It depends on your years of service or separation reason.
A retired member of the United States Uniformed Services or their eligible beneficiary may deduct the following Part B. Deductions from Federal Adjusted Gross Income (If you have items of
income that are included in federal adjusted gross income but are not taxable to North Carolina, complete Lines 17 through 41.) Page 19 payments received from the United States government in 2022:
• Uniformed Service retirement payments received by a retired member who served at least 20 years in the Uniformed Service or who was medically retired from the Uniformed Service. Note: The deduction does not apply to severance payments received by a person due to separation under 10 U.S.C. Chapter 61.
• Payments from the Survivor Benefit Plan to a beneficiary of a retired member who served at least 20 years in the Uniformed Services or who was medically retired from the Uniformed Services.
Important: Retirees of the United States Uniformed Services who deducted retirement income on Line 20 under Bailey may not deduct the same retirement income on Line 21.
Please see North Carolina Individual Income Tax Instructions (pgs. 18 - 19)
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