North Carolina Hourly Paycheck Calculator
If you need help understanding North Carolina payroll taxes and pIf you need help understanding North Carolina payroll taxes and paycheck laws, you’re in the right place. We’ve compiled some key FAQs for you here.
| State Payroll Taxes in North Carolina | |
| Employee Paid | Employer Paid |
| State Income Tax | State Unemployment Insurance Tax |
What is North Carolina’s State Income Tax?
For 2022, it’s a flat 4.99%. Your employee should provide you with an Employee’s Withholding Allowance Certificate. The North Carolina tax tables will help you withhold the correct amount of tax. To avoid thumbing through dozens of pages of tax tables, use payroll software to do the calculations for you. With just a few clicks, you’ll have the correct calculations in seconds.
Keep the form for your records. Only in limited circumstances will you need to submit this form to the North Carolina Department of Revenue.
If an employee refuses to provide a Withholding Allowance Certificate, you still must withhold tax using the single with no allowances rate. Unfortunately, you can’t use the Federal Form W-4 to calculate North Carolina withholding.
What if I have employees who work for me in North Carolina but reside in another state?
Employees who are nonresidents of North Carolina must still have state income tax withheld. You’re required to withhold the North Carolina withholding tax on any part of an employee’s wages for services performed in the state.
How do I pay this withholding tax to North Carolina?
After you’ve withheld the tax from your employees’ pay, you’ll have to send the funds to the state either quarterly, monthly, or semi-weekly. Your filing frequency depends on the average amount of tax you withhold each month.
Most businesses have the choice to pay the tax online or by mail. Companies that send on average at least $20,000 per month in withholding tax to the state must pay the tax via electronic funds transfer. Fortunately, the state will inform you if you’re required to pay this way.
Can you explain the North Carolina unemployment tax?
North Carolina collects an unemployment tax from employers meeting specific liability requirements to compensate eligible unemployed workers.
The rate you pay depends on your payroll, tax paid, timeliness of payments, and unemployment benefits paid to your unemployed workers.
When you register your business with the North Carolina Division of Employment Security using Form NCUI 604, you’ll receive your initial tax rate. Your rate can be reduced in future years and you’ll be notified in November each year of your new rate for the upcoming year. Rates can be as low as 0.06% or as high as 5.76%.
To pay this tax, each quarter you will complete the Employer’s Quarterly Tax and Wage Report to report wage and tax information. Be aware that North Carolina requires you to complete this form even if you have no employees for a quarter.
What federal payroll taxes will I have to pay for my North Carolina employees?
You will pay a few federal taxes and some are withheld from your employee’s pay. These taxes are the same, whether you pay employees hourly, salary, or per-diem.
FICA Tax
The Federal Insurance Contributions Act, or FICA tax, is made up of the Medicare tax and the Social Security tax. In 2022, the Social Security tax requires employers and employees to each contribute 6.2% of wages up to $147,000. And the Medicare tax requires each to contribute 1.45% of all wages. See the IRS webpage for details, like maximum thresholds.
FUTA Tax
Like the state, the federal government also has an unemployment tax. It’s called FUTA and it’s an annual tax employers pay on the first $7,000 of each employee’s wages. The FUTA rate for 2022 is 6%, but most employers only have to pay 0.6% each year.
Federal Income Tax
The U.S. tax system is a pay-as-you-go arrangement. That means employees must pay their federal income tax liability throughout the year. To facilitate this pay-as-you-go process, you’ll withhold federal income tax from your employees’ wages.
How much you’ll withhold depends on factors like filing status and the number of dependents. When hired, have your employees complete a Form W-4, Employee’s Withholding Certificate. The inputs on this form will determine how much federal income tax to withhold.
Employees don’t need to complete a new Form W-4 each year. Employees should consider submitting a new W-4 when they have changes that may affect how much tax they will owe. Things like getting married, having a child, or working more than one job can be good reasons to update a W-4.
And just like the North Carolina Form NC4, keep Form W-4 for your records. Don’t send it to the IRS.
Additional Medicare Tax
Some employees will have to pay the 0.9% Additional Medicare Tax depending on income and filing status. Employers must withhold this tax on employees who earn $200,000 or more in a year.
Are there other North Carolina paycheck laws I need to know about?
| Minimum Wage in North Carolina in 2021 | |
| Non-Tipped Employees | $7.25 per hour |
| Tipped Employees | $2.13 per hour |
- Overtime: Hourly, non-exempt employees must be paid time and a half for hours worked beyond 40 hours in a workweek. Issuing comp time in place of overtime pay is not allowed for non-exempt employees.
- Wage changes: Employers must provide an employee with 24 hours written notice before a wage change.
- Parental leave: Employers are required, provided certain conditions are met, to provide four hours of leave per year to an employee who is a parent or guardian of a school-aged child so that the parent can be involved at the child’s school.
- Final paycheck: Final paychecks must be paid on or before the next regularly scheduled payday. For final bonuses or commissions, final payments must be made on the first regular payday after the amount is calculated.
- Workers’ Compensation insurance: Requirements to obtain Workers’ Compensation vary by state, this table outlines some of these requirements. If you determine that your company is required to purchase Workers’ Compensation insurance in your state, learn how to sign up for this insurance with Gusto. Sometimes, companies get a request for a workers’ comp audit—head to this article and click the workers’ comp audit reports dropdown for more information.
- New hire reporting: Employers must report newly hired or rehired employees to the state within 20 days of hire.
If you’re looking for help in your payroll journey, consider consulting with an accountant or using Gusto’s payroll software. Both can provide much-needed support so you can continue to focus on your business goals.
Disclaimer
The information provided by the Employer Tax Calculator is for general information and estimation. All of the taxes or fees that apply to your business may not be accounted for, or fully up to date. Gusto, Inc. (dba “Gusto”) does not promise or guarantee that the information in the Employer Tax Calculator is accurate or complete, and Gusto expressly disclaims all liability, loss or risk incurred by employers or employees as a direct result or an indirect consequence of its use. By using the Employer Tax Calculator, you waive any rights or claims you may have against Gusto in connection with its use.