and subsequent years after the improvements are made. The property must be subject to a brownfields agreement entered into by the owner with the Department of Environment and Natural Resources pursuant to G.S. 130A-310.32.
Property used to reduce air or water pollution receives special treatment under the tax laws of North Carolina if the Environmental Management Commission or local air pollution control program certifies that the property complies with the requirements of the Commission. Such real and tangible personal property is exempt from taxation under the property tax laws. Furthermore, the cost may be excluded from the three alternate bases in computing the franchise tax and may be amortized over 60 months for corporation income tax purposes.
Personal property used exclusively for the prevention or reduction of dust in textile plants is also exempt from local property taxes.
Equipment or facilities installed for the purpose of recycling solid waste or resource recovery from solid waste receives the same treatment under the tax laws as that given to pollution abatement equipment described above.
A contiguous tract of land used primarily for commercial or industrial purposes before being damaged significantly as a result of a fire or explosion, and donated to a nonprofit corporation (expires July 1, 2016).
2014 LOCAL TAX RATES
Fire District Taxes
|Black Jack||.074||Red Oak||.07
|Clark\'s Neck||.045||Sharp Point||.06
County-wide rescue tax of .046 (except city limits of Greenville)
All tax rates are per $100 valuation. Last revaluation of property was 2012. A $71 landfill tax is also assessed on each household.
Pitt County Property Tax Rate History
Real Estate Transfer Tax
An excise tax is levied on transfers of real estate at the rate of $1 of each $500, or fraction thereof, of the consideration or value of the property conveyed.
In addition, seven counties – Dare, Camden, Chowan, Currituck, Pasquotank, Perquimmans, and Washington – are authorized to levy a local real estate transfer tax of $1 per $100 of the full consideration including the value of any lien on the property at the time of sale.
Highway Use Tax
North Carolina levies a tax on the privilege of using the highways at the rate of 3% of the sum of the retail value of a motor vehicle plus any dealer administrative fees. The tax cannot exceed $1,000 for Class A and Class B commercial motor vehicles (as defined by law). Tax is paid when a vehicle is purchased or titled in North Carolina. If the motor vehicle is purchased from an automobile dealer, “retail value” is sales price less any trade-in allowance. For casual sales, “retail value” is the value set in a schedule of values adopted by the Commissioner of Motor Vehicles, less any trade allowance. The tax cannot exceed $150 if the vehicle, at the time of applying for a certificate of title, is and has been titled in another state for at least 90 days. A credit may apply if an equivalent tax has been paid in another state or if the vehicle was at one time titled in North Carolina.
A retailer who is engaged in the business of leasing or renting motor vehicles, and who purchases a motor vehicle for his business, can elect either to pay the use tax whenever he purchases the vehicle or collect a tax on the gross receipts from the lease or rental of the vehicle. The rate to be applied on the gross receipts from long-term lease or rental of the vehicle (at least 365 continuous days to the same person) is 3%. Gross receipts from short-term leases or rentals are taxed at 8%. Taxable gross receipts do not include the allowance for a motor vehicle taken in trade on the transaction. The tax cannot exceed $1,000 if the vehicle is a Class A or Class B commercial vehicle leased continuously to the same person.
Motor Fuel Tax
The gasoline tax is 38.9¢ per gallon during the period October 1, 2013 through June 30, 2015. The State gasoline tax consists of a motor fuels tax of 17.5¢ per gallon plus a rate equal to the greater of 3.5¢ per gallon or 7% of the average wholesale price per gallon, which is capped at 37.5¢. The wholesale price component of the rate is set periodically by the Secretary of Revenue. There are no local gasoline taxes.
Scrap Tire Disposal Tax
The State levies a scrap tire disposal tax on each new tire sold. Exemptions include: recapped tires, bicycle tires, and other tires for vehicles propelled by human power. The tax is 1% of the sales price on tires with a bead diameter of at least 20 inches, and 2% on tires with a bead diameter of less than 20 inches.
Solid Waste Disposal
An excise tax is imposed on the disposal of municipal solid waste and construction and demolition debris in any landfill at the rate of $2 per ton of waste. The tax at the same rate is also imposed on the transfer to a transfer station of municipal solid waste and construction and demolition debris to be disposed of outside North Carolina.