Tax Information

Understanding  local, county and state tax requirements will enable your Fuquay-Varina business to comply with applicable laws and tax code. The summary below provides an overview of area tax requirments, follow the links for more details and consult your accountant for how this information applies to your business.

Town of Fuquay-Varina Taxes

If you live in the corporate limits of Fuquay-Varina, your tax rate is 38.5 cents per $100 of assessed valuation plus the county rate of 53.4 cents per $100, for a total tax of $.919 per $100.

Wake County Taxes

Property is appraised every eight years. The assessed valuation is 100% of the appraised value. The county property tax rate is 53.4 cents per $100 of assessed valuation. Additional information may be found at the Wake County Tax, Property and Deeds web site:  http://www.wakegov.com/general/tax/default.htm.

State of North Carolina Taxes 

Detail information on state taxes may be found at the Department of Revenue web site:  http://www.dor.state.nc.us/

State Income Tax Summary:

North Carolina taxable income is taxable income as calculated for federal income tax purposes, with adjustments:

Deductions

  1. Interest upon obligations of the U.S., its possessions, the state of N.C., political subdivisions of the state of N.C., or nonprofit educational institutions organized or chartered under the laws of the state, if included in federal gross income.
  2. Interest upon obligations and gains from the disposition of obligations, which are exempt, from tax under N.C. law.
  3. Social Security benefits and Railroad Retirement Act benefits, if included in Federal gross income.
  4. Refunds of state or local income taxes, included on line 10 of Federal 1040.
  5. Up to $4,000 in state, local, or federal government retirement benefits received by an individual taxpayer.
  6. Up to $2,000 in private retirement benefits received by an individual taxpayer.
  7. Up to $35,000 of severance wages received as a result of your permanent, involuntary termination from employment through no fault of your own.
  8. Up to a $5,000 standard dedecution.

Additions

  • Interest upon obligations of other states and their political subdivisions if not already included in federal taxable income.
  • Lump-sum distributions from a pension or profit-sharing plan.
  • Any state or local income tax deducted on the federal return.
  • Taxes for out-of-state purchases for which no sales tax is paid to the retailer at time of purchase (i.e., mail order or internet purchases).

Other additions and deductions to federal taxable income may apply; however, they do not apply to all taxpayers.

Sales and Use Tax

  • A tax of 6.5% (or 2% county tax on food) is levied on purchases of tangible commodities, room and cottage rentals*, laundry and dry cleaning services, and certain utility services. Two percent of the tax is returned to the county in which it was collected. The tax does not apply to medicines sold on prescription, insulin, false teeth, eyeglasses, gasoline, and coin-operated laundries or motor vehicles. Sales of boats and aircraft are taxable at 3% and manufactured (mobile) homes are taxable at 2%. The maximum tax on a single boat or aircraft is $1,500; the maximum tax per section of manufactured home is $300.
  • There is no state sales tax on motor vehicles, but there is a highway use tax of 3% of the purchase price of a new car or the wholesale value of a used car. It is collected by the N.C. License Plate Agency when a car is sold and license plates are purchased.
  • A new resident in the state would be expected to pay the Highway Use Tax based on wholesale value when N.C. license plates are purchased. The maximum is $150. There is no minimum.

Motor Vehicle Taxes

  • State annual registration fee is $20 per private passenger vehicle. Municipalities levy a fee not to exceed $5. There is NO county auto license fee. State gasoline tax is 23.4 cents per gallon. There are NO local gasoline taxes.

North Carolina Basic Business Taxes

  1. Income Tax:
    • A credit against the income or franchise tax is available for manufacturing and processing, warehousing and distribution, and data-processing industries with at least 5 full time employees working 40 or more weeks during the taxable year. The company will earn a credit for each new job created and can take the credit in equal installments over a four year period. The enterprise factor of the area in which the jobs are created determines the amount of tax credit per job.
    • If a corporation does business in North Carolina and in one or more other states, North Carolina taxes a fraction of its income based on the amount of sales, payroll and property it has within the state. In calculating the fraction, the amount of sales counts twice as much as the amount of payroll or property. Thus, a business located in North Carolina that make significant sales outside the state would be taxable on less of its income than a comparable business located elsewhere but making significant sales within North Carolina.
    • Income tax credits are also available for performing research and development, training new and existing employees, investing in tangible personal business property, constructing or installing solar equipment, constructing a cogenerating power plant or ethanol fuel distillery, or utilizing the Wilmington or Morehead City ports.
  2. William S. Lee Quality Jobs and Business Expansion Act:
    • This law created an Investment Tax Credit, a Jobs Creation Tax Credit, a Worker Training Tax Credit, a Research and Development Tax Credit and a Business Property Tax Credit. All tax credits can be taken against the income or franchise tax and have a 5 year carry-forward for each eligible year. The total value of credits cannot exceed 50% of annual tax liability. Eligible firms are in manufacturing and processing, warehousing and distribution, and data processing industries and pay at least 110% of the average county wage.
  3. Tax Credits for Qualified Investments
    • The new investment tax credit equals 7% of the excess value (above the applicable threshold) of machinery and equipment placed in service in North Carolina by eligible new or expanding firms. The credit is taken in equal installments over the 7 years after the machinery and equipment is first placed in service (generally when it is capitalized on the books). The enterprise factors of the county in which the firm operates determine the threshold value.
    • Individuals and corporations that invest in qualified North Carolina businesses or the North Carolina Enterprise Corporation are eligible for tax credits. For corporations, the credit is allowed against the corporate income taxes, franchise taxes, and insurance premium taxes. The credit allowed is 25% of the amount invested up to a maximum of $750,000 for corporations, which are allowed credits only for investments in the North Carolina Enterprise Corporation. The North Carolina Enterprise Corporation makes investments in small businesses in the state that have the potential to create jobs and diversify and stabilize the economy in rural areas.
  4. Inventory Tax Exemption
    • Inventories owned by North Carolina manufacturers and retail and wholesale merchants are not subject to an inventory tax.
  5. Software Tax Exemptions
    • Inventories owned by North Carolina manufacturers and retail and wholesale merchants are not subject to an inventory tax.

FOR MORE INFORMATION CONCERNING TAXES, CONTACT THE FOLLOWING:

County and Town: Wake County Southern Regional Center, 130 North Judd Parkway NE, Fuquay-Varina, NC 27526 (919) 557-2501, open Monday-Friday 8:30 a.m. to 5:00 p.m.

State: North Carolina Department of Revenue, 501 North Wilmington Street , Raleigh , NC 27604 877-252-3052, open Monday-Friday 8:00 a.m. to 5:00 p.m.

The information contained above is not intended to cover all phases of law.

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