North Carolina vs Virginia: Taxes & Take-Home Pay 2026

Flat versus graduated: how the two taxes are built

North Carolina taxes income above its standard deduction at one rate, 3.99%. Virginia has four brackets, but the top 5.75% rate starts at only $17,000 of taxable income. In practice almost every Virginia worker pays 5.75% on most of their income.

Virginia's deductions are also smaller: $8,750 standard deduction for a single filer plus a $930 exemption, compared with North Carolina's $12,750. Virginia's higher standard deduction is scheduled to end after tax year 2026, which would widen the gap from 2027 unless the General Assembly extends it.

What the difference looks like in dollars

On $95,000 of salary, a single filer pays $4,648 to Virginia and $3,282 to North Carolina, $1,367 more in Virginia. At $40,000 the gap is $399, because Virginia's lower brackets take some of the sting out at modest incomes.

Sales tax runs the other way. Virginia's average combined rate is 5.77%, against 7.10% in North Carolina. On $25,000 of taxable spending, that saves a Virginia household about $332 a year. For most salaried households that is less than the income tax difference.

A family example

For a married couple with two children earning $120,000, Virginia tax is $5,422 after the $17,500 joint standard deduction and four $930 exemptions. North Carolina tax is $3,771 after its $25,500 deduction. North Carolina's child deduction, which depends on income and is not included here, would widen the gap. Virginia's exemptions are small, so having children changes the Virginia bill much less than it changes the federal one.

Border commuters: no reciprocity between these two

Virginia Tax's employer instructions list North Carolina as a neighbouring state with which Virginia has no reciprocity agreement. A North Carolina resident working in Virginia has Virginia tax withheld, files Virginia Form 763 as a nonresident, and claims North Carolina's credit for tax paid to another state on Form D-400TC.

The reverse also applies. A Virginia resident working in North Carolina, for example around Danville or near the Outer Banks, pays North Carolina tax on those wages and claims a Virginia credit. Because Virginia's rate is higher, a Virginia resident working in North Carolina usually still owes some Virginia tax on top.

Virginia's reciprocity agreements cover Kentucky, the District of Columbia, Maryland, West Virginia and Pennsylvania. North Carolina and Tennessee residents are not included.

Retirement: Virginia has an age deduction, North Carolina does not

A retired couple with modest pension income may therefore pay less in Virginia, despite the higher rate. A working-age professional nearly always pays less in North Carolina.

• Both states exempt Social Security. Virginia does it by subtracting any Social Security included in federal AGI.
• Virginia gives an age deduction of up to $12,000 per person aged 65 or older. It is reduced $1 for every $1 of adjusted income above $50,000 (single) or $75,000 (married), so it mainly helps moderate-income retirees. Filers 65 or older also get an extra $800 exemption.
• North Carolina has no age deduction or general pension exclusion. Its Bailey exclusion covers only certain government pensions for retirees with five years of service by August 12, 1989.

Local taxes and other differences

Neither state has a local income tax on wages. Property taxes, including any tax on vehicles, are set by cities and counties in both states, so check the rates for the specific locality you are considering.

Neither state has a paid family leave or disability payroll deduction for employees in 2026, so the only state line on a paycheck is income tax withholding.

Filing in the year you move

Virginia part-year residents generally file Form 760PY and prorate their exemptions and standard deduction. If you lived in Virginia for 183 days or less, Virginia lets you file as a nonresident on Form 763 instead, which allows the full exemptions and deduction. North Carolina part-year residents file Form D-400 with Schedule PN. Start withholding in the new state from your first paycheck after the move, using Form VA-4 or NC-4.