(The Center Square) – Tax relief for North Carolina's military veterans took a step forward after the House overwhelmingly supported eliminating the state income tax on military retirement pay.
House Bill 83 would allow retired service members who served at least 20 years to deduct any retirement pay they receive from the federal government from state income taxes. The law also would allow survivors of service members to deduct survivor benefits received from the federal government.
“By eliminating the income tax on military retirement pay, we will also make our state more competitive in attracting and recruiting these highly trained and qualified military retirees,” bill sponsor Rep. John Szoka, R-Cumberland, said in a statement after the House voted Wednesday, 100-5, in favor of the bill. “This is an essential component to developing and growing North Carolina’s talented workforce.”
The legislative fiscal note on the bill estimated the state would lose more than $200 million in income tax collections over the next five fiscal years. House Republicans said studies indicated more military retirees moving to North Carolina would offset the cost of the legislation within a few years.
Twenty-one other states do not tax military retirement pay. Nine other states do not have state income taxes.
The bill now heads to the North Carolina Senate for consideration.