You don’t really provide much information to base a conclusion on, but you state the qualifications for the exclusion correctly.
If you meet those requirements, you should qualify for the military exclusion on Line 20 of D-400 Schedule S, 2021 N.C. Adjustments for Individuals.
Note, however, that the deduction doesn’t apply to severance payments received by a member of the Armed Forces who was separated from the military.
Additionally, you wouldn’t qualify if you were a military retiree who deducted the same retirement income on Line 19 under Bailey v. State of North Carolina.
See the North Carolina Individual Income Tax Instructions for more information.
