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Transportation Commerce Tax in NC: What Rideshare and Ground Transportation Businesses Need to Know

Effective July 1, 2025, North Carolina will have a new transportation commerce tax that will significantly impact businesses providing for-hire ground transportation services. This new excise tax specifically targets rideshare platforms like Uber and Lyft, as well as certain other ground transportation service providers. The tax is levied under North Carolina General Statute § 105-187.91 and the North Carolina Department of Revenue has issued a Directive 25-1 describing the new tax. Generally, the tax applies to the gross receipts from ground transportation services provided to individual passengers.

What This Means for Your Business

This new tax creates several considerations for affected businesses:

• Implementation of new accounting procedures to accurately track exclusive versus shared rides.
• Updates to customer-facing platforms to reflect the new tax structure.
• Potential pricing adjustments to account for the additional tax burden.
• Compliance requirements for proper collection and timely remittance.

Important: the obligation to collect and remit this tax falls on the “for-hire ground transportation service provider,” which includes a “transportation network company” and a “taxi service”—not on the individual drivers. Companies meeting these definitions will need to register with the Department of Revenue and implement systems to properly calculate, collect, and remit these taxes to the North Carolina Department of Revenue.

Key Points about Collection and Rates

Here’s what you need to know about collecting the new transportation commerce tax:

• This tax is collected and administered in the same manner as a sales and use tax. Transportation network companies and taxi services should register with the North Carolina Department of Revenue using Form NC-TCR.
• The rate of the transportation commerce tax depends on whether the service is for an exclusive ride or a shared ride.
  • For exclusive rides, where a passenger requests transportation solely for themselves or for companions traveling together, a 1.5% excise tax applies.
  • For shared rides, where passengers are matched with strangers (not traveling companions) who share the same vehicle, a 1% excise tax applies.
• You must collect the tax on your gross receipts from ground transportation services that begin in North Carolina, even if the trip is not completed. The tax applies to all fees or charges associated with the service, except that a voluntary tip that is provided entirely to the driver is excluded from the tax. You must keep records showing that the tip was separately accounted for and distributed entirely to the driver.
• The tax must be clearly and separately stated on your invoices.
• You will be responsible for payment of the tax if you should have collected it from a customer but failed to do so, because the tax is on the provider, not on the customer.

This is a brief overview and summary of the transportation commerce tax and does not address all situations. Young Moore and Henderson lawyers can advise you about how to ensure a smooth transition when the new tax takes effect, and they can help you with your other state and local tax obligations. For assistance, please contact Ash Giri or Reed Hollander.

About the Authors

Ash C. Giri is an associate attorney at Young Moore where he focuses his practice on civil litigation, including business litigation, defense of employment related claims, tort defense, construction litigation, professional liability litigation, and insurance coverage litigation. Contact Ash at Ash.Giri@YoungMooreLaw.com or (919) 861-5089.

Reed J. Hollander is a shareholder at Young Moore and focuses his practice primarily on state and local tax (SALT) controversies, including property tax, sales and use tax and other excise taxes, corporate and individual income tax. Contact Reed at Reed.Hollander@YoungMooreLaw.com or (919) 861-5501.

The information contained in this article is of a general nature and is not intended as, nor should it be relied upon for, legal advice. No action should be taken in reliance upon the information contained in this article without obtaining the advice of an attorney.