Understanding North Carolina’s Combined General Rate

Written By Rohahn Dawkins

North Carolina’s sales tax system might look simple on the surface — one “combined general rate,” right? But if you’ve ever tried to actually apply it on an invoice or figure out which rate to charge a customer across county lines, you know how quickly things get complicated.

This guide breaks down the Combined General Rate in North Carolina, exploring its legal foundation, how local rates get layered on top of the state rate, and how to stay compliant whether you’re a solo entrepreneur or running a growing business.

Let’s dive in.

What Is the Combined General Rate?

The Combined General Rate is essentially the “all-in” sales tax percentage you are required to charge on taxable sales in North Carolina. It includes two parts:

✅ State rate – set statewide
✅ Local rate – varies by county or municipality

In North Carolina, the state portion of the sales tax is currently 4.75%. The local portion can add anywhere from 2% to 2.75% on top of that, depending on where your sale occurs, making the Combined General Rate typically range between 6.75% and 7.5% statewide.

For example, in Mecklenburg County (home to Charlotte), the combined rate is 7.25% as of this writing.

Statutory Basis of the Combined General Rate

Here’s where it lives in law:

📌 NC General Statutes §105-164.4
 Establishes the state sales and use tax at 4.75% on the retail sale of tangible personal property, certain digital property, and certain services.

📌 NC General Statutes §105-164.4A
 Authorizes counties and municipalities to adopt additional local sales and use taxes, usually through a voter referendum or a local act of legislation.

📌 NC General Statutes §105-164.3(33a)
 Specifically defines “combined general rate” as the total of the state rate plus any local rates.

The Department of Revenue (NCDOR) then publishes rate schedules based on these statutes, keeping track of every county’s total. You can see their current rates here:
👉 NCDOR Local Rates Lookup

How Local Rates Are Layered

Local rates work a bit like building blocks. Counties or municipalities add their own increments, which get “stacked” on top of the state’s 4.75% rate. These increments are usually broken into:

✅ Article 39 Tax (1%) NC General Statutes §105-505 et seq.

  • This is the first local option sales and use tax, authorized at up to 1% by voter referendum, adopted by most counties.

✅ Article 40 Tax (0.5%) NC General Statutes §105-507 et seq.

  • This is a second local option sales tax for counties, set at 0.5%, used mostly for schools and other local funding.

✅ Article 42 Tax (0.5%) NC General Statutes §105-517 et seq.

  • Another half-cent tax, intended for local government needs, that piggybacks on Articles 39 and 40.

✅ Article 43 Tax (up to 0.5%) NC General Statutes §105-506 et seq.

  • Authorizes up to 0.5% for local transit systems (often known as the “transit tax”), requiring voter approval in participating counties

✅ Article 46 Tax (up to 0.25%) NC General Statutes §105-535 et seq.

  • This optional quarter-cent local sales tax can be used for general county purposes with voter approval.

Each local government decides whether to adopt these add-ons. Once they do, the Department of Revenue collects all of it together — which is why you only file and pay one amount, but behind the scenes it’s split among many recipients.

Example:

  • You sell a taxable good in Mecklenburg County

  • State rate = 4.75%

  • Mecklenburg’s local rates = 2.5% (combination of Articles 39, 40, 42, and 46)

  • Combined rate you must charge = 7.25%

If you sell in a county with fewer adopted local options, it could be 6.75% instead.

Relatable Examples

Let’s make this practical:

Sparkle, the wedding planner
 Sparkle runs events across Charlotte. She invoices the bride for a set of floral centerpieces she resold from a vendor, subject to sales tax. She applies the Mecklenburg combined general rate of 7.25%.

If she instead works a wedding across the county line in Gaston County, she should apply Gaston’s combined rate of 7%.

Krystal, the electrician
 Krystal rewires a house in Huntersville, which is in Mecklenburg County, so she charges 7.25% on her repair labor and parts, because RMI (repair, maintenance, installation) services are taxable.

If she crosses to Cabarrus County for another job, she would instead apply their combined rate of 7%.

Miles, the IT contractor
 Miles offers remote support to clients statewide. Because the rule is destination-based sourcing, he charges the rate based on where the client receives the benefit. If a Charlotte client is billed, he uses 7.25%, but for a Raleigh client he uses Wake County’s combined rate of 7.25%.

Common Mistakes with the Combined General Rate

Even diligent business owners slip up on these Combined General Rate rules. The most common mistakes include:

❌ Assuming one flat rate covers the entire state
 There is no universal statewide rate — it is “combined,” and local rates change.

❌ Using your business address instead of the delivery address
 Destination-based sourcing means the customer’s location usually controls the rate, not your office’s ZIP code.

❌ Ignoring local referenda
 Local tax rates change based on county votes. If you don’t check the updated NCDOR list regularly, you could undercharge or overcharge.

❌ Failing to separate taxable from nontaxable sales
 If you blend taxable and nontaxable items on one line, the whole line might be considered taxable at the Combined General Rate.

❌ Over-relying on platforms
 Many people trust Square, Etsy, or Shopify to “automatically” get rates right, but you are still legally responsible for verifying it.

Staying Compliant with the Combined General Rate

Here’s the smart, repeatable process to keep you out of trouble:

✅ Register properly
 Before collecting sales tax, get a Sales and Use Tax Certificate of Registration from the NCDOR under §105-164.29.

✅ Check current rates
 Bookmark the NCDOR rate page and verify rates at least quarterly, since counties can adopt new local rates any time.

✅ Destination-based sourcing
 Confirm the customer’s delivery address or service location and charge the rate for that jurisdiction.

✅ Separate invoice lines
 Always separate taxable goods or taxable services from exempt professional fees, to protect yourself in an audit.

✅ Keep documentation
 Retain invoices, exemption certificates, and rate lookups for at least three years (per §105-164.24).

✅ Use up-to-date accounting software
 Make sure your sales tax module is current on local rate updates.

✅ Train your team
 If you have staff issuing invoices, train them to verify the correct combined rate before finalizing a sale.

Practical Action Steps You Can Take Today

👉 Action Step 1: Register for your certificate if you haven’t already.
👉 Action Step 2: Verify your county’s combined rate today using the NCDOR site. https://sites.ncleg.gov/frd/wp-content/uploads/sites/7/2024/03/2024_Local_Sales_Tax_Article_2Pager-2.pdf
👉 Action Step 3: Review your current invoices to see if you are separating taxable vs. exempt lines.
👉 Action Step 4: Schedule a quarterly calendar reminder to review rate changes.
👉 Action Step 5: Add a note on your client intake forms to always confirm delivery/service location.

Frequently Asked Questions (FAQ)

Q: What is the current North Carolina state sales tax rate?
 A: 4.75% statewide.

Q: What is the Combined General Rate?
 A: It is the state rate plus all local rates in the place of sale or delivery. For example, 7.25% in Mecklenburg County.

Q: How do I find out my local rate?
 A: Go to the NCDOR rates page.

Q: Do I charge based on where I am, or where my customer is?
 A: North Carolina uses destination-based sourcing for most sales. Use your customer’s delivery location.

Q: What if I get the rate wrong?
 A: You still owe the correct amount to the state. If you undercharge, you pay the difference out of pocket. If you overcharge, you must remit it or refund it.

Q: My software charges tax automatically. Isn’t that enough?
 A: You are legally responsible for making sure it is correct, even if your platform automates it.

Q: I only provide professional consulting. Do I even need to worry about this?
 A: Generally, no — professional services are exempt. But if you sell any tangible property along with your consulting, you might still have to collect sales tax.

Putting It All Together

Let’s do a quick recap:

✅ The state rate is 4.75%, locked in by statute.
✅ Local counties and municipalities add their own rates under local statutes, generally totaling an extra 2–2.75%.
✅ The Combined General Rate is the total, which ranges between 6.75% and 7.5% depending on location.
✅ You must charge based on the customer’s location, not your own.
✅ Keep your invoices separated between taxable and nontaxable items.
✅ Always verify the current rate quarterly to avoid accidental errors.


Extra Pro Tips

✅ When in doubt, separate:
List each item clearly on your invoice with line-level tax status.

✅ Double-check local tax referenda:
Counties vote on small rate changes that kick in every July 1 and January 1.

✅ Keep evidence:
If challenged, you should have:

  • client addresses

  • rate lookups

  • exemption certificates

✅ Train your staff:
Never assume “they know.” A single wrong decimal point can cost you.

Final Takeaways

Sales tax may feel like a dull topic, but North Carolina’s Combined General Rate is a critical pillar of keeping your business compliant. Whether you sell handmade candles at a farmers market, offer wedding planning packages, or fix HVAC systems, you cannot afford to ignore:

  • the state base rate (4.75%)

  • local add-ons (varies by county)

  • and your duty to collect the combined rate where your customer is located

A little bit of organization and a quarterly rate check will save you hours of headache, protect your reputation, and help you dodge nasty surprises from the Department of Revenue.

Need Help?

If you have questions about the Combined General Rate, your invoice structure, or how to handle an audit, reach out to a qualified tax professional — or follow our blog for practical sales tax strategies that won’t make you cry.

Stay safe, stay organized, and get those tax rates right.


Rohahn Dawkins