Motor carrier taxes - North Carolina

Sales & use taxes

North Carolina imposes a sales and use tax within the state. The sales tax applies to the sales price of each article of tangible personal property. In instances where the correct amount of sales tax has not been paid on taxable tangible personal property, use tax is due. Items subject to use tax include tangible personal property, certain digital property, and taxable services.

Motor vehicle service contracts are exempt from the sales and use tax. Interstate carriers are, however, subject to sales or use tax on all purchases of tangible personal property for storage, use, or consumption in North Carolina. Interstate carriers may obtain a refund for a portion of the state and local sales tax on purchases of fuel, lubricants, repair parts, accessories, service contracts other than motor vehicle service contracts, and repair, maintenance, and installation services for motor vehicles. Refunds may be claimed on Form E-581, Interstate Carrier Claim for Refund State and County Sales and Use Taxes.

North Carolina also collects a highway use tax (instead of a sales tax) on vehicles whenever a title is transferred. Commercial vehicles greater than 26,000 pounds are subject to a maximum tax of $2,000. The general highway use tax rate for vehicles is 3 percent.

If a vehicle purchased out-of-state is owned for less than 90 days before applying for a North Carolina title, tax credit against the highway use tax is allowed upon submission of proof of payment. If a vehicle purchased out-of-state is owned for more than 90 days before applying for a North Carolina title, no credit is allowed.

Franchise/Gross receipts taxes

Domestic and foreign corporations incorporated or domesticated and doing business in the State of North Carolina are subject to a franchise tax. Motor carriers operating solely in interstate commerce may be exempt from the franchise tax in some cases.