North Carolina Taxpayers: 2026 Changes from the Big Beautiful Deal

Some tax rules may change in 2026. If you live in North Carolina, some changes may help more on your federal return than your state return. This post gives a simple overview.

Quick look: What may change in 2026

1) Retirement savings limits go up

• 401(k) / 403(b) / 457 limit: $23,500 to $24,500

• 401(k) catch-up (age 50+): $7,500 to $8,000

• IRA limit: $7,000 to $7,500

• IRA catch-up (age 50+): $1,000 to $1,100

North Carolina note: Pre-tax retirement contributions generally lower NC taxable income if they are excluded from federal wages.

2) Tips and overtime pay

• 2025: taxable wages

• 2026: exempt from federal income tax

North Carolina note: If excluded from federal taxable wages, NC typically follows the federal wage definition, which can reduce NC taxable income. Confirm employer reporting.

3) A new charitable deduction for non-itemizers

• 2025: none

• 2026: $1,000 single / $2,000 married

North Carolina note: NC itemized deductions differ from federal, but this above-the-line benefit improves federal AGI and usually benefits NC if the starting point is federal AGI.

4) SALT deduction cap goes up (federal)

• 2025 cap: $10,000

• 2026 cap: $40,000 (through 2029; phases down above $500k income; indexed +1% annually; reverts to $10k in 2030)

North Carolina note: NC’s itemized deduction rules are more restrictive than federal SALT. Expect most SALT benefit to be federal. Review NC caps and limits before assuming equal NC savings.

5) Mortgage interest and PMI

• 2025: PMI not deductible

• 2026: PMI deductible as mortgage interest (and the limit is described as permanent)

North Carolina note: PMI deductibility is a federal benefit that may not fully carry to NC.

6) Estate and gift exemptions

• Federal estate & gift exemption (per person): $13.99M to $15M (indexed)

• Married couple: ~$27.98M to $30M (indexed)

• Annual gift exclusion: $19,000 to $20,000

North Carolina note: NC does not impose a separate state estate tax, and NC has no separate gift tax.

How this can play out for many North Carolina taxpayers

If you itemize federally because of the $40,000 SALT cap: expect most of that benefit to be federal. NC’s itemized deduction rules are more limited, so NC tax savings will likely be smaller than federal savings. OBBB Overview

If you increase retirement contributions: pre-tax deferrals reduce federal wages and typically reduce NC taxable income.

If you rely on tips or overtime: the federal exclusion lowers your federal taxable income and likely your NC taxable income (confirm reporting).

Estate and gifts: planning opportunities expand federally with higher, indexed exemptions. NC imposes no separate estate tax.

A simple next step: Get your numbers side by side

If you share:

• your filing status

• your income range

• whether you itemize

• your typical property tax and state income tax amounts

We can estimate your federal versus North Carolina savings side by side and highlight where NC conformity may be different.