North Carolina generally taxes most private pension retirement income and withdrawals from retirement accounts such as 401(k) and IRA accounts.
However, North Carolina cannot tax certain retirement benefits received by retirees (or by beneficiaries of retirees) of the U.S. government and the state of North Carolina and its local governments as a result of the North Carolina Supreme Court's decision in Bailey v. North Carolina.
What benefits may qualify for this subtraction?
- North Carolina Teachers' and State Employees' Retirement System
- North Carolina Local Governmental Employees' Retirement System
- North Carolina Consolidated Judicial Retirement System
- Federal Employees' Retirement System
- United States Civil Service Retirement System
Important: The exclusion does not apply to retirement benefits paid to former teachers and state employees of other states and their political subdivisions.
Program Entry
Log in and go to:
- State
- Edit (three dots)
- Subtractions from Income
- Enter the amount of taxable retirement benefits that qualify for the Bailey Settlement included on the federal return.
- Continue to save
See also Is my military pension/retirement income taxable to North Carolina?