North Carolina retirement taxes at a glance
| Income | Taxed? | How |
|---|---|---|
| Social Security | No | Social Security and railroad retirement are fully deducted. |
| IRA withdrawals | Yes | Taxable, with no retirement exclusion. |
| 401(k), 403(b) and 457(b) | Yes | Taxable, except Bailey-protected state 401(k) and 457 money. |
| Private pensions | Yes | Taxable. |
| Government pensions | Partly | Exempt in full under Bailey for North Carolina and federal retirement systems if you had five or more years of creditable service by August 12, 1989; otherwise taxable. |
| Military retirement pay | Partly | Exempt with 20 or more years of service or a medical retirement; Survivor Benefit Plan payments to those retirees’ beneficiaries are exempt too. |
| Roth conversions and Roth withdrawals | Partly | Conversions are taxable; qualified Roth withdrawals are not. |
What retirees pay in North Carolina
Five households, priced on the same 2026 tax engine Killion’s planner uses: Social Security plus withdrawals from a traditional IRA, the standard deduction, and every age break the state and federal returns give. Estimates for planning, not tax advice.
| Household | Social Security | IRA withdrawals | North Carolina tax | Federal tax |
|---|---|---|---|---|
| Single, 67 | $24,000 | $20,000 | $289 (0.7%) | $0 |
| Single, 67 | $30,000 | $50,000 | $1,486 (1.9%) | $6,016 |
| Married, both 67 | $42,000 | $40,000 | $579 (0.7%) | $1,295 |
| Married, both 67 | $50,000 | $100,000 | $2,973 (2.0%) | $10,904 |
| Single, 62, before Social Security | $0 | $60,000 | $1,885 (3.1%) | $5,020 |
North Carolina compared with other states
The same two households in each state we cover. In the nine states with no income tax (Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming) both pay $0 of state tax.
| State | Married, 67: $42,000 Social Security, $40,000 IRA | Single, 67: $30,000 Social Security, $50,000 IRA |
|---|---|---|
| Arizona | $0 | $646 |
| California | $0 | $815 |
| Colorado | $0 | $1,139 |
| Maryland | $0 | $964 |
| Massachusetts | $1,490 | $2,245 |
| Michigan | $0 | $0 |
| North Carolina | $579 | $1,486 |
| Ohio | $347 | $682 |
| Pennsylvania | $0 | $0 |
| Virginia | $0 | $1,325 |
2026 rates and senior breaks
North Carolina’s rate: Flat 3.99% for 2026.
- Standard deduction $12,750 single, $19,125 head of household, $25,500 joint, with no extra amount at 65.
Local taxes: No local income tax.
What people get wrong about North Carolina
- Rolling Bailey money into an ordinary IRA loses the exemption.
- Bailey does not cover 403(b) plans, local-government 457 plans or other states’ pensions.
Tax on a 401(k) withdrawal in North Carolina
A single filer aged 60 with no other income, taking one withdrawal in 2026:
| Withdrawal | Federal | North Carolina |
|---|---|---|
| Tax on a $25,000 401(k) withdrawal | $890 | $489 |
| Tax on a $50,000 401(k) withdrawal | $3,820 | $1,486 |
| Tax on a $100,000 401(k) withdrawal | $13,170 | $3,481 |
| Tax on a $200,000 401(k) withdrawal | $36,734 | $7,471 |
Social Security across all fifty states, including the eight that can tax it, is on which states tax Social Security. Required minimum distributions add to this income from 73: see the RMD on $1 million.
The retirement tax calculator, set to North Carolina
Set to a married couple, both 67, with $42,000 of Social Security and $40,000 of IRA withdrawals. Change any input, including the state.
On $82,000 of income, the 2026 tax is about $1,874: $1,295 federal and $579 North Carolina. $20,450 of your Social Security is taxable. The next $1,000 you withdraw from an IRA would cost $224 in tax.
This year’s income sets your Medicare premiums for 2028. See your IRMAA tier.
Figures checked on against NCDOR, 2025 D-401 instructions, NCDOR, the Bailey decision and NCDOR, tax rate schedules.