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Category: North Carolina

North Carolina Use Tax

North Carolina use tax is due by individuals and businesses on purchases, leases, and rentals of tangible personal property and certain digital property purchased, leased or rented inside or outside North Carolina for storage, use, or consumption. Use tax is due on taxable services sourced to North Carolina. Individual and businesses must pay use tax when retailers do not collect tax on taxable transactions.

Out-of-state retailers that are not "engaged in business" in this State are not required to collect North Carolina's tax. However, some out-of-state retailers voluntarily collect North Carolina tax as a convenience to their customers. Out-of-state retailers include mail-order companies, television shopping networks, firms selling over the Internet, and other retailers.

Items subject to sales and use tax include but are not limited to the following:

  • Computers and other electronic equipment
  • Prewritten software including electronic downloads of software
  • Books, books on tape, and digital books delivered or accessed electronically
  • Audio compact disks, tapes, and records
  • Digital music delivered or accessed electronically
  • Magazines and newspapers including those delivered or accessed electronically
  • Clothing, appliances, furniture, home furnishings, sporting goods, and jewelry
  • Ringtones
  • Movies delivered or accessed electronically
  • Sales or recharges of prepaid telephone calling cards and phones

 

Retail sales of tangible personal property not subject to a reduced rate of tax are subject to the general 4.75% State rate of sales and use tax. The general 4.75% State rate of sales and use tax also applies to the gross receipts derived from the rental of an accommodation, the sales price of or the gross receipts derived from a prepaid meal plan, the sales price of or the gross receipts derived from a service contract to maintain or repair tangible personal property or a motor vehicle, the gross receipts derived from an admission charge to an entertainment activity, the gross receipts derived from cleaning, pressing, hat blocking, and laundering of linens and apparels, the sale or recharge of a prepaid telephone calling service, the gross receipts derived from providing satellite digital audio radio service, the sales price of non-household personal property sold at a specialty market, and the sales price of certain digital property. The lease or rental of tangible personal property is subject to the applicable percentage rate and the maximum tax, if any that applies to a sale of the property that is leased or rented. Items subject to the general 4.75% State rate are also subject to the 2% (2.25% in Alexander, Anson, Ashe, Buncombe, Cabarrus, Catawba, Cumberland, Davidson, Duplin, Durham, Edgecombe, Greene, Halifax, Harnett, Haywood, Hertford, Lee, Martin, Montgomery, New Hanover, Onslow, Orange, Pitt, Randolph, Robeson, Rowan, Sampson, Surry, and Wilkes Counties) local sales and use tax rate. Mecklenburg County has an additional 0.50% transit county tax for public transportation in addition to the 2% local sales and use tax rate. Durham and Orange Counties have an additional 0.50% transit county tax for public transportation in addition to the 2.25% local sales and use tax rate.