Retirement income in North Carolina
Varies
Does North Carolina Tax Retirement Income?
Short answer: Yes. Pensions and 401(k)/IRA withdrawals are taxed at North Carolina's flat rate with no general retirement exclusion.
Government pensions: Under the Bailey settlement, state, local, and federal government pensions are fully exempt if the retiree had 5+ years of creditable service (vested) by August 12, 1989. Otherwise they are fully taxed. Pensions, traditional IRA and 401(k) withdrawals are taxable federally either way; Roth withdrawals after 59½ (5-year rule met) are tax-free.
Records to keep: Keep your state return, W-2s and 1099s (1099-R, SSA-1099), and any state credit worksheets. Check your state revenue department's current-year instructions before you file.
Retirement income in North Carolina
Varies
Individuals / Personal Taxes
Yes. Pensions and 401(k)/IRA withdrawals are taxed at North Carolina's flat rate with no general retirement exclusion.
Business justification
Yes. Pensions and 401(k)/IRA withdrawals are taxed at North Carolina's flat rate with no general retirement exclusion. Government pensions: Under the Bailey settlement, state, local, and federal government pensions are fully exempt if the retiree had 5+ years of creditable service (vested) by August 12, 1989. Otherwise they are fully taxed. Pensions, traditional IRA and 401(k) withdrawals are taxable federally either way; Roth withdrawals after 59½ (5-year rule met) are tax-free.
Category
- Personal Tax Deductions