North Carolina Retirement Tax Calculator 2026
Social Security is exempt, but NC taxes pensions and 401(k) withdrawals at a flat 3.99%. Enter your income to see your NC retirement tax bill.
How to Use This Calculator
Tab "Tax on My Retirement Income"
Enter your Social Security benefit, pension income (select whether it qualifies for the Bailey Settlement), 401(k)/IRA withdrawals, other income, filing status, and age. The calculator applies North Carolina's flat 3.99% rate to your taxable retirement income after the standard deduction. Social Security and Bailey-qualifying pensions are automatically excluded.
Tab "What's Exempt?"
A clear breakdown of which retirement income sources North Carolina exempts and which are fully taxed. Social Security is exempt. Bailey Settlement pensions (government employees vested before August 12, 1989) are exempt. Private pensions, 401(k)/IRA withdrawals, and military pay are fully taxed at 3.99%.
Tab "Compare States"
See how North Carolina stacks up against Florida, Georgia, Pennsylvania, and California for a typical retiree with $65,000 in income. NC's flat-rate taxation of pensions and 401(k) puts it behind several neighboring and popular retirement states.
North Carolina Retirement Tax Rules
Standard Deduction:
Single / Head of Household: $12,750
Married Filing Jointly: $25,500
Social Security: Fully exempt — not taxed at all
Pensions: Fully taxed at 3.99% (no exclusion for private pensions)
Bailey Settlement Exception: Federal, state, and local government pensions where the retiree was vested (5+ years of creditable service) before August 12, 1989 are fully exempt. This comes from the Bailey v. State of North Carolina court settlement.
401(k) / IRA: Fully taxed at 3.99%
Military Retirement: Taxed at 3.99% (no special exclusion beyond Bailey eligibility)
Local Income Taxes: None — no city or county in NC levies a local income tax
North Carolina uses a flat income tax, meaning all taxable income above the standard deduction is taxed at the same 3.99% rate regardless of amount. Unlike states with progressive brackets, there is no higher rate for larger retirement incomes.
Example
$65,000 Retirement Income — Single, Age 68
With $65,000 in total retirement income, the $30,000 in Social Security is fully exempt. The remaining $35,000 in pension and 401(k) income is reduced by the $12,750 standard deduction, leaving $22,250 taxable at 3.99% = approximately $888 in NC state tax. If this pension qualified under the Bailey Settlement, the entire amount would be exempt and the NC tax bill would be $0.