Tag Archive for: retirement goals

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North Carolina State Taxes

North Carolina sales tax guide

North Carolina offers incredible scenery, ranging from the Appalachian Mountains to the ocean and everywhere in between. From the beautiful Asheville area in Western North Carolina to the sandy beaches of the Outer Banks, understanding the state tax system is crucial for anyone moving to or currently living in the Tar Heel State.

North Carolina is generally considered a moderately tax-friendly state, with state income taxes expected to decrease further in the coming years, putting it in the bottom third of states’ income tax rates. Whether you are considering a move, recently moved, or already here and seeking information, we’ve got you covered. Below, we break down everything you need to know about state taxes in North Carolina. 

Key Takeaways

  • North Carolina is considered a moderately tax-friendly state. 
  • The state levies a flat individual income tax rate of 4.25% as of the taxable year 2025.
  • Property taxes vary by county and municipality.
  • North Carolina does not have an estate tax.

North Carolina State Income Taxes

North Carolina employs a flat individual income tax rate, meaning all taxpayers, regardless of income, pay the same percentage of income tax. For taxable years beginning in 2025, the rate is 4.25%; for any year after 2025, it will be 3.99%. For the most up-to-date information, see the North Carolina Department of Revenue (NCDOR) website.

A new tax structure was enacted under Session Law 2023-134, gradually lowering the individual income tax rate on a trigger-based system. Depending on specific triggers, income tax rates could be further reduced, starting with tax years beginning in 2027. 

NC Property Taxes

North Carolina does not employ a statewide property tax. Instead, all property taxes are levied at the county and municipality levels, meaning taxes vary depending on where you live. As of 2023, the state’s effective property tax rate was 0.62%.

Depending on your location, you may owe both county and municipal property taxes. For example, Asheville residents pay property taxes as listed:

  • City tax rate: 44.19 cents per $100 of assessed valuation.
  • County tax rate: 54.66 cents per $100 of assessed valuation.
  • City School tax rate: 11.00 cents per $100 of assessed valuation. Not all City of Asheville residents pay the City School tax.

For most property taxes, the lien date is Jan. 1. Put simply, this means the individual who owns the property on that date is liable for the taxes. One exception to this rule is the Motor Vehicle Property Tax.

There are several exemptions, including those for individuals over 65, permanently or totally disabled individuals, disabled veterans, farm or forestry landowners, and individuals with wildlife conservation lands. Check with your county of residence for more information. 

North Carolina Estate Tax

North Carolina does not levy an estate tax. It is important to note that your estate may still be subject to federal estate taxes if its value is high enough. If you’re unsure about your estate planning needs, speaking with a financial advisor is a wise idea. Horizon’s Wealth Management services include estate planning, ensuring your peace of mind as you navigate your finances. 

North Carolina Retirement Tax

North Carolina is considered moderately tax-friendly for retirees. Retirement income is as follows:

  • Social Security benefits: exempt. 
  • Military pensions: exempt.
  • All other retirement income: subject to standard flat income tax rate. 

As discussed, North Carolina does not have an estate tax, allowing retirees to pass on their financial legacy without worry of additional taxes. 

Bottom Line

North Carolina is moderately tax-friendly, with a flat-rate individual income tax that places the state in the bottom third of the US. Additionally, the average property tax is relatively low, there is no estate tax, groceries are taxed at a lower rate (mostly 2%), and prescription drugs are exempt from sales tax entirely. 

If you live here in the Tar Heel State, recently relocated, or are considering a move, Horizon’s Wealth Management can help you manage and understand how state taxes will affect your finances.

NC Taxes FAQ

Is North Carolina a tax-friendly state?

North Carolina state taxes make it a moderately tax-friendly state. It is placed in the bottom third of state income tax rates as of 2025. 

What is not taxed in North Carolina?

Social security income, military pensions, inheritance/estate and prescription drugs are exempt from taxes in North Carolina. There are also property tax exemptions for several categories. Additionally, groceries are taxed at a lower rate than normal sales tax, usually 2%.

Is it cheaper to live in NC or SC?

South Carolina is considered slightly more tax-friendly for retirees due to additional deductions allowed for qualified retirement income and the state’s overall income tax structure. However, if you are in a high tax bracket, SC does employ a graduated tax structure for its state income tax. If you’re choosing between the states, an advisor at Horizon’s Wealth Management can assist you in finding your best tax outcome.

At what age do you stop paying property taxes in North Carolina?

There is no age at which you stop paying property taxes in North Carolina. There is an exemption that can be applied for, which reduces property taxes for individuals over 65 with an income below a certain threshold. For 2025, that limit is $37,900.

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How to Retire Early

Early Retirement

Retiring early is a dream shared by many but achieved by few. It’s not just about breaking free from the 9-to-5 grind but also about having the freedom to pursue your passions, travel, spend time with loved ones, or simply relax on a beach. Imagine doing all this while you’re still young and vibrant, without the burden of a paycheck-to-paycheck existence. While it may seem like a pipe dream, retiring early is a realistic goal for those who are willing to put in the effort and discipline required to make it a reality. With the right strategies, mindset, and planning, you can join the ranks of those who have successfully retired early and start living the life you’ve always wanted.

Key Takeaways

  • Retiring early requires a combination of strategic financial planning, disciplined saving, and smart investing to achieve financial independence and pursue your passions.
  • Key strategies for early retirement include taking advantage of workplace-sponsored retirement programs, paying off high-interest debt, investing early and often, using a Health Savings Account, and establishing multiple forms of income.
  • With the right guidance, such as from Horizons Wealth Management, you can create a personalized plan to reach your financial goals and achieve early retirement, allowing you to live the life you’ve always wanted.

What is Early Retirement?

Early retirement is a state of financial independence in which an individual stops working for a salary or wage before the traditional retirement age, which is typically around 65 years old. In this situation, one has sufficient wealth, income streams, and resources to support one’s living expenses without the need for a regular paycheck. Essentially, early retirement means having the financial freedom to pursue one’s passions and interests without worrying about a steady income.

Tips to Retire Early

By combining strategic financial planning, disciplined saving, and smart investing, you can set yourself on the path to retiring early and enjoying the freedom and flexibility that comes with it.

Take Advantage of Workplace-Sponsored Retirement Programs

Take advantage of workplace retirement savings accounts, such as 401(k), 403(b), or Thrift Savings Plan, which offer tax benefits and potential employer matching contributions to supercharge your savings. By contributing enough to maximize employer matching, you can earn free money that can significantly boost your retirement nest egg.

Don’t Withdraw from Retirement Accounts

Avoid the temptation to withdraw funds from your retirement accounts for non-essential expenses. This can lead to penalties, taxes, and a significant setback to your early retirement goals. Instead, treat your retirement accounts as sacred and let the power of compound interest work in your favor over time.

Pay Off Debt

Paying off high-interest debt, such as credit card balances, and avoiding new debt can free up a significant amount of money in your budget to invest in your retirement accounts, accelerating your progress toward financial independence. By eliminating debt and avoiding new debt, you can redirect your hard-earned money toward building a prosperous retirement future.

Invest Early and Often

Investing early and often can help your money grow exponentially over time, thanks to the power of compound interest, and can significantly boost your chances of achieving early retirement. By starting to invest as soon as possible and consistently adding to your investments, you can take advantage of the market’s potential for long-term growth and build a sizable nest egg.

Use an HSA

Utilizing a Health Savings Account (HSA) can be a valuable strategy for early retirees. It allows you to set aside pre-tax dollars for medical expenses, reducing your taxable income and lowering your tax liability. Additionally, HSA funds can be invested and grown over time, providing a source of tax-free money for healthcare expenses in retirement.

Establish Multiple Forms of Income

Creating multiple streams of income can provide a safety net and help you achieve early retirement by reducing your reliance on a single income source. Consider creating multiple income streams, such as:

  • Dividend-paying stocks or index funds
  • Real estate investments, including rental properties or real estate investment trusts (REITs)
  • Online businesses or side hustles, such as blogging, coaching, or freelancing
  • A small business or entrepreneurial venture

Bottom Line

Achieving early retirement requires a combination of strategic financial planning, disciplined saving, and smart investing. By following these principles, you can break free from work life and pursue your passions, travel, and spend time with loved ones. With the right guidance, you can create a prosperous retirement future and live the life you’ve always wanted. Horizons Wealth Management can help you develop a personalized plan to reach your retirement financial goals and achieve early retirement.

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How Much Money You Need To Save Each Day To Become A Millionaire By Age 65

Becoming rich is nothing more than a matter of committing and sticking to a systematic savings and investment plan.

If you want to get rich, start investing- and start as early as you possibly can.

To illustrate the simplicity of building wealth over time, Bach created a chart detailing how much money you need to set aside each day, month, or year in order to have $1 million saved by the time you’re 65.

Next time you consider running to Starbucks for a $4 latte, think about this chart and consider redirecting that coffee cash to your savings.  Check it out here.

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