North Carolina LLC Tax Filing: Forms & Rates (2026)

Fact-checked by the LegalGlass editorial team against primary sources · Published Aug 6, 2026 · Last updated Aug 6, 2026

By default a North Carolina LLC is a pass-through: a single-member LLC files Schedule C with Form 1040, and a multi-member LLC files Form 1065. Profit flows to the owners and is taxed at North Carolina's flat 3.99% rate on Form D-400 for 2026. Owners also pay 15.3% self-employment tax, and the LLC can elect S-corp taxation.

How the IRS Taxes a North Carolina LLC by Default

An LLC is not a federal tax category - the IRS taxes it under an existing classification. By default, a single-member LLC is a disregarded entity: its income and expenses are reported on Schedule C of the owner's individual Form 1040, as if the owner were a sole proprietor, while the LLC still provides liability protection. A multi-member LLC is taxed as a partnership, filing an informational Form 1065 and issuing a Schedule K-1 to each member, who reports their share on their own return. In both cases the LLC itself pays no federal income tax - profit "passes through" to the owners. This is the foundation for everything else on this page; see the IRS LLC classification rules and our national business tax guide for the full picture.

Electing S-Corp or C-Corp Taxation

An LLC can change its federal tax treatment by election. Filing Form 8832 makes the LLC taxable as a C corporation (Form 1120), which introduces entity-level tax. More commonly, an LLC files Form 2553 to be taxed as an S corporation (Form 1120-S). The S-corp election can reduce self-employment tax because only the owner-employee's reasonable salary is subject to payroll tax, while remaining profit is a distribution - but it adds payroll, a separate return, and reasonable-compensation rules. Whether the trade is worthwhile depends on profit level; see LLC or S-corp, LLC vs S-corp tax, and Form 2553 explained. The federal election also governs which North Carolina return you file.

Self-Employment Tax and Estimated Payments

Because a default LLC's profit is self-employment income, owners owe self-employment tax of 15.3% - 12.4% for Social Security (up to the annual wage base) plus 2.9% for Medicare - on their net earnings, on top of income tax. This is the trade-off for pass-through simplicity, and it is the number the S-corp election is usually chosen to reduce. Since no employer withholds tax for an owner, most LLC members must make quarterly estimated tax payments to both the IRS and North Carolina to avoid underpayment penalties. Learn the mechanics in self-employment tax and quarterly estimated taxes.

North Carolina Income Tax on LLC Income (3.99%)

North Carolina taxes individual income at a flat 3.99% rate for tax year 2026 (the rate has been stepping down each year under state law). Because a default LLC is a pass-through, its owners report their share of the profit on Form D-400, the North Carolina Individual Income Tax Return, and pay the 3.99% rate there. The LLC itself does not pay a separate North Carolina income tax under the default classification. North Carolina generally conforms to the federal treatment of the entity: if the IRS disregards it or treats it as a partnership, North Carolina follows suit. The North Carolina return is due April 15, matching the federal individual deadline in most years.

State Returns by Classification

Which North Carolina return the business files depends on its federal classification:

• Single-member (disregarded): no separate entity return; the owner reports the activity on Form D-400.
• Multi-member (partnership): the LLC files Form D-403, the North Carolina Partnership Income Tax Return, and each member reports their share on D-400.
• S corporation: the LLC files Form CD-401S, the North Carolina S-Corporation Tax Return; shareholders report income on D-400.
• C corporation: the LLC files Form CD-405, the North Carolina C-Corporation Tax Return, and pays corporate income and franchise tax at the entity level.

Getting an EIN is a prerequisite for partnership, S-corp, and C-corp returns and for payroll.

The North Carolina Taxed PTE Election

North Carolina offers a Taxed Pass-Through Entity (Taxed PTE) election. A partnership or S-corp LLC can elect to pay North Carolina income tax at the entity level on the owners' shares, and the owners then exclude that income from their own North Carolina return. The main appeal is working around the federal cap on the state-and-local-tax (SALT) deduction, since the entity's tax is deductible on the federal return. The election is made annually on the entity's North Carolina return (D-403 or CD-401S). It is optional and best evaluated with a tax professional, because it interacts with estimated payments and the owners' individual filings.

Franchise Tax: When It Applies

North Carolina imposes a franchise tax, but only on corporations - including LLCs that elect to be taxed as a C corporation or S corporation. The rate is $1.50 per $1,000 of the franchise tax base, with a $200 minimum. A default, pass-through LLC does not pay North Carolina franchise tax at all, which is a meaningful cost advantage of staying pass-through. If you elect corporate treatment, factor in both the corporate income tax (a 2.25% corporate rate for 2026) and the franchise tax. Details are on the Department of Revenue corporate income and franchise tax page.

Sales, Use, and Employer Taxes

If your LLC sells taxable goods or certain services, you must register for a free Certificate of Registration using Form NC-BR and collect sales and use tax. The North Carolina state rate is 4.75%, and combined state-plus-local rates commonly run 6.75% to 7.5% depending on the county. You remit collected tax on Form E-500 monthly or quarterly. If your LLC has employees, you also register for North Carolina income tax withholding (also via Form NC-BR, remitting on Form NC-5) and for state unemployment insurance with the Division of Employment Security. Federal employment taxes apply on top of these. See how to file business taxes and when business taxes are due.

Key Forms and Due Dates

Always confirm the exact due date each year, since weekends and holidays shift deadlines.

Frequently Asked Questions

How is a North Carolina LLC taxed?

By default, single-member LLCs are disregarded (Schedule C) and multi-member LLCs are partnerships (Form 1065). Profit passes through to owners and is taxed on Form D-400 at 3.99% for 2026. The LLC can elect S-corp or C-corp treatment.

What is the North Carolina income tax rate for 2026?

A flat 3.99% for individuals. Pass-through LLC profit is taxed at that rate on the owners' D-400 returns.

Does a North Carolina LLC pay self-employment tax?

Yes, owners of a default LLC pay 15.3% self-employment tax on net earnings. An S-corp election can reduce the amount subject to it.

Does North Carolina charge a franchise tax on LLCs?

Not on default LLCs. Franchise tax ($1.50 per $1,000, $200 minimum) applies to corporations and corporate-taxed LLCs.

What forms does a North Carolina LLC file?

Single-member: Schedule C and D-400. Multi-member: Form 1065 and D-403. S-corp: Form 1120-S and CD-401S.

Does the LLC need to collect sales tax?

Only if it sells taxable goods or services. Register free via Form NC-BR and collect at 4.75% state plus local rates (commonly 6.75%–7.5%), remitting on Form E-500.

Related

• How to form an LLC in North Carolina (state hub)
• North Carolina annual report
• North Carolina LLC cost
• North Carolina registered agent
• North Carolina operating agreement
• S-corp vs LLC
• Self-employment tax
• Quarterly estimated taxes
• How to file business taxes
• How to get an EIN

Sources

1. IRS - Limited Liability Company (LLC) (default classification).
2. IRS - Single-Member LLCs (disregarded entity; Schedule C).
3. IRS - About Form 1065, U.S. Return of Partnership Income.
4. IRS - About Form 2553, Election by a Small Business Corporation (S-corp election).
5. IRS - About Form 8832, Entity Classification Election.
6. IRS - Self-Employment Tax (15.3% rate).
7. IRS - Estimated Taxes.
8. North Carolina Department of Revenue - Individual Income Tax (3.99% flat rate; Form D-400).
9. North Carolina Department of Revenue - Corporate Income and Franchise Tax ($1.50 per $1,000, $200 minimum; 2.25% corporate rate).
10. North Carolina Department of Revenue - Sales and Use Tax (4.75% state rate; Form E-500).
11. North Carolina Department of Revenue - Withholding Tax (employer withholding; Form NC-5).
12. North Carolina Department of Revenue - Business Registration (Form NC-BR).
13. North Carolina General Statutes - G.S. 105-154.1, Taxed pass-through entity election.

LegalGlass provides general information for educational purposes and is not a law firm or a substitute for advice from a licensed attorney, CPA, or tax professional. Tax rates, thresholds, and forms change; verify current rules with the IRS and North Carolina Department of Revenue, and consult a professional about your situation, before filing.