If you live in North Carolina, you may be missing out on valuable state-level tax credits that can reduce your tax bill or increase your refund.
Whether you’re a parent, a retiree, or someone with student loan debt, there are credits built to support your situation—and many go unclaimed every year.
Here’s a breakdown of the North Carolina tax credits available in 2025, how to qualify, and how to claim them correctly.
✅ 1. Child and Dependent Care Tax Credit (CDCTC)
This credit helps working parents offset child care or elder care costs. You may qualify if:
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You paid care expenses for a child under 13 or a dependent adult
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You had earned income during the year
How much?
Up to $525 per child (based on your AGI and expenses). This is in addition to the federal version.
✅ 2. Education-Related Tax Credits
While North Carolina doesn’t have its own version of the federal American Opportunity or Lifetime Learning Credit, you may qualify for:
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529 Plan deductions for NC-sponsored college savings accounts
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Federal education credits (still claimed on your federal return, but they reduce your total state-taxable income indirectly)
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✅ 3. Retirement Savings Contributions Credit (Federal Only)
Though NC doesn’t have a direct credit for retirement contributions, maximizing your Traditional IRA or 401(k) lowers both state and federal tax liability.
Tip: North Carolina does not tax Social Security income, which helps when planning income distribution strategies in retirement.
📌 See how our tax planning services protect retirement income »
✅ 4. Low-Income Taxpayer Credit
North Carolina previously offered a state-level Earned Income Tax Credit (EITC), but that expired. However, federal EITC still applies and can significantly benefit:
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Parents with qualifying children
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Workers earning under $63,398 (2025 limit)
Even if you don’t owe state tax, this could boost your federal refund by over $6,000.
✅ 5. Credit for Taxes Paid to Another State
If you earned income in another state but live in North Carolina, you may qualify for a credit to avoid double taxation.
Example: You live in Charlotte but work part-time in South Carolina. You’ll file both returns—but claim a credit on your NC return for the tax you paid to SC.
✅ 6. Business & Property Credits (Bonus for Entrepreneurs)
If you own a small business, NC offers credits for:
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Investing in renewable energy property
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Qualified R&D expenditures (state-level tie-in to federal research credit)
These apply only in specific industries and require documentation—but the savings can be huge.
📌 Explore the importance of proactive tax planning»
Final Thoughts: Are You Missing Out?
Most tax software doesn’t catch state-level credits—and many accountants overlook them unless you ask. At Polaris, we specialize in finding the overlooked deductions and credits that make a real difference for individuals and families.
📅 Schedule a 1-on-1 consultation to review your eligibility
We serve individuals across Charlotte, Lake Norman, Asheville, and beyond—making sure your return is complete, accurate, and optimized.