North Carolina Salary Paycheck Calculator
Your employees are vital to the success of your business. Paying them correctly involves calculating several state and federal payroll taxes. There are also paycheck laws like parental leave and Workers’ Compensation insurance to consider. We’ll provide you with a summary of the taxes and rules. Using Gusto’s North Carolina Salary Calculator, you’ll see how easy it is to use an automatic system to make these calculations for you.
North Carolina Payroll Taxes
North Carolina has two payroll taxes, one paid by the employer and one paid by the employee. We’ll explain the differences.
State Payroll Taxes in North Carolina | |
Employee Paid | Employer Paid |
State Income Tax | State Unemployment Insurance Tax |
North Carolina Withholding Tax (State Income Tax)
With a North Carolina state personal income tax rate of a flat 4.99% for 2022, employees pay this tax with paycheck withholdings. Not unlike federal income tax withholding, employees have an amount taken out of each paycheck to cover their annual tax liability.
Although North Carolina has a flat tax rate, calculating withholding tax involves more than multiplying an employee’s wages by 4.99%. Employees should complete an Employee’s Withholding Allowance Certificate. You’ll use the inputs on this form, along with North Carolina’s tax tables, to calculate the withholding amount.
What do you do if your employee doesn’t provide you with a Withholding Allowance Certificate? You might think you can use the federal withholding form (Form W-4) as a substitute. Unfortunately, you can’t, and North Carolina law requires you to withhold tax using the single and zero allowances rate. And when you have employees who don’t live in North Carolina, you’ll still need to withhold tax.
Keep the Allowance Certificate in your payroll files. Don’t send it to the North Carolina Department of Revenue unless asked.
Paying North Carolina Withholding Tax
When you’ve withheld tax from employees’ pay, you’ll have to send the money to the state either:
- Quarterly,
- Monthly, or
- Semi-weekly
The frequency depends on the average amount of tax you withhold each month.
North Carolina allows most businesses to file and pay online or by mail. Paying online is required for employers with average monthly withholdings of $20,000 or more.
North Carolina Unemployment Tax
Like most states, North Carolina collects an unemployment tax from eligible employers. The unemployment tax is generally used to compensate employees who are unemployed through no fault of their own.
Tax rates vary depending on your payroll, tax paid, timely payment, and the number of claims paid to your unemployed workers. They can be as low as 0.06% and as high as 5.76%.
After you register with the North Carolina Division of Employment Security, you’ll receive your initial rate. Rates are reviewed annually, with notification coming in November of your tax rate for the following year.
Each quarter you’ll complete the Employer’s Quarterly Tax and Wage Report, even if you have no employees or wages to report. This report provides the state with your employee’s name, Social Security Number, wages, and tax calculation.
Let’s not forget about federal payroll taxes.
Federal Payroll Taxes
There are four federal payroll taxes you need to know about.
- Federal income tax
- Additional Medicare tax
- FICA tax
- Federal unemployment tax
Federal Income Tax
Employees have federal income tax withheld from their paychecks and the amount withheld depends on tax filing status and the number of dependents, among other things.
Form W-4 should be completed by your employee when they begin work. And although a new W-4 isn’t required each year, employees should provide an updated form when anything changes that might affect the amount of federal income tax they owe.
Additional Medicare Tax
You may have employees who need to pay the Additional Medicare tax. This tax is 0.9% and is imposed on employees earning more than $200,000 per year.
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.
Federal Unemployment 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.
Filing and Paying Federal Payroll Taxes
Taxes withheld for federal income tax and FICA, along with your portion of FICA tax, are paid to the IRS monthly or semi-weekly. Your filing frequency depends on how much tax you owe.
At the end of each quarter, a summary report is due. You’ll use Form 941 and send it, along with any remaining tax you may owe, to the IRS as follows:
Form 941 Filing Deadlines | |
Quarter ending | Form 941 due to IRS |
March 31 | April 30 |
June 30 | July 31 |
September 30 | October 31 |
December 31 | January 31 |
Important North Carolina Paycheck Laws
New Hire Reporting in North Carolina
All newly hired or rehired employees must be reported to the state within 20 days of hire.
Salary Threshold in North Carolina
Because the state of North Carolina doesn’t have its own salary threshold, it adheres to the federal salary threshold, which is now $684 per week (equivalent to $35,568 per year for a full-year worker). The Department of Labor permits employers to count some bonuses, commissions, and other incentive payments toward meeting the standard salary level (up to 10%). Employees who earn at least $107,432 per year may qualify as “highly compensated.” See this Department of Labor fact sheet for details.
Wage Changes in North Carolina
If wages change for an employee, you must provide at least 24-hour written notice before the wage change takes effect.
Final Paychecks in North Carolina
An employee’s final paycheck must be given no later than the next regularly scheduled pay date after the employee leaves. And if a bonus or commission is owed, it must be paid on the next regularly scheduled pay date after the calculation is finalized.
Workers’ Compensation Insurance in North Carolina
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.
Parental Leave Requirements in North Carolina
Each parent or guardian of a school-aged child is entitled to four hours of leave each year to participate in a child’s school, provided certain conditions are met.
Not feeling like tackling your payroll process alone? Consider working with a specialized accountant or using Gusto’s payroll software to help.
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.