Frequently Asked Questions About Use Tax

Use tax is a tax due on purchases, leases, and rentals of tangible personal property and certain digital property purchased, leased or rented inside or outside this state for storage, use, or consumption in North Carolina. Use tax is also due on taxable services sourced to North Carolina. 

Consumer use tax is paid to the Department of Revenue by the purchaser when the North Carolina, county, or transit sales and use tax has not been collected by the retailer.

It depends.  The use tax rate is the same rate as the sales tax.  The rate depends on the type of item purchased and the county where the item is stored, used, or consumed in North Carolina.

The items subject to use tax are the same items that are subject to the sales tax. Generally, the items include tangible personal property, certain digital property, and specified services.

North Carolina does not require certain small out-of-state retailers to collect North Carolina sales and use tax.  In many cases, the state cannot require these retailers to collect tax under the United States Constitution.  However, some of these retailers may voluntarily collect the North Carolina tax as a convenience to their customers. For additional information, visit the remote sales webpage.

North Carolina requires out-of-state retailers that have gross sales of more than $100,000 sourced to North Carolina in the previous or current calendar year to collect North Carolina sales and use tax. In addition, other retailers engaged in business in the state must collect the tax.

The use tax is not a new tax.  North Carolina enacted the use tax in 1939. The Department has included use tax reporting requirements in the instructions for the Individual Income Tax Return since 1990. 

The Department compared the information used in other states and made adjustments for the total general state, local, and transit rates.

If you maintained a record of all purchases during the income tax year, you can use the worksheet in the Individual Income Tax Instructions for Form D-400 for the tax year to compute the actual amount of use tax due.

If you determine your use tax liability is more than the amount shown on the use tax table, you should pay the actual use tax you owe.  An individual should only use the Use Tax Table if the amount of purchases subject to use tax is unknown.

It depends.  If you purchase the items for storage, use, or consumption in North Carolina, they are subject to the North Carolina use tax . If another state's sales or use tax was due and paid on the out-of-state purchases, you may claim a credit for the tax that was due and paid against the North Carolina use tax. You may not claim a credit for sales tax or value-added tax (VAT) paid to another country.

Yes.  Shipping, handling, transportation, and delivery charges imposed by the retailer that are in any way connected with the sale of taxable items purchased for storage, use, or consumption in North Carolina are subject to the North Carolina use tax.