Most states levy an income tax on their residents that is in addition to the federal income tax. Laws vary from state to state but in most states the state income tax is a tax on the annual earnings of individuals, corporations, trusts, limited liability companies, and other legal entities.

There are nine states that do not have a state income tax—including Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. But New Hampshire levies a tax on capital gains and Washington state recently enacted a tax on extraordinary profits from the sale of financial assets over $250,000.

In North Carolina (NC), residents are subject to state income tax in addition to the federal income tax. The state income tax applies to annual earnings of individuals, corporations, trusts, limited liability companies, and other legal entities. The rates and brackets for these taxes can vary, with personal income tax rates being progressive based on income levels. As of the knowledge cutoff in 2023, North Carolina has a flat income tax rate for individuals, meaning that all taxpayers pay the same percentage of their income, regardless of the amount earned. Corporate income tax is also levied in North Carolina, with rates that may differ from those applied to individuals. It is important for residents and entities in North Carolina to comply with these tax regulations and file their state income tax returns annually, typically by the same deadline as the federal tax return.