Government and Taxes

North Carolina has long been recognized as having an equitable and reasonable tax structure. This fact combined with a strong economy has resulted in a AAA bond rating for the State of North Carolina. Since a greater portion of the cost of schools and transportation infrastructure is borne at the state level, taxpayers find local property taxes lower than in other states. Local tax structure is primarily focused around the implementation of ad valorem property taxes. The exceptionally strong local economy has led to both Durham County and the City of Durham being granted AAA bond ratings by the major rating services.

State of North Carolina

For more information regarding State of NC tax issues, see the NC Dept. of Revenue's web site.

Individual Income Tax

The state of North Carolina levies an income tax upon individuals and single proprietor businesses. Filing status and income bracket determine a statewide tax rate of 6.00% - 8.25%.

Sales & Use Tax

A tax of 4.5% is levied on general retail sales by the State. A 2.5% local sales and use tax is applied to goods & services subject to the general state levy providing a statewide effective sales tax of 6.75% on most items.

Exceptions to the standard rate are itemized below:

6.5% (state): sales of intrastate toll telephone,services;

3% (state): sales of local telephone service;

3% (state): sales of aircraft, boats, mobile classrooms, mobile offices, and railway cars ($1,500 maximum per unit);

3% (state): sales for all other electricity and piped natural gas uses;

2.83% (state): sales of electricity and piped natural gas to manufacturers, farmers, commercial laundries and dry cleaners for non-residential use;

2% (state): sales of manufactured (mobile) homes;

2% (local): sales of food intended for home consumption (reduced from 4% effective May 1, 1999);

1% (state): on purchases of manufacturing machinery and equipment ($80 maximum per unit);

1% (state): on purchases by manufacturers of coal, coke, and fuel oil used in manufacturing process;

Motor vehicles, prescription medications, insulin, false teeth, eyeglasses, gasoline, coin-op laundries, raw materials, containers, labels, and packaging/shipping materials are exempt from the sales and use tax.
Source: NC Dept. of Revenue (2001)

City of Durham & Durham County

For more information regarding local tax issues, see the Durham County Tax Administration's web site.

Property Taxes

Local property taxes are levied on real estate and tangible personal property. Household property in the personal residence of the owner is exempt from taxation. By law, properties must be appraised at 100% of real value at the time of assessment. Revaluation is conducted once every four years. Durham County's last revaluation occurred in 2005. A revaluation is next scheduled for 2009. Because values may change significantly in intervening years, the Effective Tax Rate, which accounts for differences between assessed and true property values, is a more useful tool in predicting a property owner's total tax burden.

Property Tax Levy per $100 Assessed & True Value

	Municipal	County	Other	Total
City of Durham	$0.6180	$0.8340	None	$1.452
Durham County	N/A	$0.8340	Fire: (see note below)	$0.8340

Source: Durham County Tax Administration (2008)
County residents outside the city limits are subject to a tax for fire protection services. This tax varies by fire service district. For more information on Durham County Fire Districts, see the Durham County Tax Office Site.