Yes, the North Carolina underpayment interest calculation is initially based solely on withholding amounts.
However, as you go through the North Carolina return, you should see an option to try to reduce or eliminate the interest penalty based on the fact that you made estimated payments as well.
The following information is taken from the North Carolina instructions for calculating the underpayment penalty:
Who Must Pay Underpayment Interest.
In general, you may owe underpayment interest if the total of your North Carolina income tax withheld and timely estimated tax payments do not equal at least the smaller of: • 90% of your 2021 tax, or • 100% of your 2020 tax. (Your 2020 tax return must cover a 12-month period)
Exceptions.
You do not have to pay interest on the underpayment of estimated income if any of the following exceptions apply:
• The total tax shown due on your 2021 tax return minus the amount of tax credits and North Carolina tax withheld is less than $1,000. To determine whether the total tax is less than $1,000, complete Part I, Lines 1 through 6.
• You did not have any individual income tax liability for 2020. For purposes of this exception, an individual income tax liability means the amount of tax shown due on the return less any tax credits.
• If you are a farmer or commercial fisherman and your gross income from farming (including oyster farming) or fishing is at least two-thirds of your gross income from all sources for 2020 or 2021 and you file your 2021 North Carolina income tax return (Form D-400) and pay the entire amount of tax shown due by March 1, 2022, you do not owe interest for underpaying estimated tax. Important: If this exception applies, you must enter the letter F in the exception box located next to Line 26e of Form D-400 to avoid receiving an assessment for underpayment of estimated tax.
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