NC Highway Use Tax: What You Need to Know

Tax Rates

North Carolina imposes a highway use tax on vehicles with a registered weight of over 26,000 pounds. This tax is based on the weight of the vehicle and the number of miles traveled in North Carolina. The tax applies to vehicles used for business and personal purposes. The North Carolina Highway Use Tax (HUT) is a separate tax from the federal Heavy Vehicle Use Tax (HVUT).

The North Carolina Department of Revenue uses a weight-distance formula to determine the highway use tax. The tax rate per mile increases with the weight of the vehicle. For example, a vehicle weighing 26,001-40,000 pounds has a tax rate of $0.015 per mile traveled in North Carolina, while a vehicle weighing over 80,000 pounds has a tax rate of $0.27 per mile.

Vehicle owners must file a Highway Use Tax Return and pay the tax due annually. The return is due on the last day of February, and it covers the previous calendar year. For instance, the tax return due in February 2024 covers miles traveled in North Carolina during 2023.

Penalties for failure to file or pay the highway use tax can be severe. These penalties may include interest on the unpaid tax, a percentage-based penalty on the unpaid tax, and even criminal charges for egregious cases.

There are some exemptions from the North Carolina highway use tax. For example, vehicles owned by the federal government, the state of North Carolina, or a political subdivision of the state are exempt. Additionally, certain agricultural vehicles, fire trucks, and ambulances may be exempt from the tax.

Understanding the North Carolina highway use tax is crucial for vehicle owners subject to the tax. Failure to comply with the tax laws can result in significant financial penalties. Vehicle owners unsure about their tax obligations should consult with a qualified tax professional for guidance.

The NC Highway Use Tax is essentially a 'use it or lose it' proposition - if we don't adequately fund our infrastructure, our roads will deteriorate, and our economy will suffer.

Eleanor Kensington

Payment Methods

North Carolina charges a highway use tax (HUT) on vehicles with a weight over 26,000 pounds. This tax is for the privilege of using our state's highways. You can pay this tax in a few ways. We offer online payment options, mail-in options, and even payment through authorized agents. Let's break down each method.

Our online system is the fastest and easiest way to pay. You can pay with e-check or credit card. We accept Visa, Mastercard, Discover, and American Express.

If you prefer traditional methods, you can mail in your payment. We accept checks or money orders made payable to NCDOR. Make sure to include your HUT account number on the payment.

For those who prefer a more personal touch, we have authorized agents across the state. These agents can process your HUT payment for a small fee.

No matter your choice, remember that paying your HUT on time is important. Late payments may result in penalties.

Exemptions

Certain vehicles and uses are exempt from the North Carolina Highway Use Tax. These exemptions aim to alleviate the tax burden on essential services, specific organizations, and unique circumstances. Understanding these exemptions is crucial for vehicle owners and operators in North Carolina. Let's delve into the key exemptions:

• Vehicles used exclusively for agriculture are generally exempt. This includes tractors, combines, and other farm vehicles used primarily for agricultural purposes.
• Vehicles owned by the United States government, the state of North Carolina, or any county, city, or political subdivision are exempt. This exemption covers vehicles used for public purposes.
• Vehicles owned and operated by nonprofit organizations are exempt, but only if the organization holds a valid exemption certificate from the North Carolina Department of Revenue.
• Certain vehicles used for transportation are exempt. This includes school buses, church buses, and vehicles used exclusively to transport passengers for hire.
• Vehicles used for construction and industrial purposes are exempt, but only if they are not used to transport property or passengers for hire.
• Vehicles owned by disabled veterans with specific disabilities may be eligible for an exemption. The exemption has specific requirements, including disability level and vehicle use.
• Vehicles purchased for resale by licensed dealers are exempt. This exemption prevents double taxation on vehicle sales.
• Vehicles owned by members of the armed forces stationed in North Carolina are exempt, provided the vehicle is registered in their home state.
• Vehicles used exclusively for parades, funerals, or other ceremonial events are exempt. This exemption recognizes the unique nature of these events.

It's important to note that these exemptions have specific requirements and limitations. Vehicle owners and operators should consult the North Carolina Department of Revenue or a qualified tax professional to determine their eligibility for an exemption. Understanding and complying with the Highway Use Tax regulations is crucial for all vehicle owners in North Carolina.

Distribution of Revenue

Audits and Penalties

The North Carolina Department of Revenue (NCDOR) takes highway use tax compliance seriously. To ensure everyone pays their fair share, they conduct periodic audits of businesses potentially liable for this tax. These audits delve into your records to verify the accuracy of your reported highway use tax liability.

If the NCDOR's audit reveals underreported or unpaid highway use taxes, be prepared to face penalties. These penalties can include:

Back taxes: You'll have to pay the taxes you owe, plus interest.

Penalties: Expect additional financial penalties for failing to report or pay your taxes on time.

Criminal charges: In cases of intentional tax evasion, you could even face criminal prosecution.

It's crucial to maintain meticulous records of your business operations, especially those related to highway use. These records serve as evidence of your compliance and can be invaluable during an audit.

Here's what you should keep in mind:

Maintain detailed records of your vehicles, including their weight and mileage.

Keep accurate records of all taxable and nontaxable trips.

Ensure your tax returns are filed accurately and on time.

If you're unsure about your highway use tax obligations or need assistance understanding the regulations, don't hesitate to seek professional advice from a qualified tax advisor. They can provide personalized guidance based on your specific business operations and help you stay on the right side of the law.