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2026 rules · verified against North Carolina's primary source
North Carolina fully exempts military retirement pay from state income tax.
Military retirees who served at least 20 years or were medically retired (or qualify under the Bailey settlement) may deduct 100% of military retirement pay; effective tax year 2021.
Treatment
fully exempt
Top marginal rate
3.99%
Source: https://www.ncdor.gov/taxes-forms/individual-income-tax/filing-topics/military-retirement · verified July 2026
Estimated North Carolina state income tax on your military retirement, using the top marginal rate on the taxable portion (an upper bound; your effective rate is usually lower).
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