CD-425: Corporate Tax Credit Summary (2025)
North Carolina · North Carolina DOR · Used for tax years 2025
Form CD-425 summarizes North Carolina corporate franchise and income tax credits taken in 2025. It calculates total credits, including credits carried over from previous years and credits subject to the 50% of tax limit.
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.
What you'll need
Have these forms and schedules available, as applicable:
- Form CD-405 or CD-401S: CD-425 uses franchise tax due from Schedule A, line 2, and income tax due from CD-405, Schedule B, line 23, or CD-401S, Schedule B, line 19.
- Separate supporting schedules: Attach schedules to substantiate any credit taken.
- Form NC-478, Part 3: Use this for credits subject to the 50% tax limit.
- Form NC-Rehab, Part 4: Use line 23 or line 26 for the applicable Article 3L historic rehabilitation credit.
- Prior year's franchise tax liability: This is used for the short-period credit for a change in income year.
How to file
Attach CD-425 to the last page of Form CD-405 or CD-401S if you take a tax credit. Include separate schedules to substantiate the credits.
Transfer the totals to your return:
- Franchise tax credits: Enter CD-425, line 14, on CD-405 or CD-401S, Schedule A, line 4.
- C corporation income tax credits: Enter CD-425, line 30, on CD-405, Schedule B, line 24e.
- S corporations with nonresident shareholders filing composite, or Taxed S Corporations: Enter CD-425, line 30, on CD-401S, Schedule B, line 20e.
The supplied form text does not provide a mailing address or e-filing directions.
Common mistakes
- Including NC-478 carryovers twice: Do not include carryovers of credits taken on Form NC-478 on CD-425, lines 7 or 22.
- Entering historic mill expenses in the wrong year: Enter expenditures or expenses on lines 17a and 18a only if tax year 2025 is the first year the credit is taken.
- Entering the wrong S corporation credit amounts: On lines 15 through 21, S corporations enter only credits attributable to nonresidents filing composite or to Taxed S Corporations.
- Leaving out attachments: Attach CD-425 to the last page of the return and include separate schedules supporting the credits.
- Ignoring handwritten-form guidelines: Use blue or black ink, not red. Do not use dollar signs, commas, or other punctuation marks.
- Using incorrect print settings: Set page scaling to “none,” uncheck Auto-Rotate and Center, and do not print on both sides.
- Sending the wrong pages or copies: Do not include the handwritten-form guidelines page. Submit originals, not photocopies, and do not mix form types.
Questions people ask
What does CD-425 summarize?
It summarizes franchise and income tax credits taken in 2025, including credits not subject to the 50% tax limit and credit totals brought over from Form NC-478.
How are nonrefundable credits limited on this form?
For franchise tax, line 11 is the lesser of total franchise tax due on line 9 or nonrefundable credits on line 10. For income tax, line 26 is the lesser of tax due on line 24 or nonrefundable credits on line 25.
Do C corporations have an income tax credit adjustment?
Yes. C corporations multiply line 28 by 2.25% and enter the adjustment on line 29. They subtract line 29 from line 28 to calculate line 30.
Do S corporations use that same adjustment?
Line 29 is for C corporations only. S corporations with nonresident shareholders filing composite, and Taxed S Corporations, enter the amount from line 28 on line 30.
Where is the short-period franchise tax credit reported?
The credit for a change in income year is reported in Part 1, line 1. That amount is carried to Part 2, line 13, as a refundable franchise tax credit.