Capital Gains Tax in North Carolina

North Carolina applies a flat 4.50% income tax to capital gains, a rate that's been declining in recent years and may keep falling. For now, combined with federal and NIIT, an investment property sale reaches up to 28.3% (20% federal + 3.8% NIIT + 4.50% state).

North Carolina's capital gains rate, broken down

The 28.3% splits cleanly into three pieces, and the state's share is the one most likely to shift going forward. The capital gains tax calculator can estimate a real sale, depreciation recapture included, using the current rate below.

• Federal long-term capital gains: 20%
• Net investment income tax: 3.8%, for higher earners
• North Carolina state income tax: 4.50% flat, scheduled to continue declining under current law

Where the 1031 exchange fits

A 1031 exchange defers all three layers of that 28.3% by reinvesting sale proceeds into a replacement property instead of taking a cash payout. Set up the exchange in the 1031 exchange calculator and get your deadline dates from the timeline calculator.

Things to know before you exchange

• North Carolina does not run a separate 1031 program; the deferral above comes entirely from federal Section 1031.
• A qualified intermediary has to hold your proceeds before a North Carolina sale can qualify.