Improving Business in the Wilmington Region
Taxes and Incentives
State Income Taxes
Corporate Income Tax
$1.50 per $1,000 of the largest of the following:
- Capital stock, surplus, and undivided profits
- Appraised value of tangible property in NC
- Actual investments in tangible property in NC
Unemployment Insurance Tax
- Standard beginning rate is 1.0%.
- The taxable wage base is $22,300.
- Minimum rate is 0%; Maximum rate is 6.84%; Average rate is 1.7%
- Index Rate is 2.17 per $100 of payroll
- Self-insurance is permitted
- Insurance rates are lower than the standard rates for qualifying firms
- A clear-cut, on the job accident is a condition for benefit compensation
- Free-accident—prevention workshops designed for each product manufactured
- Industrial machinery and equipment is exempt from sales and use tax but is subject to an excise tax. This rate is 1 percent with a maximum of $80 per item.
- Parts and accessories to manufacturing machinery, which include most supplies used in the manufacturing process but not becoming a part of the manufactured product, including pollution abatement equipment, are taxed at 1 percent.
- Purchases of ingredients or component parts of manufactured products are exempt from sales or use tax.
- Packaging containers and items that become part of a manufactured product and are delivered with the product to the customer are exempt from sales and use tax.
- Air courier services; Aircraft manufacturing; Bioprocessing; Financial services, securities operations and related systems development; Motor vehicle manufacturing; Paper-from-pulp manufacturing; Pharmaceutical and medical manufacturing and distribution; Semiconductor manufacturing; Solar electricity generating materials manufacturing; and Turbine manufacturing companies may receive a refund of sales taxes on purchases of building materials, fixtures and equipment if the facility costs at least $50 million in Tier 1 counties and $100 million in Tier 2 and 3 counties.
- Sales of electricity to manufacturers and farmers are exempt from sales and use tax.
- Sales of electricity and eligible business property to an internet datacenter or software publishing datacenter business that invests at least $250 million in private funds are exempt from sales and use tax.
- Piped natural gas is exempt from sales and use tax but is subject to an excise tax. This tax rate is based on the number of therms of gas consumed in a month.
- Fuel purchased by a manufacturer for use in connection with the operation of a manufacturing facility is not subject to the privilege tax.
- Motor vehicles are exempt from sales and use tax but are subject to the highway use tax. Highway use tax is 3 percent of the retail value of the motor vehicle with a maximum tax of $1,500 per recreational vehicle and $1,000 maximum per Class A or B motor vehicles.
- Aircraft and boats are taxed at 3 percent with a maximum tax of $1,500 per item.
- Computer software or digital property that becomes a component part of other computer software or digital property is exempt from sales and use tax.
State Tax Information
Local Property and Sales Taxes
Local property and sales taxes are governed by State law in North Carolina. Counties and municipalities are granted the authority to set ad valorem tax rates annually for real estate and personal property for the jurisdiction, and counties also have limited authority to establish a local sales tax in addition to the state sales tax. Property taxes are based on schedules of values established by each County tax department. Residents or businesses within a municipality are subject to both city and county property tax rates set by the respective governing boards. Residents or businesses outside a municipality are subject only to the property tax rates set by the county, which may include separate fire or EMS district. New Hanover County assesses a fire district tax in addition to the general county property tax, and Pender County assesses a fire and EMS district tax in addition to the general county property tax.
Property Taxes (excluding fire and EMS) as of 2021 per $100 of valuation:
*Each county tax department should be consulted regarding applicable fire and EMS taxes. The New Hanover County Tax Department may be reached at 910-798-7300. The Pender County Tax Department may be reached at 910-259-1221.
For property tax rates for municipalities in:
New Hanover County
Sales and Use Taxes as of 2021:
*The North Carolina general retail sales tax is 4.75% which is included in the sales and use tax shown above. The State has special sales and use tax schedules that apply to purchases of machinery and equipment, and other non-retail products and items. The State of North Carolina Department of Revenue should be contacted for more comprehensive and detailed information regarding state sales and use taxes (910-251-5752; www.dor.state.nc.us)
Tax Credits and Incentives
North Carolina’s targeted, performance-based incentive programs greatly lessen the tax burden and lower the overall costs, helping companies that are locating and doing business here succeed.
County Development Tier Designation
- The North Carolina Department of Commerce annually ranks the state’s 100 counties based on economic well-being and assigns each a tier designation. The 40 most distressed counties are designated as Tier 1, the next 40 as Tier 2 and the 20 least distressed as Tier 3. This tier system is incorporated into various state programs to encourage economic activity in the less prosperous areas of the state.
- Brunswick, and Pender Counties are Tier 3. New Hanover County is a Tier 2 designation.
Job Development Investment Grant
The Job Development Investment Grant (JDIG) is a performance-based, discretionary incentive program that provides cash grants directly to new and expanding companies to help offset the cost of locating or expanding a facility in the state. The amount of the grant is based on a percentage of the personal income tax withholdings associated with the new jobs. To learn more click here JDIG
One North Carolina Fund
The One North Carolina Fund (OneNC) is a discretionary cash-grant program that allows the Governor to respond quickly to competitive job-creation projects. The North Carolina Department of Commerce administers OneNC on behalf of the Governor. Awards are based on the number of jobs created, level of investment, location of the project, economic impact of the project and the importance of the project to the state and region. To learn more click here One NC Fund
Community Development Block Grant, Economic Development Program
The Community Development Block Grant, Economic Development Program (CDBG ED) is administered by the North Carolina Department of Commerce; it provides grants to local governments for public infrastructure development. Funds are administered based on an annual federal allocation to North Carolina from the U.S. Department of Housing and Urban Development (HUD) and are made available to most local governments for economic development projects. Companies cannot apply directly for this funding, but instead work collaboratively with a local government applicant. To learn more click here CDBG Economic Development
North Carolina’s Utility Account provides infrastructure grants to local governments in Tier 1 and Tier 2 counties. The North Carolina Department of Commerce administers the Utility Account. All applications are reviewed and approved by the Secretary of Commerce. To learn more click here Utility Account
Rural Division, Economic Infrastructure Program
The Economic Infrastructure Program is administered by the Rural Division of the North Carolina Department of Commerce; it provides grants to local governments to assist with public infrastructure projects that will lead to the creation of new, full-time jobs. To learn more click here Rural Division, Economic Infrastructure Program
Community Development Block Grant, Building Reuse Program
The Community Development Block Grant, Building Reuse Program (CDBG Building Reuse) is administered by the North Carolina Department of Commerce; it provides funds to renovate and upfit vacant industrial and commercial buildings for economic development purposes. CDBG Building Reuse grants are available to local government applicants that work in conjunction with a company intending to operate in a vacant building. The company’s new or expanding operations must result in the creation of permanent, full-time jobs. To learn more click here CDBG, Building Reuse Program
Rural Division, Building Reuse Program
The Building Reuse Program is administered by the Rural Division of the North Carolina Department of Commerce; it provides grants to local governments for two purposes: the renovation of vacant buildings and the renovation or expansion of a building occupied by an existing North Carolina company wishing to expand in its current location. To learn more click here Rural Division, Building Reuse Program
N.C. Departments of Commerce and Transportation, Joint Economic Development Program
The North Carolina Department of Transportation (NCDOT) works closely with the North Carolina Department of Commerce to provide transportation improvements and infrastructure that will expedite industrial/commercial growth and provide new jobs or retain existing ones. Projects must be approved by both the Secretary of Transportation and the Secretary of Commerce. Funds may be awarded up to $2,500 per new job, with a $400,000 limit per project. To learn more click here NCDOC & Transportation, Joint ED program
North Carolina Department of Transportation Rail Industrial Access Program
The North Carolina Department of Transportation’s (NCDOT) Rail Industrial Access Program uses state funds to help construct or refurbish railroad spur tracks required by a new or expanding company. Program funding is intended to modernize railroad tracks to ensure effective and efficient freight deliveries. Project funding is contingent upon a company’s receiving application approval prior to making a decision to locate or expand its facility in North Carolina. In addition, an award can be made only after confirmation of the availability of matching funds from private and/or local sources. Local governments, community development agencies, railroads and companies themselves are eligible for funds to improve rail access. Approval depends on a variety of factors, including the number of potential new jobs that will be created, the amount of capital investment, rail use and local economic conditions. Grant recipients may receive a maximum of 50% of total project costs, subject to a $200,000 limit per project. To learn more click here NCDOC & Transportation, Rail Industrial Access Program
Workforce Training & Development
Among the most significant questions a company new to North Carolina or expanding in the state must address is how to attract and retain a qualified workforce. No state has greater long-term experience with successful workforce solutions than North Carolina. Its world-class educational system of colleges and universities ensures a robust pipeline of candidates in fields ranging from finance to nanotechnology. Its award-winning community college system provides state-of-the-art training customized to meet an employer’s specific needs. North Carolina’s workforce development system—one of the most comprehensive in the nation—brings employer and employees together by managing recruiting, screening and other necessary pre-employment assessments. To learn more click here Workforce Training & Development
- At no charge, NCWorks Career Centers provide companies with an extensive network of recruiters and recruiting tools. These experienced specialists leverage resources to more efficiently and effectively identify qualified applicants.
- NCWorks Career Centers offer a variety of employment services that help companies find employees with the required skills. Services available at NCWorks Career Centers:
- Computer Access
- Job opening postings
- Job applicant screening
- Qualified candidate referrals
- Space for applicants interviews
- Job fair arrangement
- Reference library for use by companies
- Information on local labor market, prevailing wages, etc.
- Employer workshops on a variety of topics
Available screening services can trim considerable time from the staffing process. Screening services provided at no charge include: Application screening, Employment consultants, Facilities and equipment testing.
Available customized training services provided include: Assessments, Pre-employment Training, North Carolina Community College Customized Training Program, On-the-Job Training (OJT), NCWorks Apprenticeship Program, NCWorks Incumbent Worker Training Grants, Continuing Education Program.
Data Centers Sales & Use Tax Exemptions
- North Carolina provides three sales and use tax exemptions for purchase of the following items related to data centers and their operations:
Electricity and support equipment purchased for a “Qualifying Data Center”
- Electricity and certain business property purchased for an “Eligible Internet Data Center”
- Computer software at a “Data Center”“Data Center” is defined as: A facility that provides infrastructure for hosting or data-processing services and is concurrently maintainable. The power and cooling systems serving the computer equipment must include redundant capacity components and multiple distribution paths. Although the facility must have multiple distribution paths serving the computer equipment, a single distribution path may serve the computer equipment at any one time. To learn more click here Data Centers Sales & Use Tax Exemption
Historic Preservation Tax Credit
Owners or lessees of a “certified historic structure,” as designated by the State Historic Preservation Office or U.S. Department of the Interior’s National Park Service, are eligible for historic preservation tax credits. Credits are available for the rehabilitation of income-producing historic properties and owner-occupied historic residences.A 15% state tax credit for rehabilitation of income-producing certified historic structures is awarded to rehabilitations that qualify for the federal tax credit and spend up to $10 million. A 10% state tax credit for rehabilitation of income-producing certified historic structures is awarded to rehabilitations that qualify for the federal tax credit and are for expenses from $10 million to $20 million. There is also a 5% bonus if the development is within a Tier 1 or Tier 2 county or is located in an eligible targeted investment site. This bonus may be applied for expenses up to $20 million.
- Machinery and Equipment, Sales and Use Tax Exemption – Mill (generally manufacturing) machinery, including parts or accessories as well as specialized equipment for loading or processing, is exempt from sales and use tax, but is subject to a 1% privilege tax, capped at a maximum of $80 per article. For a list of items that are classified as mill machinery, please see Section 58 of the North Carolina Department of Revenue’s Sales and Use Tax Technical Bulletin.North Carolina does not levy a sales and use tax on repairs to industrial machinery or service contracts for mill machinery.
- Electricity, Fuel and Natural Gas, Sales and Use Tax Exemption – Retail sales, as well as the use, storage or consumption of electricity, fuel and piped natural gas sold to a manufacturer are exempt from sales and use tax for use in a manufacturing operation. This exemption does not apply to electricity used at a facility at which the primary activity is not manufacturing. For purposes of the exemption, a “facility” is (1) a single building or (2) a group of buildings that are located on a single parcel of land or on contiguous parcels of land under common ownership. “Facility” also refers to any other related real property contained on the parcel(s) where manufacturing activity occurs.
- Raw Materials, Sales and Use Tax Exemption – Purchases of ingredients or component parts of a manufactured product that become an ingredient or component part of tangible personal property are exempt from sales and use tax. In addition, packaging items that constitute a part of the sale (retail or wholesale) and are delivered with the product to the customer are exempt from sales and use tax.
- Inventory, Property Tax Exclusion -North Carolina and its local governments do not levy a property tax on inventories.Inventories owned by contractors, manufacturers and merchants (retail and wholesale) are excluded from property tax. Inventories are defined as goods held for sale in the regular course of business by manufacturers, retail and wholesale merchants and construction contractors. For manufacturers, the term inventory includes raw materials, goods in process and finished goods, as well as other materials or supplies that are consumed in manufacturing or processing. Inventory also refers to any commodity or part thereof that accompanies and becomes part of the property being sold.
Pollution Control and Abatement & Recycling
- Pollution Control & Abatement Equipment – Pollution control and abatement equipment for manufacturing is exempt from sales and use tax, but is subject to a 1% privilege tax, capped at a maximum of $80 per article. In addition, chemicals purchased by manufacturers to be used in air or stream pollution abatement equipment or processes are exempt from sales and use tax, but are subject to a 1% privilege tax, capped at a maximum of $80 per article.Pollution abatement equipment means any equipment, including parts and accessories, used to eliminate, prevent or reduce air and water pollutants emitted resulting from the manufacturing process. This category also includes equipment used for the purpose of treating, pretreating or modifying any potential solid, liquid or gaseous pollutants that might be harmful, detrimental or offensive to human, animal or plant life or to property. Neither buildings housing such control and abatement equipment, nor equipment used within a building’s interior primarily for health, comfort or safety purposes is eligible for this exemption.Property Tax Exemption North Carolina does not levy property tax on real and personal property that is used exclusively for air cleaning, waste disposal or to abate, reduce or prevent air and/or water pollution. To claim an exclusion on property tax liability, a taxpayer must apply to the county for exclusion during the annual listing period and apply to the North Carolina Department of Environmental Quality for exclusion certification.
- Recycling – The North Carolina Recycling Property Tax Exemption excludes equipment and facilities used exclusively for recycling and resource recovery from property tax liability. For more details and application information, please visit the Solid Waste Section of the N.C. Department of Environmental Quality website.
- Recycling Business Assistance Center, Recycling Business Development Grants – The Recycling Business Assistance Center (RBAC) is a partnership between the state Departments of Environmental Quality and Commerce. RBAC offers a variety of financial tools and incentives for recycling businesses, including tax credits, grants, loans and incentive programs.In an effort to divert materials from the waste stream while supporting company growth, expansion and job creation in North Carolina, RBAC offers Recycling Business Development grants to eligible organizations. Funds are typically used for sustainable investments in equipment and buildings necessary to increase the capacity of a recycling company. Funding is made available through an annual request for proposal process that begins in the fall. Applicants may request a maximum of $40,000 and must provide at least a 50% cash match. For more information, visit the Grants section of the RBAC website.
Foreign Trade Zones
- Foreign trade zones (FTZ), sometimes known as free trade zones, are geographically designated and secured areas that for legal purposes are considered outside of U.S. Customs territory. FTZs offer several economic advantages for companies involved in international trade. North Carolina has four general-purpose FTZs and eighteen active subzones approved for use by individual companies. In addition, three of the zones have successfully transitioned to the Alternative Site Framework (ASF), which greatly simplifies service to users. An ASF has a large, preapproved service area in which the organization in charge of the FTZ, the grantee, can propose new sites. Within this broad service area, which incorporates several counties, the grantee can work with interested companies to establish sites intended for either an individual company’s use or the use of several companies.Foreign or domestic merchandise may enter an FTZ without a formal customs entry document or payment of customs duties or government excise taxes. If the final product is exported from the United States, no customs duty is levied. If the final product is imported into the U.S., duty and excise taxes are due at the time of transfer from the FTZ and formal entry is made into the United States. Duty is paid on the product itself or its imported parts, whichever is lower.
- Foreign-Trade Zone #214 is located in Southeastern North Carolina (SENC) and offers individuals and businesses in 22 counties the opportunity to import foreign goods into a duty-free zone. The N.C. Department of Transportation is the Grantee and oversees FTZ #214 SENC.
What are the Advantages of FTZ #214 SENC?
- FTZ service area encompassing a 24-county region
- Midpoint between Maine and Florida
- Air cargo facility at Kinston Regional Jetport, which can accommodate the world’s largest aircraft
- Located along two major interstate highways with international trucking facilities
- Encompasses rail and aviation facilities at Wilmington International Airport (ILM) and Kinston Regional Jetport (ISO), as well as two sea ports in Wilmington and Morehead City, N.C.
- Skilled workforce, with customized training programs through North Carolina’s Community College System
- Home to three industrial parks in the FTZ magnet sites, Global TransPark, Carven County Industrial Park and Wilmington International Airport, serving businesses in manufacturing and assembly, research, fulfillment centers, and warehousing and distribution, among others.
What is a Magnet Site?
Magnet sites are essentially the same as the current general-purpose zone sites with a warehouse operator that has already been approved within FTZ #214 SENC. A magnet site can be used by many importers.
Current FTZ #214 Magnet sites include:
- N.C. Global TransPark
- Port of Morehead City
- Port of Wilmington
- Craven County Industrial Park
- Wilmington International Airport
What is a Usage-Driven Site?
“Usage-Driven” sites are managed by individual companies that commit to operating within the inventory and reporting requirements of U.S. Customs, after recommendation from FTZ #214 and approval by the U.S. FTZ Board. “Usage-driven” sites are able to be approved in approximately 60 days.
N.C. Biotechnology Center, Economic Development Award
The North Carolina Biotechnology Center collaborates with North Carolina communities to attract life science economic development projects. Its Bioscience Industrial Development team provides industry-specific expertise and resources. The Center also supports community efforts through its Economic Development Award (EDA) Program.The EDA Program provides performance-based grants to local units of government in support of life science company projects. Grants are linked to job creation and retention milestones for specific company projects in the locality of interest. The local government administers the grant and allocates funds to the company to be used for project-related investments providing sustainable benefit to the company and community. The Center partners with both community and company to determine the appropriate use of EDA funds.EDA grants awards are made in amounts of up to $100,000 per project based on project job-creation estimates. As for all of its funding programs, the Center has established an application, review and award process for the EDA Program. Companies and local units of government apply for this program by invitation from the Center’s Bioscience Industrial Development staff. For more information about the North Carolina Biotechnology Center’s Economic Development Award Program, contact Courtney Skunda, Director of Bioscience Industrial Development at the N.C. Biotechnology Center at (919) 549-8887 or [email protected].