North Carolina capital gains tax (2026): selling a business, real estate or farm

A flat rate that is scheduled to keep falling

North Carolina replaced its brackets with a single rate in 2014 and has cut it almost every year since. G.S. 105-153.7(a) sets 4.25% for 2025 and 3.99% for taxable years after 2025, and the Department of Revenue confirms 3.99% for 2026 (NCDOR tax rate schedules). Subsection (a1) then adds a revenue trigger: if General Fund revenue for a fiscal year exceeds a set amount, the rate for the matching tax year drops by half a point, never below 2.49% (G.S. 105-153.7, 2023 law). The first test is fiscal 2025-2026 revenue above $33,042,000,000, which would lower the rate for 2027.

For a seller the flat rate has one clean consequence: a $3 million gain is taxed at the same percentage as a $30,000 one. Ordinary pieces of a sale, such as equipment recapture, cost the same 3.99% at the state level as long-term gain, so allocation fights matter less here than in a state with a capital gain preference.

Timing a note around the 2027 trigger

Because the rate can only go down under current law, gain pushed into a later year may be taxed at a lower North Carolina rate if the triggers are met. An installment sale reports gain as principal is collected, so a seller who closes in late 2026 and takes most of the price in 2027 or 2028 lets those payments ride the schedule. Whether the trigger is met will not be known until the State Controller's final accounting in August after each fiscal year ends, so model 3.99% and treat any cut as upside. The year-end timing page shows the federal side of the same decision.

Selling North Carolina real estate from out of state

North Carolina does not withhold from a nonresident at closing. Instead, the buyer must file Form NC-1099NRS within 15 days of closing, reporting the seller, the property, the date and the gross price of the real property and its associated tangible personal property (NC-1099NRS instructions). The form tells the seller plainly that gain recognized federally on North Carolina real property is also North Carolina income, so a return is required.

For a nonresident the computation is a ratio: total adjusted gross income, as modified, times the share of gross income derived from North Carolina real or tangible property or a business carried on in the state (G.S. 105-153.4(b)). Installment payments on a North Carolina property stay North Carolina income in each year they are collected. Mountain cabins and coastal rentals owned by Florida, Virginia and New York residents are the usual case; see second home sales.

Bonus depreciation: the 85% add-back that follows you to the sale

North Carolina decouples from federal bonus depreciation. A taxpayer who takes the IRC 168(k) or 168(n) deduction must add back 85% of it, then deduct 20% of the add-back in each of the next five years (G.S. 105-153.6(a), current law). If you sell before those five deductions are used, North Carolina basis and the remaining deductions need reconciling on the final returns, and your state gain can differ from your federal gain. Owners of equipment-heavy firms such as trucking, construction or farming, or real estate owners who used cost segregation, should ask their CPA for the North Carolina schedule before pricing the deal.

Deed excise tax and the missing estate tax

Every deed carries an excise tax of $1 per $500 of consideration, paid by the transferor to the register of deeds before recording, and it also reaches timber deeds and contracts for standing timber (G.S. 105-228.30). That timber rule is unusual and matters to landowners selling cutting rights (see timber sale taxes).

North Carolina repealed its estate tax for decedents dying on or after January 1, 2013 (G.S. 105-32.1, repealed by S.L. 2013-316). With no state estate tax and a low income tax, the main question for an older seller is federal: whether to sell now or hold for a step-up in basis.

Moving to North Carolina before a sale

Retirees and business owners relocating from the Northeast often ask whether a move first changes the bill. It can, if the move is real: domicile changes, the asset is not sourced to the old state, and the old state has no rule that reaches deferred gain. New York, for example, accrues installment gain held at the time of the move (Tax Law 639). In the comparison run the North Carolina resident owes $702,395 in total versus $868,319 as a New York resident. Read residency change before a sale first.

Federally, long-term gain is taxed at 0%, 15% or 20%, with 20% above $613,700 of joint taxable income (Rev. Proc. 2025-32, 2026); details on the capital gains page and every state on capital gains tax by state. For a side-by-side model of your sale, get the Big Sale Tax Analysis.

Run your own numbers

Frequently asked questions