Chapel Hill, NC Local Taxes & Fees: Business Tax Classification (2026)
Key Facts
- Schedule A
- State-exempt professions and dealers
- Schedule B
- State-capped rates, §§ 10-151-10-203
- Schedule C
- Flat tax set by council
- Schedule D
- Gross receipts sliding scale, $25-$300
- Multi-activity rule
- Separate license per business activity
Summary
Chapel Hill sorts businesses into four privilege license tax schedules under Code of Ordinances §§ 10-5.1 through 10-5.4. Schedule A businesses are exempt by state law, Schedule B and C businesses pay taxes set by the town council within state limits or as a flat fee, and any business not listed elsewhere falls into Schedule D and is taxed on gross receipts.
Schedule C businesses are those businesses that are not limited by the state's schedule B, and are not charged privilege license taxes based on gross receipts (schedule D). Instead, these businesses are charged a flat tax determined by council. ... All businesses not specifically listed in schedules A, B, or C of this section will fall under the miscellaneous category of schedule D. The rate for the privilege license tax for any schedule D business will be based on the gross receipts of the business.
Full Breakdown
The town's license tax chapter classifies every business operating in Chapel Hill into one of four schedules before it can be taxed. Schedule A, under § 10-5.1, lists businesses the North Carolina General Statutes exempt from town privilege license taxes outright, including licensed professions such as accountants, architects, and physicians, along with certain dealers, utilities, and nonprofit-run camps and day care operations. Schedule B, under § 10-5.2, covers businesses such as automobile dealers, contractors, restaurants, hotels, and pawnbrokers, for which the amount the town may charge is capped by state law, with the specific rates set out in §§ 10-151 through 10-203.
Section 10-5.3 defines Schedule C as businesses not limited by Schedule B and not taxed on gross receipts like Schedule D; instead the town council sets a flat tax, including $500 for escort services and fortune tellers, $50 for mechanical contractors, $25 per vehicle for taxicabs, and $5,000 per location plus $2,500 per machine for electronic sweepstakes operations. Section 10-5.4 catches everything else as Schedule D, taxed on a sliding scale from $25 for gross receipts up to $25,000 to $300 for gross receipts over $3,000,000.
A business with activities in more than one schedule must pay separately for each classified activity under § 10-5.1(c), and gross receipts for Schedule D are computed under § 10-5.5 from the business's own state or federal tax return.
Violations & Fines
Operating without securing the required privilege license, or misclassifying a business to avoid the correct schedule, is enforced through the town's revenue collector, who under § 10-3 requires even an exempt business to obtain a license showing the exemption on its face. Section 10-5(a) ties the license tax to the town council's annually adopted rate ordinance, and unpaid or unlicensed activity remains collectible by the town as a civil debt.
Frequently Asked Questions
How does Chapel Hill decide which privilege license tax schedule my business falls into?
What is the tax rate for a Schedule D business in Chapel Hill?
Do I need a license even if my business type is exempt?
Sources & Official References
Other rules in Chapel Hill
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