North Carolina Hourly Paycheck Calculator
If you need help understanding North Carolina payroll taxes and paycheck laws, you’re in the right place. We’ve compiled some FAQs here, and along with Gusto’s North Carolina Hourly Paycheck Calculator, you’ll be ready to process your next payroll with ease.
|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?
Yes, and it’s a flat 4.99%. Your employee should provide you with an Employee’s Withholding Allowance Certificate. This form and the North Carolina tax tables will ensure 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 this 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 sState 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 a 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.
Both you and your employee are responsible for paying the Federal Insurance Contributions Act (FICA) tax, which contains the Social Security tax and Medicare tax.
Both of you will pay the Social Security tax of 6.2% of the employee’s gross pay and 1.45% for Medicare tax. For for 2022, only the first $147,000 of an employee’s wage is subject to the Social Security tax; there is no limit for the Medicare tax.
Just like North Carolina has its unemployment tax, so does the federal government. It’s commonly called FUTA, short for Federal Unemployment Tax Act.
And like North Carolina, employers are solely responsible for paying FUTA tax. For 2022, it’s limited to 6% of the first $7,000 of an employee’s wages each year. Many employers will qualify for tax credits to reduce the rate to 0.6% by paying their state unemployment taxes on time.
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 their 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: Generally, employers must carry workers’ compensation insurance when they have three or more employees. Exceptions apply for specific worker classifications.
- 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.