North Carolina Withholding laws & compensation compliance analysis

North Carolina Withholding: What you need to know

North Carolina law requires employers to withhold state income taxes from the wages of resident employees for work performed within or outside of the state and from nonresidents for work done within the state. A resident employee's wages are not subject to withholding if the wages have been subject to another state's income tax withholding.
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Taxes must be withheld on “wages,” which include all cash and noncash payments for services performed by an employee. North Carolina has conformed its income tax statutes to the definitions of taxable income set out in the Internal Revenue Code. Compensation that is subject to federal withholding is also subject to state withholding.
Exceptions. Payments for some services, including the following, are exempt from withholding:
• Agricultural labor
• Domestic service in a private home or fraternity
Dependent care assistance up to $5,000 is not subject to withholding.
Severance payments of up to $35,000 paid because of the employee's permanent, involuntary termination from employment through no fault of the employee are exempt from North Carolina income tax and are not subject to state withholding.
New employers must register for a North Carolina Withholding Tax Identification Number by submitting a completed business registration application, Form NC-BR, Business Registration Application for Income Tax Withholding, Sales and Use Tax, and Machinery, Equipment, and Manufacturing Fuel Tax, to the Department of Revenue. Employers may use the department’s online business registration system instead of submitting the Form NC-BR. Using this system allows the department to process applications more accurately and ...

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North Carolina Withholding Resources

Type Title
Forms Employer's Quarterly Federal Tax Return (941 Form)
See all Withholding Resources