CD-429B: Underpayment of Estimated Tax by C-Corporations (2025)
North Carolina · North Carolina DOR · Used for tax years 2025
North Carolina Form CD-429B helps C-corporations determine whether they owe interest on underpaid estimated tax for 2025 and calculate the amount. It compares required installments with payments and credits, then calculates interest for each underpayment period. Keep the form for
Who files this form
C-corporations use Form CD-429B to determine whether they owe interest on underpaid estimated tax and to calculate that interest. Do not attach this form to the corporation’s tax return. Keep it for your records.
A corporation must make estimated tax payments if it reasonably expects North Carolina income tax liability of $500 or more after tax credits. Estimated payments are not required if its tax year is less than four months.
Generally, interest applies if the income tax due on the corporation’s 2025 return is $500 or more and it did not timely pay at least the smaller of:
- 90% of the income tax due on its 2025 return.
- 100% of the income tax due on its 2024 return.
For a large corporation as defined in IRC Section 6655, the test is based on 90% of the income tax due on its 2025 return, not the smaller of the two amounts.
Line 4 gives a specific stopping rule: if 90% of the 2025 net tax due is less than $500, do not complete the form. The corporation does not owe underpayment interest.
When it's due
For the 2025 tax year, Line 7 lists estimated tax installment due dates as the 15th day of the 4th, 6th, 9th, and 12th months of the corporation’s tax year.
For the 2025 underpayment-interest calculation, Line 16 uses the payment date or the 15th day of the 4th month after the close of the tax year, whichever is earlier. This is the endpoint for calculating interest, not a filing deadline for CD-429B.
What you'll need
Have these records and details available:
- The corporation’s legal name and Federal Employer ID Number.
- 2025 Form CD-405, Schedule B: Line 23 for net income tax and Line 24e for tax credits.
- 2024 Form CD-405, Schedule B: Line 23 minus Line 24e for prior-year net tax due. Large corporations instead enter the CD-429B Line 4 amount on Line 5.
- Records of estimated tax paid or credited for each period, including payment dates.
- The applicable interest rate. The form directs you to visit ncdor.gov and search for “interest rate.”
If using the annualized income installment method, attach a schedule showing the installment computations and retain your computations for future reference.
How to file
Do not attach Form CD-429B to the corporation’s tax return. Retain it for your records.
Complete Part 1 to determine whether any installment was underpaid. If Line 12 shows an underpayment in any column, complete Part 2 to calculate interest separately for each installment.
Add Lines 18 through 21 and enter the total on Line 22. Also enter that amount on Form CD-405, Schedule B, Line 31.
Common mistakes
- Attaching CD-429B to the tax return. The form says to retain it for your records instead.
- Completing Lines 10–13 across all columns at once. Complete one column before moving to the next.
- Assuming a later payment or refund eliminates earlier interest. Interest is calculated separately for each installment, so an earlier underpayment may still create interest.
- Applying a payment only to the current installment. Estimated payments first cover any previous underpayment. If there is more than one payment for an installment, make separate computations for each payment.
- Leaving out annualized-method computations. Attach the computation schedule and retain the computations.
- Ignoring handwritten-form guidelines. Use blue or black ink, not red. Do not use dollar signs, commas, or other punctuation marks in entries. Set print scaling to “none,” uncheck Auto-Rotate and Center, and do not print on both sides.
Questions people ask
Can the corporation owe interest even if its return shows a refund?
Yes. Interest is calculated separately for each installment due date. A later payment or a refund does not necessarily eliminate interest for an earlier underpayment.
Can the annualized income installment method reduce interest?
Yes. It may reduce or eliminate underpayment interest. Enter the computed installments on Line 8, attach a schedule showing the computations, and retain the computations for future reference.
Where can I find the interest rate?
The Secretary of Revenue sets the rate semiannually under G.S. 105-241.21(a). Visit ncdor.gov and search for “interest rate.”
How are payments applied when an earlier installment was underpaid?
An estimated tax payment first covers any previous underpayment of a required installment, regardless of which installment the payment was intended to cover.