While the North Carolina sales tax of 4.75% applies to most transactions, there are certain items that may be exempt from taxation. This page discusses various sales tax exemptions in North Carolina.
In North Carolina, certain items may be exempt from the sales tax to all consumers, not just tax-exempt purchasers.
Several examples of exemptions to the state sales tax are prescription medications, some types of groceries, some medical devices, and machinery and chemicals which are used in research and development.
Many states have special, lowered sales tax rates for certain types of staple goods - such as groceries, clothing and medicines. Restaurant meals may also have a special sales tax rate. Here are the special category rates for North Carolina:
4.75%
2%
Prepared Food
9%
Prescription Drugs
EXEMPT
4.75%
These categories may have some further qualifications before the special rate applies, such as a price cap on clothing items. Groceries are generally defined as "unprepared food", while pre-prepared food may be subject to the restaurant food tax rate.
Candy and soda may be included or excluded from any preferential tax rate depending on whether or not the state considers them to be a "grocery":
Candy is NOT considered a grocery in North Carolina
Soda is NOT considered a grocery in North Carolina
The taxability of transactions involving services, shipping, and installation of tangible goods can be slightly complicated with various laws applying to slightly different situations. To learn more about how these transactions, and other more complicated situations, are subject to the North Carolina sales tax see the North Carolina sales taxability FAQ page.
This table lists a number of additional categories of goods and services that are exempt from North Carolina's sales tax. For a list that also shows taxable items, see the list of taxable and nontaxable items in North Carolina.
| Category | Exemption Status |
|---|---|
| Food and Meals | |
| Grocery Food | EXEMPT * |
| Leases and Rentals | |
| Motor Vehicles | EXEMPT * |
| Manufacturing and Machinery | |
| Raw Materials | EXEMPT * |
| Utilities & Fuel | EXEMPT * |
| Medical Goods and Services | |
| Medical Devices | EXEMPT * |
| Medical Services | EXEMPT |
| Occasional Sales | |
| General Occasional Sales | EXEMPT |
| Motor Vehicles | EXEMPT * |
| Optional Maintenance Contracts | |
| Parts Purchased for Use in Performing Service Under Optional Maintenance Contracts | EXEMPT * |
| Services | |
| Janitorial Services | EXEMPT |
| Transportation Services | EXEMPT |
| Software and Digital Products | |
| Custom Software - Delivered on Tangible Media | EXEMPT |
| Custom Software - Downloaded | EXEMPT |
* See notes in category taxability page for details
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