North Carolina’s D-400 Schedule PN is the form part-year residents and nonresidents attach to Form D-400 to separate income earned in North Carolina from income earned elsewhere. It uses two columns, one for total income from all sources and one for the North Carolina share, and produces a percentage that determines how much of the state’s 3.99% tax applies to you.1North Carolina Department of Revenue. Tax Rate Schedules Get the allocation right and you pay tax only on what North Carolina can actually claim.
Who Has to File Schedule PN
Two groups need this schedule:
- Part-year residents who moved into or out of North Carolina during the year. You report all income earned while living in the state, plus any NC-source income earned while living elsewhere.
- Nonresidents who lived entirely outside the state but received NC-source income, such as wages from a job physically located in North Carolina, rent from NC property, or profits from an NC business.
Skipping Schedule PN when it applies is costly. Without it, the Department of Revenue has no way to distinguish your NC income from your total, and it may treat your entire federal adjusted gross income as taxable by North Carolina. That means a larger bill plus possible penalties and interest.
What to Gather Before You Start
Nearly every figure on Schedule PN pulls from documents you already have. Have these on the desk:
- Your completed federal Form 1040 or 1040-SR. It’s the primary data source.
- W-2s, which show wages and which state each employer withheld for.
- Federal Schedules C, E, and F if you had business, rental, or farm income to allocate.
- 1099s for interest, dividends, capital gains, retirement distributions, and other reported income.
- Exact dates of North Carolina residency, if you’re a part-year filer.
- Form D-400 Schedule S, if you have North Carolina additions or deductions that will flow onto Schedule PN.
Part A: Residency Status
The top of the form asks for your name and Social Security number, which must match Form D-400. Part A then asks whether you (and your spouse, if filing jointly) are a part-year resident or a nonresident. Part-year residents enter the specific dates of NC residency.2North Carolina Department of Revenue. 2025 North Carolina Individual Income Tax Instructions If you’re married filing jointly and one spouse was a full-year resident while the other wasn’t, you still complete Schedule PN, and both spouses’ income from all sources goes on the form.
Part B: Allocating Income Across Two Columns
Lines 1 through 15 mirror the income categories on your federal return, each with two columns:3North Carolina Department of Revenue. D-400 Schedule PN – 2024 Part-Year Resident and Nonresident Schedule
- Column A, total income from all sources. These figures transfer straight from your federal return. Joint filers include both spouses’ income even if only one spouse lived in North Carolina.
- Column B, the portion attributable to North Carolina. Enter only income from NC sources or income received while you were living in the state.
The categories run through wages, interest, dividends, state and local tax refunds, alimony received, business income, capital gains, other gains, IRA distributions, pensions and annuities, rental and partnership income, farm income, unemployment, taxable Social Security and railroad retirement, and other income.3North Carolina Department of Revenue. D-400 Schedule PN – 2024 Part-Year Resident and Nonresident Schedule
Line 16 totals both columns. The form then applies North Carolina additions (Lines 17a–17e) and deductions (Lines 19a–19h) that correspond to entries on Schedule S. Line 21 gives you the modified total for each column: totals plus additions minus deductions.
Allocating Income as a Part-Year Resident
If you moved to North Carolina on June 1, wages from your out-of-state job for January through May go in Column A but not Column B. Wages from any job after you became an NC resident go in both. Investment income like interest and dividends follows residency: amounts received while you were an NC resident belong in Column B regardless of where the bank or brokerage is based. Amounts received before the move stay out of Column B unless they came from an NC source.
Allocating Income as a Nonresident
Nonresidents put in Column B only income with a clear geographic link to North Carolina: wages for work physically performed in the state, rent from NC property, profits from a business operating in the state, and gambling winnings from NC venues. Interest from a national bank or dividends from a publicly traded company generally don’t count, even if the company is headquartered in North Carolina.
When Schedule PN-1 Is Required
If you enter any amount on Line 17e (other additions) or Line 19h (other deductions), you must also attach Schedule PN-1. It breaks out items that don’t have their own lines, such as federal net operating loss deductions, 529 plan withdrawal penalties, S corporation built-in gains tax, and income from pass-through entities.2North Carolina Department of Revenue. 2025 North Carolina Individual Income Tax Instructions Attach both pages even if you only need one; the Department of Revenue warns that missing pages may delay processing.
Part C: The Percentage That Goes on Form D-400
This is where the schedule earns its keep.
- Line 22: the amount from Column B, Line 21 (your NC-source modified income).
- Line 23: the amount from Column A, Line 21 (your total modified income).
- Line 24: Line 22 divided by Line 23, rounded to four decimal places.
Line 24 is your NC taxable percentage, and it transfers to Line 13 of Form D-400.2North Carolina Department of Revenue. 2025 North Carolina Individual Income Tax Instructions It multiplies against tax calculated on your full income, so a percentage of 0.6500 means you pay 65% of what a full-year resident with the same total would owe. In unusual cases where NC additions push Column B above Column A, the percentage can exceed 100%. If Line 22 or Line 23 is negative, fill in the circle next to the line.
Check the division twice. A misplaced decimal turns a 65% ratio into 6.5% or 650%, and the Department of Revenue’s systems will flag it and send a notice.
Income That Gets Special Treatment
Social Security and Railroad Retirement
North Carolina does not tax Social Security or railroad retirement benefits.4North Carolina Department of Revenue. Social Security and Railroad Retirement Benefits If those amounts are in your federal AGI, you deduct them on Schedule S, Part B, Line 19, and that deduction flows onto Schedule PN, removing the benefits from both columns.
Military Retirement Pay
North Carolina fully exempts military retirement pay for service members who served at least 20 years or were medically retired under 10 U.S.C. Chapter 61, along with survivor benefit payments under 10 U.S.C. § 1447. The deduction has been available for tax years beginning on or after January 1, 2021.5North Carolina Department of Revenue. Military Retirement It runs through the adjustment lines and reduces your NC taxable percentage.
Military Spouse Income
Under the Military Spouses Residency Relief Act, a service member’s spouse can exclude income earned for services performed in North Carolina if three conditions are met: the service member is in the state solely under military orders, the spouse is in the state solely to be with the service member, and the spouse shares the service member’s legal domicile, or elects to under the Veterans Benefits and Transition Act of 2018.6North Carolina Department of Revenue. Frequently Asked Questions Regarding Military Spouses
The exemption covers wages, salaries, tips, and other pay for personal services. It does not cover rental income from NC property, gambling winnings from NC venues, or income from a partnership or S corporation with NC sources. Qualifying spouses leave the exempt wages out of Column B and still put the Line 24 percentage on Form D-400, Line 13. Even if all your income qualifies, you need to file an NC return to recover any tax your employer withheld.6North Carolina Department of Revenue. Frequently Asked Questions Regarding Military Spouses
Submitting Schedule PN with Your Return
Schedule PN attaches to Form D-400. Two ways to file:
Electronically
Tax software handles the attachment. North Carolina’s NC Free File program includes options that support part-year residents and nonresidents, not only full-year residents.7North Carolina Department of Revenue. NC Free File Returns filed electronically in January or February typically produce refunds within about five weeks of early March; March returns can take up to six weeks.8North Carolina Department of Revenue. The Refund Process
By Mail
Clip Schedule PN, and Schedule PN-1 if it applies, behind Form D-400. The mailing address depends on whether you owe or expect a refund:9North Carolina Department of Revenue. When, Where, and How to File Your North Carolina Return
- Refund expected: NC Department of Revenue, PO Box R, Raleigh, NC 27634-0001.
- Payment enclosed: NC Department of Revenue, PO Box 25000, Raleigh, NC 27640-0640.
Paper returns take longer to process.
Deadline, Extension, and Penalties
Schedule PN is due when Form D-400 is due. For tax year 2025, that’s April 15, 2026, with paper returns postmarked by that date.10North Carolina Department of Revenue. NCDOR Urges Taxpayers File April 15 Deadline You can request a six-month extension with Form D-410, which moves the filing deadline to October 15.11North Carolina Department of Revenue. Extensions If you already have an automatic federal extension, North Carolina honors it, so a separate D-410 isn’t required.12North Carolina Department of Revenue. D-410, Application for Extension for Filing Individual Income Tax Return The extension covers filing only, not payment. Estimate and pay by April 15 to avoid penalties and interest.
Failure to file by the deadline (including extensions) draws a penalty of 5% of the tax due per month or partial month, up to 25%.13North Carolina General Assembly. North Carolina Code 105-236 – Penalties; Situs of Violations; Penalty Disposition Failure to pay when due adds 2% per month, capped at 10%. A negligent failure to comply carries a 10% penalty on the deficiency; understating taxable income by 25% or more of gross income raises that to 25%. Errors on Schedule PN that significantly understate the NC portion of your income can land in either category, which is reason enough to take the Column B allocation seriously.
If you must make estimated tax payments because your liability after withholding and credits is $1,000 or more, and you underpay, the Department of Revenue charges interest on the shortfall. Interest doesn’t apply if you had no tax liability in the prior year.14North Carolina Department of Revenue. Estimated Income Tax Form D-422 calculates any underpayment interest owed.