Does North Carolina tax Social Security? Retirement income rules
North Carolina is less tax-friendly for retirees. On a typical retirement income it ranks #42 of 51 for the lowest state income tax.
Assumptions behind this comparison
The ranking uses a full-year resident, single filer age 67, with $30,000 Social Security, $20,000 private defined-benefit pension, $20,000 traditional IRA withdrawals under 2026 rules. It models a general private pension and traditional IRA withdrawals. Public or military pension exceptions, early-distribution penalties and itemized deductions require separate checking. Maryland and Indiana estimates include an approximate statewide-average county income tax; other local income taxes are not modeled. A state with no income tax differs from a state that exempts only specified retirement income.
The joint table uses two spouses age 67, with each income category split equally between them. Personal exclusions follow each spouse's own eligible income; some states instead allow a joint cap. The calculator initially assigns household income to you and lets you enter your spouse's actual age and share. Read the source instructions for your pension type.
The rules in North Carolina
- Social Security: North Carolina fully deducts Social Security benefits at any income level.
- Pensions: Private pensions are taxed at North Carolina's flat rate. Qualifying state, local and federal government retirement benefits are excluded under the Bailey settlement when the retiree was vested by August 12, 1989. Military retirement has a separate deduction: qualifying pay after at least 20 years of uniformed service or a Chapter 61 medical retirement, plus qualifying Survivor Benefit Plan payments, can be deducted without Bailey vesting. The calculator uses the general private-pension rule.
- 401(k), 403(b) and IRA withdrawals: 401(k) and IRA withdrawals are taxed. The exception: government 401(k) and 457 plans qualify for the Bailey exclusion if the retiree contributed before August 12, 1989.
Calculate your North Carolina retirement taxes
State income tax in North Carolina: $1,087 a year
In North Carolina, qualifying employer-plan withdrawals can receive the pension exclusion while traditional IRA withdrawals do not. Keep each account in its own field when changing state; the calculator applies the state-specific treatment.
The employer-plan field supports federally taxable private 401(k) / 403(b) retirement distributions owned by someone aged 60 or older. Earlier distributions and Hawaii, Mississippi or Pennsylvania employer-plan scenarios are not calculated; funding or plan retirement eligibility needs a separate check. Enter each amount once; do not include completed rollovers, Roth payments or special public/military plans.
Older shared links did not identify employer-plan withdrawals separately. Pension and IRA amounts have been left unchanged. If an old amount includes 401(k) or 403(b) withdrawals, move that portion into the employer-plan field before comparing states; the tool cannot infer the original account type.
Household totals include taxable private pensions and traditional retirement withdrawals. Other ordinary income means taxable interest and ordinary dividends; capital gains, qualified dividends, tax-exempt interest, wages, Roth distributions and special public or military pension rules need a separate calculation. Disability and survivor eligibility are not assessed by this tool. Age bands represent the listed ages for the full year; midyear eligibility and birth-date exceptions need checking.
Local income taxes are not modeled here, except the approximate statewide-average county rates included when you select Maryland or Indiana.
In North Carolina you'd pay about $1,087 in state income tax and $4,336 in federal income tax on $70,000 of retirement income, keeping $64,577 (7.7% total).
North Carolina ranks #42 of 51 for the lowest state tax on this income. 19 states charge no state income tax on this income.
What retirees pay in North Carolina
| Retirement income | State tax (single) | State tax (married) | Federal tax (single) |
|---|---|---|---|
| $24,000 Social Security, $12,000 traditional IRA withdrawals | $0 | $0 | $0 |
| $30,000 Social Security, $20,000 private defined-benefit pension, $20,000 traditional IRA withdrawals | $1,087 | $579 | $4,336 |
| $40,000 Social Security, $40,000 private defined-benefit pension, $50,000 traditional IRA withdrawals, $10,000 other income | $3,481 | $2,973 | $19,812 |
Age 67, 2026 rules including the federal senior deduction. For the joint column, income is the household total, both spouses are 67, and each owns 50% of every income category. State estimates apply North Carolina's main exclusions and may differ for income-tested credits.
Lower-tax states for the age-67 example
The amounts below use the fixed example above. Comparison links carry the last valid household entered in the calculator, including each spouse's income and age; the destination recalculates that household. Finish correcting invalid entries before using a comparison.
Moving to North Carolina in retirement?
Compare the tax on your Social Security, pension and 401(k)/IRA income, and typical living costs, with the state you'd leave. These are the states most households moving to North Carolina come from (IRS migration data, 2022–2023).
- Florida to North Carolina
- South Carolina to North Carolina
- Virginia to North Carolina
- New York to North Carolina
- California to North Carolina
- Georgia to North Carolina
Frequently asked questions
Does North Carolina tax Social Security?
Not taxed. North Carolina fully deducts Social Security benefits at any income level.
Does North Carolina tax pensions?
Taxed. Private pensions are taxed at North Carolina's flat rate. Qualifying state, local and federal government retirement benefits are excluded under the Bailey settlement when the retiree was vested by August 12, 1989. Military retirement has a separate deduction: qualifying pay after at least 20 years of uniformed service or a Chapter 61 medical retirement, plus qualifying Survivor Benefit Plan payments, can be deducted without Bailey vesting. The calculator uses the general private-pension rule.
Does North Carolina tax 401(k) and IRA withdrawals?
Taxed. 401(k) and IRA withdrawals are taxed. The exception: government 401(k) and 457 plans qualify for the Bailey exclusion if the retiree contributed before August 12, 1989.
Is North Carolina a good state to retire for taxes?
For a single retiree with $30,000 Social Security, $20,000 private defined-benefit pension, $20,000 traditional IRA withdrawals, North Carolina charges about $1,087 in state income tax, ranking #42 of 51 (lowest tax first).
Related
Sources: ncdor.gov, ncdor.gov (2), ncdor.gov (3). Rules reviewed .