Self-employed taxes and LLC costs in North Carolina, 2026
North Carolina lowered its flat income tax again for 2026, but keeps one of the higher yearly report fees for LLCs.
Total tax on this income in 2026
$20,443
Put aside 24% of each payment · $5,111 per quarter
| Self-employment tax (15.3%) | $12,010 |
| Federal income tax | $5,790 |
| North Carolina income tax | $2,643 |
| QBI deduction used | $12,579 |
| Effective rate on all income | 24.1% |
With an S corp election and a $34,000 salary, about $3,269 less tax (check it).
Computed by Radif Partners from IRS and North Carolina agency documents read on October 15, 2026 · How we calculate
North Carolina taxes all business profit at one rate, 3.99 % for 2026, after a standard deduction of $12,750 for a single filer or $25,500 for a married couple. On $75,000 of profit, a single filer owes about $2,272 to the state and $17,767 in total with federal income tax and self-employment tax, which is $4,442 per quarter. An LLC costs $125 to form and $200 every year for the annual report, or $1,125 over five years. An LLC taxed by default owes no franchise tax, but a corporation does, so electing S status adds at least $200 a year of franchise tax, plus state unemployment tax of 1 % on the first $34,200 of the owner's salary for a new employer. At $120,000 of profit and a $50,000 salary, the election still saves about $4,758 a year after $2,000 of payroll costs.
North Carolina at a glance, 2026
| LLC filing fee | $125 |
| Annual Report | $200 a year |
| Income tax | flat 3.99 % |
| S corporation election | followed by the state |
| Tax on $75,000 of profit (single) | $17,767 in all, $2,272 to North Carolina |
The flat rate fell from 4.25% in 2025 to 3.99 % for 2026 (NCDOR, tax rate schedules), and there are no brackets: the same rate applies to the first dollar of taxable income and the last. With the standard deduction set at $12,750, a part-time freelancer with $30,000 of profit pays about $604 to North Carolina, and a married couple with $90,000 of profit and no other income pays about $2,320. Because the calculation starts from federal AGI, half of self-employment tax and any SEP or solo 401(k) contribution lower it; the federal QBI deduction does not.
An annual report that costs more than the filing
Many states charge more to form an LLC than to keep it. North Carolina does the reverse: the Articles of Organization cost $125, while the annual report costs $200 every year after (NC Secretary of State, business registration fees). Over ten years the reports add up to several times the formation fee. There is no newspaper publication and no minimum tax on an LLC taxed as a sole proprietorship or partnership. The LLC cost by state page compares the recurring bill with nearby South Carolina and Virginia.
S corp or LLC in this state
S corp saves
$4,686
| Salary used (42%) | $50,400 |
| North Carolina entity tax | $200 |
Franchise tax once the company is a corporation
North Carolina's franchise tax falls on corporations, including S corporations, and not on LLCs taxed as partnerships or disregarded entities. An S corporation pays $200 on the first million dollars of its tax base and $1.50 per $1,000 above that (NCDOR, corporate income and franchise tax rates). For a one-person company, the base stays under a million and the bill is the $200 minimum. Add it to the $200 annual report, the payroll service and the unemployment tax on the salary, and the yearly cost of running an S corporation in North Carolina is easy to underestimate. The calculator above counts the franchise tax and unemployment tax; the reasonable salary guide covers the salary itself.
North Carolina also has a taxed pass-through entity election for partnerships and S corporations, used mainly to work around the federal cap on state tax deductions. Its rate and conditions were not read on an official page today, so it is left out of the comparison.
Estimated payments in North Carolina
Quarterly estimates are due when the tax left after North Carolina withholding and credits will be $1,000 or more, on the federal schedule. The January installment can be skipped if you file the return and pay the balance by January 31 (NCDOR, estimated income tax). With a single flat rate, the state part of each payment is easy to compute: about 3.99 % of profit after the standard deduction, divided by four.