Article 3J Tax Credits - Provides tax credits to qualifying businesses for job creation, investment in business property and in some cases investment in real property. Article 3J Tax Credits offer several types of tax credits to eligible taxpayers that undertake qualifying initiatives. These credits may be used to offset up to 50% of the taxpayer's state income and/or franchise tax liability, and unused credits may be carried forward for up to five years. Read More
Research and Development Tax Credits - Provides tax credits for qualified North Carolina research expenses during a taxable year. Credit is based on a percentage of qualified research expenses with the highest amounts for research performed by North Carolina universities.
Businesses with qualified North Carolina research expenses are allowed a credit equal to a percentage of those expenses. The allowable credits are determined by:
- Small business (annual receipts less than $1 million): Qualified businesses on the last day of the taxable year are allowed a credit of 3.25%.
- Low-tier research: For expenses for research performed in a Tier 1 county, a business is permitted a credit of 3.25%.
- Other research: For expenses not covered above, refer to the table below for qualified research expenses during a taxable year:
|$50 - $200 million||2.25%|
|More than $200 million||3.25%|
A business with North Carolina university research expenses for the taxable year is allowed a credit equal to 20% of those expenses.
N.C. Ports Tax Credits - Provides tax credits towards income taxes paid by businesses or individuals using ports facilities at N.C. Ports at Morehead City and Wilmington. Businesses who pay North Carolina state income tax and use North Carolina ports can qualify for tax credits on outbound cargo.
The credit is earned on cargo wharfage and handling fees paid to the N.C. State Ports Authority which exceed the average for over three tax years. The credit applies to taxes due to the state - up to 50% of the total tax liability for each tax year. Any unused credit may be carried forwarded up to five years for a total credit of up to $2 million.
For more information on ports tax credit or services, visit the N.C. State Ports website or call 1-800-334-0682.
Renewable Energy Tax Credits - Provides a tax credit of 35% of the cost of renewable energy property. North Carolina's various renewable-energy tax credits are unified into a statute that addresses nearly all renewables. The statute provides a tax credit of 35% of the cost of renewable energy property constructed, purchased or leased by a taxpayer and placed into service in North Carolina during the taxable year. Read More
Job Development Investment Grant - Provides a limited number of cash grants to new and expanding businesses that will provide economic benefits to the State, and need the grant to carry out the project in North Carolina.
One North Carolina Fund - Awards grants for job creation and/or retention in conjunction with local government matches.
SBIR/STTR Small Business Technology Funding - Awards matching funds to firms who have been awarded a SBIR/STTR Phase I award from the federal government.
Site and Infrastructure Grant Fund - Provides assistance for site development and infrastructure improvements for very high-impact projects.
Job Maintenance and Capital Development Fund - Provides a limited number of grants to businesses with at least 2,000 employees, which are located in Development Tier 1 counties and which invest at least $200 million in capital improvements, providing economic benefits to the State.
Other Cost-Saving Programs
Foreign Trade Zones - Provides opportunities to defer, reduce and/or eliminate import duties.
Industrial Revenue Bonds - Provides tax-exempt financing for eligible new or expanded manufacturing facilities, certain solid waste disposal facilities and sewage disposal facilities.
Recycling Business Assistance Center - Provides grants, tax credits and loans to businesses involved with recycling in North Carolina.
North Carolina Biotechnology Center - Provides loans and matches to help leverage larger financial awards for biotechnology companies.
Film incentives - Provides tax credits and sales and use tax discounts to encourage film and television production in North Carolina.
Sales and Use Tax Discounts, Exemptions and Refunds
North Carolina offers reduced rate allowances on certain parts, accessories and construction supplies for eligible industries and manufacturing processes.
- Industrial machinery and equipment is exempt from sales and use tax but is subject to an excise tax. This rate is 1 percent with a maximum of $80 per item.
- Parts and accessories to manufacturing machinery, which include most supplies used in the manufacturing process but not becoming a part of the manufactured product, including pollution abatement equipment, are taxed at 1 percent.
- Purchases of ingredients or component parts of manufactured products are exempt from sales or use tax.
- Packaging containers and items that become part of a manufactured product and are delivered with the product to the customer are exempt from sales and use tax.
- Bioprocessing, pharmaceutical and medical manufacturing and distribution, aircraft manufacturing, computer manufacturing and semiconductor manufacturing companies may receive a refund of sales taxes on purchases of building materials, fixtures and equipment if the facility costs at least $50 million in Tier 1 counties and $100 million in Tier 2 and 3 counties.
- Sales of electricity to manufactures are taxed at a rate of 1.8%. Effective July 1, 2008, the rate will decrease to 1.4%; effective July 1, 2009 the rate will decrease to .8%; and effective July 1, 2010, sales of electricity to manufacturers for qualifying purposes will be exempt from sales and use tax.
- Sales of electricity and eligible business property to an internet service provider or web search portal business that invests at least $250 million in private funds are exempt from sales and use tax.
- Piped natural gas is exempt from sales and use tax but is subject to an excise tax. This tax rate is based on the number of therms of gas consumed in a month.
- Coal, coke and fuel oil used in manufacturing is taxed at 1 percent.
- Motor vehicles are exempt from sales and use tax but are subject to the highway use tax. Highway use tax is 3 percent of the retail value of the motor vehicle with a maximum tax of $1,500 per vehicle.
- Aircraft, boats, railway cars and mobile offices are taxed at 3 percent with a maximum tax of $1,500 per item.
- Custom computer software and computer software delivered electronically are exempt from sales and use tax.
- All telecommunications services are taxed at a rate of 6 percent.