NC taxpayers could get a higher refund & waived fees in 2025 with these tax code changes
Tax season is officially here, and North Carolina began to accept tax returns on Monday, Jan. 27.
The deadline to file is Tuesday, April 15, but those affected by Hurricane Helene in September can have certain fees and penalties waived.
Another change to this year’s tax code could mean a higher refund for some North Carolina families.
Here’s what to know about this year’s tax code changes, how to maximize your refund and why it might be delayed.
Fees + penalties waived for some NC taxpayers this year
To assist victims of Hurricane Helene, the N.C. Department of Revenue is waiving penalties and fees associated with tax filing this year for certain residents.
All North Carolina taxpayers will be eligible for penalty relief this year, meaning the state will not assess penalties (such as failure to file a return and failure to pay tax when due) for returns not filed by Sept. 25, 2024, as long as they’re filed by May 1, 2025.
But only certain taxpayers who live in disaster counties, designated by FEMA, will be eligible for interest relief. That means the NCDOR will waive interest accrued from Sept. 25, 2024 to May 1, 2025 for the underpayment of taxes. The change will apply to franchise, corporate and individual income taxes.
Visit ncdor.gov to see if you live one of the qualifying counties.
The deadline for these payments can be pushed to November or December, NCDOR says. For more information, visit NCDOR’s FAQ page for tax relief for victims of Hurricane Helene (ncdor.gov/frequently-asked-questions-tax-relief-victims-hurricane-helene).
The IRS also extended it’s filing deadline for federal individual and business tax returns for the entire state to May 1, 2025.
NC taxpayers may get a higher refund
Another change to the tax code could mean you get a higher refund this year.
A state law that went into effect in January pushes the income tax rate down from 4.5% in 2024 to 4.25% in 2025. In 2026, the income tax rate will drop to 3.99%.
In 2023, North Carolina’s income tax rate was 4.75%.
That means a North Carolina resident who earned $50,000 in 2024 would have their income taxed at a rate of 4.5% (instead of 4.75%, as it was the year before), Roby Sawyers, an accounting professor at NC State University, told The Charlotte Observer.
Sawyers said that this tax rate has gradually dropped over the last decade. Until 2013, the state used a graduated tax rate system, where the tax rate depended on your annual income. Now, North Carolina is one of about 14 states that has a flat income tax rate, Sawyers said, meaning the income tax rate is the same for all taxpayers regardless of income.
“We have consistently gone down,” Sawyers said, noting that other nearby states — such as South Carolina, Virginia and Georgia — have higher income tax rates.
“If you look at our individual tax rate compared to rest of the country, and certainly in the southeast, we’re very, very low,” he said.
How can you get a higher tax refund?
U.S. News & World Report suggests itemizing deductions, claiming credit for energy-efficient home improvements and claiming dependent care expenses, such as day care, before- and after-school programs and summer camps for a higher refund.
Contributing to a traditional individual retirement accounts and health savings accounts are also good ways to maximize your tax savings, according to U.S. News.
What is the fastest way to get a refund?
According to the IRS, the fastest way to get your tax refund is to have it electronically deposited for free of charge into your bank account through direct deposit. Taxpayers can use it to deposit their refunds in up to three accounts.
“Eight out of 10 taxpayers get their refunds by using direct deposit,” the IRS website says. “It is simple, safe and secure. This is the same electronic transfers system used to deposit nearly 98 percent of all Social Security and Veterans Affairs benefits into millions of accounts.”
Combining electronic filing and direct deposit to file early produces the fastest refunds, according to the IRS, and some may be eligible to file electronically for free.
Using other filing software like TurboTax, H&R Block and TaxSlayer can be a convenient way to do your taxes, but they usually charge a fee that can be deducted from your refund.
Why do tax refunds get delayed?
Some tax returns can take longer to process for many reasons, the IRS says, including when a return:
Is sent by mail
Contains errors or is incomplete
Is affected by identity theft or fraud
Was referred to the IRS by the bank due to suspicious activity
Includes a claim filed for an Earned Income Tax Credit or an Additional Child Tax Credit
Includes a Form 8379, Injured Spouse Allocation, which could take up to 14 weeks to process
Needs further review in general
If more information is needed to process returns, the IRS will contact those taxpayers by mail.
This story was originally published February 10, 2025 at 7:00 AM with the headline "NC taxpayers could get a higher refund & waived fees in 2025 with these tax code changes."
