North Carolina

State Taxes
Education Benefits

Employment Benefits
Unemployment Compensation
Division of Motor Vehicles Benefits
Health Insurance Benefits

Parks and Recreation Benefits
North Carolina Military Resource Locator
Miscellaneous Benefits
U.S. Department of Veterans Affairs (VA) Facilities

Resources

Summary of North Carolina Military and Veterans Benefits: The State of North Carolina offers special benefits for its military Service members and Veterans including property tax exemptions, state employment preferences, education and tuition assistance, vehicle tags, as well as hunting and fishing license privileges. Eligibility for some benefits may depend on residency, military component, and Veteran disability status.

North Carolina Military and Veterans State Benefit Highlights and Eligibility

 What are my North Carolina Military and Veterans State Taxes Benefits?

North Carolina Retired Military Pay Income Taxes: If an individual had five years of creditable service as of August 12, 1989, all military retired pay is exempt from taxes. Effective for taxable years beginning on or after January 1, 2014, there are no deductions available for distributions from private retirement plans or government retirement plans that do not qualify as tax-exempt Bailey benefits.

As a result of the North Carolina Supreme Court's decision in Bailey v. State of North Carolina and the settlement subsequently reached in that case, North Carolina may not tax retirement benefits received by a retiree (or by a beneficiary of a retiree) from qualifying State, local, or federal retirement systems if the retiree was vested in the retirement system as of August 12, 1989. For most government retirement systems, a person is vested if the person had five or more years of creditable service in a qualifying State, local or federal retirement system as of August 12, 1989.
State of North Carolina, Individual Income Tax, Pass-Through Entities, and Withholding Bulletin FEB 2017

Learn more about North Carolina Retired Military Pay Income Taxes

North Carolina State Taxes on U.S. Department of Veterans Affairs Military Disability Retired Pay: Military Disability Retirement Pay received as a pension, annuity or similar allowance for personal injury or sickness resulting from active service in the Armed Forces should not be included in taxable income if any of the following conditions apply:

  • You were entitled to receive a disability payment before September 25, 1975;

  • You were a member of the military (active or reserves) or were under a binding written commitment to become a member on September 24, 1975;

  • You receive disability payments for a combat-related injury. This is a personal injury or sickness that:

    • Resulted directly from armed conflict,

    • Took place while you were engaged in extra-hazardous service,

    • Took place under conditions simulating, including training exercises such as maneuvers, or

    • Was caused by an instrumentality of war.

You would be entitled to receive disability compensation from the Department of Veterans Affairs (VA) if you filed an application for it (the exclusion under this condition equals the amount you would be entitled to from the VA).

All disability payments to Veterans by reason of service in the Armed Forces are not reportable as income for income taxation purposes.
North Carolina Tax Relief Fact Sheet

Learn more about North Carolina State Taxes on U.S. Department of Veterans Affairs Military Disability Retired Pay

Military Survivor Benefit Plan (SBP)/ Reserve Component Survivor Benefit Plan (RCSBP)/ Retired Serviceman’s Family Protection Plan (RSFPP) North Carolina State Tax Benefits: Dividends and all other proceeds except interest on dividends from G. I. insurance policies are exempt from income taxation.

Learn more about Military Survivor Benefit Plan (SBP)/ Reserve Component Survivor Benefit Plan (RCSBP)/ Retired Serviceman’s Family Protection Plan (RSFPP) North Carolina State Tax Benefits

North Carolina State Taxes on U.S. Department of Veterans Affairs Disability Dependency and Indemnity Compensation: Dependency and Indemnity Compensation (DIC) is a tax-free monetary benefit paid to eligible survivors of military Service members who died in the line of duty or eligible survivors of Veterans whose death resulted from a service-related injury or disease.

Learn more about North Carolina State Taxes on U.S. Department of Veterans Affairs Disability Dependency and Indemnity Compensation

North Carolina Tax Relief for Service Members and Certain Veterans: North Carolina offers the following tax benefits to Service members and eligible Veterans:

Cancellation of Certain Assessments and Abatement of Income Tax : Any assessment of income tax due prior to the time a person was inducted into the Armed Forces will be canceled and abated if the Service member was killed while a member of the Armed Forces or is receiving service-connected disability compensation. No interest is payable on refunds made under this section of the law.

Allowances for Service Members : Subsistence and quarters allowances, uniform and equipment allowances, and mustering-out payments are not taxable to the Service member as income. Mileage and per diem allowances for official travel and transportation are excludable from the Service member's income except to the extent that they exceed the travel and transportation expenses.

 Deductions for Service Members : Income tax deduction may be claimed for insignia, swords, aiguillettes, epaulets, campaign bars, cap devices, chinstraps, and the cost of altering uniforms necessitated by change in rank.

Education and Training Allowances : U. S. Department of Veterans Affairs payments made to Veterans enrolled in schools and training establishments under the GI Bill are exempt from income taxation.

Grants for Motor Vehicles : Grants by the U. S. Department of Veterans Affairs for motor vehicles for Veterans who lost their sight, or the use of their limbs are exempt from income taxation.

Grants for Specially Adapted Housing : Grants by the U. S. Department of Veterans Affairs to seriously disabled Veterans for homes designed for wheelchair livings are exempt from income taxation.

Gratuity Pay, Six-Months : The six-month gratuity pay to a beneficiary of a deceased Service member is exempt from income taxation.

Real Property Tax : This program excludes up to the first $45,000 of the appraised value of the permanent residence of an honorably discharged Veteran who has a total and permanent disability that is service-connected or who receives benefits for specially adapted housing under 38 U.S.C. 2101. There is no age or income limitation for this program. This benefit is also available to the unmarried surviving Spouse of an honorably discharged disabled Veteran. See G.S. 105-277.1C for the full text of the statute. Contact your local County Tax Office for applications.

Certain Vehicles : A motor vehicle owned by a disabled Veteran that is altered with special equipment to accommodate a service-connected disability. As used in this section, disabled Veteran means a person as defined in 38 U.S.C. § 101(2) who is entitled to special automotive equipment for a service-connected disability.

Learn more about North Carolina Tax Relief for Service Members and Certain Veterans

 North Carolina Military Spouses Residency Relief Act: The Act prohibits North Carolina from taxing the income earned for services performed in North Carolina by a Spouse of a Service member stationed in North Carolina if:

  • The Service member is present in North Carolina solely in compliance with military orders;

  • The Spouse is in North Carolina solely to be with the Service member; and

  • The Spouse is domiciled in the same state as the Service member.

All three conditions must be met to qualify for exemption.

Learn more about North Carolina Military Spouses Residency Relief Act

Back to top

 What are my North Carolina Military and Veterans Education Benefits?

North Carolina National Guard Tuition Assistance Program (NCTAP) : The North Carolina National Guard Tuition Assistance Program (NCTAP) provides tuition assistance for active members of the North Carolina Army or Air National Guard. Assistance for tuition to qualified members of the NCNG is awarded up to $4,515.02 per academic year. Awards are subject to the availability of funds.
Who is eligible for the North Carolina National Guard Tuition Assistance Program (NCTAP)? In order to qualify for NCTAP funds, the Service Member must be:

  • in good standing with your unit. CANNOT be flagged for any reason.

  • attending a school approved to receive NCTAP funding. Please contact the NCNG Education Services Office to determine if your school meets this criteria.

  • meeting the Satisfactory Academic Progress (SAP) requirements for the approved institution of higher education.

  • an active drilling member of the North Carolina Army or Air National Guard PRIOR to the start date of the term/course(s).

  • an active drilling member of the Army or Air National Guard and meeting the 2 year service obligation. You MUST have 2 years remaining on your contract with the North Carolina Army or Air National Guard at the END of the academic period for which the award will be applied.

  • attending an approved certificate or degree program at an approved institution of higher education approved by the Authority.

North Carolina National Guard Tuition Assistance Program (NCTAP) Eligibility and Application Instructions

Learn more about the North Carolina National Guard Tuition Assistance Program (NCTAP)

 North Carolina In-State Tuition for Non-Resident Service Members: Active-duty members of the armed services are charged in-state tuition while abiding in North Carolina because of their active military duty in the state. This applies to reservists too. "Abiding" means living here, even without intent to make it one's permanent home. If subsequently reassigned outside North Carolina, the members continue to qualify for in-state tuition as long as they remain continuously enrolled in the program they were in prior to reassignment. A dependent relative who shares the abode of a member of the armed services who is in North Carolina on active duty also qualifies for in-state tuition.

Learn more about North Carolina In-State Tuition for Non-Resident Service Members

North Carolina Scholarship for Children of War Time Veterans : Since July 2002, the North Carolina Division of Veterans Affairs has awarded over 5,000 scholarships to the Children of North Carolina Veterans. North Carolina's Scholarship Program was created to show its appreciation for the services and sacrifices of its war Veterans.

The scholarship program is only valid at North Carolina schools. Scholarship recipients attending North Carolina approved private schools shall be granted a monetary allowance. The scholarship is for 8 academic semesters; in which the applicant will have six years to utilize the eight academic semesters.