Bill > H387

This bill amends North Carolina's tax code to provide a comprehensive tax exemption for retirement income from government retirement plans. Specifically, the legislation expands existing tax deduction provisions to allow taxpayers to fully deduct income received from North Carolina state government retirement plans, North Carolina local government retirement plans, and federal government retirement plans. The bill removes previous language that limited such deductions to specific court settlement cases (Bailey v. State, Emory v. State, and Patton v. State) and instead creates a broader exemption for government retirement plan income. The tax exemption will take effect for taxable years beginning on or after January 1, 2026, which means retired government employees will be able to exclude their retirement plan income from state income tax calculations starting in the 2026 tax year. This change is designed to provide financial relief and additional tax benefits to government retirees in North Carolina by reducing their state tax burden.

Government Affairs

https://www.ncleg.gov/BillLookUp/2025/H387