North Carolina Salary Paycheck and Payroll Calculator

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.

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:

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.