While we are all clear that taxes are necessary for maintaining society and the nation itself, it is still uncomfortable not to understand how many tax deductions make it out of the paycheck.
The gross salary amount compared to the amount received after deducting various taxes seems unpleasant, even if you are in North Carolina.
North Carolina only pays state income taxes
The only difference between living in another state and living in North Carolina is the change in state income tax. While those who live in another state must pay the tax of that particular State, in North Carolina, they must pay their state income tax.
Besides that, there is no other special tax unique to North Carolina. Therefore, it will deduct only the state income tax from your paycheck.
The state income tax in North Carolina is 5.25%. It is a flat rate that is unchanged regardless of the amount of wages earned, activity performed, or age.
In short, everyone pays the same state tax. To pay it, you only need to receive a wage within North Carolina, regardless of whether or not you are a resident of North Carolina.
What are other taxes deducted from the paycheck in N.C?
Beyond North Carolina’s 5.25% state tax deduction, taxes are deducted just like anywhere else in the country. Generally, they are the federal tax, the FICA tax, and the state tax.
FICA Tax
FICA stands for Federal Insurance Contributions Act. These are two types of Social Security taxes, considered federal taxes, and must be paid throughout the country, including North Carolina.
On the one hand, the first FICA tax is the Social Security tax, consisting of a total of 6.2% of your gross pay. Meanwhile, the second tax of this type is the Medicare tax; it is 1.45% of your entire salary.
The FICA tax is not only the employee’s responsibility but also the employer, who, in addition to making the deduction above from your paycheck, must submit the same percentage to the State.
In other words, the state rate is double the FICA tax for each employee: the employee’s rate is deducted and the same rate must be paid by the employer to the State.
Likewise, suppose you are self-employed and must receive a paycheck from yourself. In that case, you must deduct the above taxes from your salary and pay the state tax deducted from your salary and the same amount out of your employer’s pocket.
Federal income tax
This tax, like the previous one, is also federal; that is, it is paid by every U.S. citizen who has a job or has income coming from the country and lives in the U.S., although there may be exceptions.
Federal income tax ranges from 0% to 37%. It is not at all a fixed rate and has several values capable of changing the percentage for each person. The criteria established are age, income, and marital status.
According to the above, the corresponding percentage also establishes whether or not the person must pay federal tax.
Unlike the State tax paid to the State tax office, the Federal tax is paid directly to the IRS. Although, as an employee, this entire process probably falls on to your employer.
State Tax
State Tax is the tax mentioned at the beginning of the article. It is 5.25% and must be paid by any resident or non-resident who generates income in the U.S.
The state tax, FICA taxes, and the federal income tax are deducted from a North Carolina paycheck. If there are further deductions, they may be withholdings for retirement, but they are not taxes.
Isn’t North Carolina taxed locally?
The answer to this question is simple: No, you do not pay local taxes in North Carolina because no city asks for them. Regardless of what city or town in North Carolina you live in, rest assured that you will not owe local taxes.