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If I'm retired military, do I have to pay North Carolina tax on my military pension?
North Carolina doesn't tax certain retirement benefits U.S. government retirees receive. This includes military retirees. To receive the exclusion, both of these must apply:
If you’re entitled to exclude retirement benefits from North Carolina tax:
You might be able to exclude all your retirement benefits. If so, you must still file a North Carolina return if you meet the minimum filing requirements. These are usually based on your federal adjusted gross income (AGI).
If you don't qualify for that exclusion, you can still deduct up to $4,000 on Form D-400, Line 48. You can deduct up to $8,000 if both of these apply: