As rates of sea‐level rise continue to increase due to climate change, land planners require accurate spatial analyses on the extent and timing of coastal flooding and associated hazards. Digital elevation data used to evaluate coastal vulnerability to flooding are available at various horizontal and vertical resolutions. However, the quality of digital elevation models (DEM) used in environmental assessment can significantly affect the detection of topographic features and the magnitude of hydrological processes. We used lidar elevation data in coastal North Carolina, USA to investigate the effects of horizontal resolution and connectivity on the extent and timing of flooding from sea‐level rise. We found that the rate and extent of inundation were dependent on horizontal resolution and assumptions made on hydrological connectivity. The variation in flood extent was much larger (760 km²) at low sea‐level projections (<0.4 m) than at high sea‐level projections (>∼0.9 m, 114 km²) due to the effect of hydrological corrections on the coarse‐scale DEM and topographic complexity at low elevations. Lidar elevation data provide a significant advance in mapping potential coastal flooding, but the extent and timing of inundation are sensitive to horizontal resolution and the modelling of hydrological connectivity.