CD-425: Corporate Tax Credit Summary (2024)
North Carolina · North Carolina DOR · Used for tax years 2024
Form CD-425 is North Carolina’s 2024 Corporate Tax Credit Summary. It summarizes franchise and income tax credits, including credits carried over from previous years, and calculates the total credits taken in 2024.
Who files this form
If you take a tax credit on Form CD-405 or CD-401S, you must attach Form CD-425 to the last page of that return. Attach separate schedules to substantiate each credit taken.
For Part 3, Lines 15 through 21, S corporations enter only credits attributable to nonresidents filing composite or to Taxed S Corporations.
What you'll need
- Form CD-405 or CD-401S, including the tax amounts from Schedules A and B.
- Separate schedules to substantiate any credit taken.
- Form NC-478, Part 3, if claiming credits subject to the 50% of tax limit.
- Form NC-Rehab, Part 4, Lines 23 or 26, if claiming the listed Article 3L historic rehabilitation credits.
- Prior year's franchise tax liability and the number of days in the short period, if claiming the short-period credit for a change in income year.
The form also asks for your legal name and federal employer identification number (FEIN).
How to file
Attach Form CD-425 to the last page of Form CD-405 or CD-401S if you take a tax credit. Include separate schedules supporting any credit taken.
- Enter total franchise tax credits from CD-425, Line 14, on Form CD-405 or CD-401S, Schedule A, Line 4.
- C corporations enter total income tax credits from CD-425, Line 30, on Form CD-405, Schedule B, Line 24e.
- S corporations with nonresident shareholders filing composite, and Taxed S Corporations, enter the Line 30 amount on Form CD-401S, Schedule B, Line 20e.
The supplied form text does not give a mailing address or e-filing instructions.
Common mistakes
- Do not include carryovers of credits taken on Form NC-478 on CD-425, Line 7 or Line 22.
- Enter expenditures or expenses on Lines 17a and 18a only if tax year 2024 is the first year the credit is taken.
- If claiming the historic mill facility credits on Lines 2 or 3, also complete Line 17a or 18a, as applicable, following the first-year rule.
- For handwritten forms, use blue or black ink, not red. Do not use dollar signs, commas, or other punctuation marks.
- When printing, set page scaling to “none,” uncheck Auto-Rotate and Center, and do not print on both sides of the paper.
- Submit originals only, not photocopies of returns. Do not mix form types.
- Do not include the handwritten-form guidelines page with your submission.
Questions people ask
Does CD-425 cover both franchise and income tax credits?
Yes. Parts 1 and 2 cover franchise tax credits, and Parts 3 and 4 cover income tax credits for 2024.
Where do credits subject to the 50% of tax limit go?
Enter the amounts from Form NC-478, Part 3, on CD-425, Line 12 for franchise tax credits and Line 27 for income tax credits.
How are nonrefundable credits limited on this form?
For franchise tax, Line 11 uses the lesser of total franchise tax due on Line 9 or nonrefundable credits on Line 10. For income tax, Line 26 uses the lesser of N.C. net income tax due on Line 24 or nonrefundable credits on Line 25.
Do C corporations have an income tax credit adjustment?
Yes. On Line 29, C corporations multiply Line 28 by 2.5%. They then subtract Line 29 from Line 28 to calculate total income tax credits on Line 30.
Do I need supporting schedules?
Yes. The form requires separate schedules to substantiate any credit taken.