North Carolina has a flat income tax that keeps falling. For 2026 it is 3.99%, down from 4.25% in 2025 — one of the lower rates among states that tax income.
What you pay on freelance profit
| Tax | Rate |
|---|---|
| Federal self-employment tax | 15.3% on 92.35% of profit |
| Federal income tax | 10%–37% |
| North Carolina income tax | Flat 3.99% for 2026 |
How the 3.99% is applied
North Carolina starts from your federal adjusted gross income — so Schedule C business expenses and the deduction for half of your self-employment tax reduce North Carolina income — and then subtracts the North Carolina standard deduction (or itemized deductions). The rate cut to 3.99% comes from Session Law 2023-134; further cuts from 2027 depend on state revenue “triggers.”
Estimated payments
Make North Carolina estimated payments (Form NC-40) if you expect to owe $1,000 or more after withholding and credits. Due dates match the IRS: April 15, June 15 and September 15, 2026, and January 15, 2027. You can skip the January payment if you file your 2026 return and pay in full by January 31, 2027. Size the federal part with the quarterly estimated tax calculator.
If you have an LLC
North Carolina LLCs file an annual report with the Secretary of State by April 15 each year. The fee is $200 (online filing adds a small processing fee). A sole proprietor has no annual report.
How much to set aside
Enter 3.99 in the state field of the tax set-aside calculator. Because the standard deduction shields the first slice of income, your real North Carolina cost is a bit lower — the flat rate gives you a small cushion.