Listed below are some sources of income that should be added to your North Carolina return:
Interest Income From Other State Obligations
North Carolina does not tax interest income from notes, bonds, and other state obligations and political subdivisions from North Carolina; however, North Carolina does tax all interest income from other state obligations even if it is not taxable by the Federal government. This includes exempt interest dividends received from regulated investment companies (mutual funds) to the extent such dividends do not represent interest from obligations of North Carolina or its political subdivisions.
Deferred Gains Reinvested into an Opportunity Fund
NC did not conform to the temporary deferral of income for certain gains timely invested into a qualified Opportunity Fund and this should be added as an addition to income on the NC return.
Section 179 Expense Adjustment
North Carolina did not conform to the increased federal section 179 expense deduction or increased investment limitations. The NC limitations are $25,000 section 179 maximum and $200,000 investment limitation. You are required to add back 85% of the difference between the federal section 179 amount and the state section 179 limit. See the NC DOR website for additional details.
Note: You are allowed to deduct an amount that’s equal to 20% of the section 179 expense deduction that was added to the federal AGI for the next 5 taxable years following the add back.
Adjustment For Bonus Depreciation
North Carolina did not conform to the 100% bonus depreciation on the Federal return for property placed in service in 2022. You are required to add back 85% of the bonus depreciation that was claimed on the federal return.
Note: You are allowed to deduct an amount that’s equal to 20% of the bonus depreciation deduction that was added to your federal AGI for the next 5 years following the add back.
Other Federal Adjusted Gross Income Additions
For information regarding North Carolina's other additions to income, please click here.
To enter these additions on your North Carolina return, follow the steps below:
- State Section
- North Carolina return>Edit (three dots)
- Additions to Income