As of January 1, 2021, military retirees who settle in North Carolina will be exempt from state taxes on their pensions.
The tax exemption comes after the approval of a bill eliminating state tax on military pension income by the North Carolina General Assembly and signed by the Governor. Under the new law, the exemption will apply to veteran survivors, those who medically retired, and retirees who have served in the Armed Forces for a minimum of 20 years. North Carolina joins many other states that exempt military retirees from state income taxes.
Recognizing veterans' service by eliminating pension taxes is a small way to honor those who sacrificed and stood to protect our freedoms. The average military member retires when they are under 45 years of age, with many having more than 20 years of work experience. Many military retirees start businesses - generating payroll and taxes - or go on to civilian careers.
The new law is a great opportunity for military retirees and North Carolina. Since many military retirees go on to serve as educators, first-responders, executives, and community leaders, the law attracts retirees to remain in North Carolina. This creates additional revenue and benefits the overall economy of the state and local communities.