NORTH CAROLINA
Sales Taxes
State Sales Tax: 4.75%. Prescription drugs and medical equipment exempt. Food is subject to a 2% county tax. Counties may also add up to 2.75% tax.
Gasoline Tax: $0.385/gallon (Includes all taxes)
Diesel Fuel Tax: $0.385/gallon (Includes all taxes)
Cigarette Tax: $0.45/pack of 20
Personal Income Taxes
Individual Taxes (Married Couple, combined income of 75,000): 5.25%
Effective Tax Rate: 4.50%
Social Security: Not taxed
Medical/Dental Deduction: Federal amount. North Carolina has an income tax credit for premiums paid on long-term care insurance covering the individual, a spouse or dependent. The credit is equal to 15% of the premium cost not to exceed $350.
Federal Income Tax Deduction: None
Retirement Income Taxes: Social Security is exempt. All other forms of retirement income are taxed at the North Carolina flat income tax rate of 5.25%. Although the state taxes retirement benefits, the standard deduction is $8,750 for single filers, $17,500 for joint filers and $14,000 for heads of household.
Retired Military Pay: Exempt if the retiree had five years of creditable service as of August 12, 1989. Others may be allowed to exclude $4,000 of military retirement pay from income or $8,000 if married filing jointly.
Property Taxes
All property, real and personal, is subject to taxation and assessed based on 100% appraised value. Cities and counties collect property taxes at an average rate of 0.84%, or $1,454 on a $172,500 home—the state’s median home value.
People age 65 or older or who are completely and permanently disabled qualify for an exclusion based on a portion of the appraised property value. The qualifying income typically raises from year to year and is currently set at $33,800 or less. The greater of $25,000 or 50% of the residence appraised value may be excluded from taxes. Gifts or inheritances from a spouse or immediate family member do not count as income.
North Carolina’s Circuit Breaker Property Tax Deferment Program limits taxes for each year to a percentage of income. The qualifying owner must either be at least 65 years of age or totally and permanently disabled. The Current income limit is $33,800. Property owners with income over that amount but not exceeding 150% of the eligibility limit ($50,700 for 2021) will pay taxes equal to 5% of income. See North Carolina Property Taxes for more information.
Inheritance and Estate Taxes
North Carolina has no estate or inheritance tax.
CALIFORNIA
Sales Taxes
State Sales Tax: California’s state sales tax is 7.25%. Local district taxes increase the tax owed by a seller, ranging from 0.10% to 1.00%. Given that some areas have multiple district taxes, the sales tax can be confusing. You can look up California sales tax by address to research rates.
California charges an annual vehicle license fee of 0.65% of the purchase price, reduced for the first 11 years of ownership.
Gasoline Tax: $0.539/gallon (Includes all taxes)
Diesel Fuel Tax: $0.41/gallon (Includes all taxes)
Cigarette Tax: $2.87/pack of 20
Personal Income Taxes
Individual Taxes (Married Couple, combined income of 75,000): 10.30%
Effective Tax Rate: 9.63%
Social Security: Not taxed
Medical/Dental Deduction: Federal amount
Federal Income Tax Deduction: None
Retirement Income Taxes: Social Security is exempt, while all other retirement income is subject to state income tax. California taxes 2.5% of early retirement distributions and qualified pensions.
Retired Military Pay: Follows federal tax rules.
Property Taxes
The effective property tax rate in California is 0.76%, or $760 for every $100,000 of assessed value. For example, a homeowner will pay $1,371 in taxes on a $505,000 home—the median home value in the state.
California’s Homeowners Exemption reduces the taxable value of a home by $7,000 for qualified taxpayers. The property must be the principal residence for the taxpayer as of January 1 in the tax year.
The Property Tax Postponement Program is available to homeowners age 62 or older, or who are blind or have a disability to defer on their principal residence. Annual income must be less than $35,500, and the taxpayer must have at least 40% equity in their homes. A lien is placed on the property with a 7% interest on the amount outstanding. The lien is paid when the taxpayer sells the property, no longer uses it as a primary residence or dies. The California State Controller offers more information.
Inheritance and Estate Taxes
There is no inheritance tax or estate tax in California.
Someone was telling a fib about paying less in income taxes in CA than NC.
