- North Carolina fully exempts military retirement pay and SBP annuity payments from state income tax for veterans who served at least 20 years or were medically retired — saving military retirees $1,400 to $2,500+ per year at NC’s 3.99% flat rate
- VA disability compensation is completely exempt from North Carolina state income tax at all rating levels — 10% through 100%
- Veterans rated 100% P&T receive a $45,000 homestead exclusion from property taxes on their primary residence — proposed legislation (SB 660) would dramatically expand this to $125,000 in 2026 and up to $500,000 by 2027, but as of mid-2026 the bill has not been enacted
- 100% P&T veterans and veterans rated TDIU receive free disabled veteran license plates, free vehicle registration, and exemption from the motor vehicle personal property tax on one vehicle
- Veterans with a 50% or greater disability rating qualify for lifetime hunting and fishing licenses at significantly reduced rates — as low as $10 to $110 depending on license type
- North Carolina has approximately 720,000 veterans and major military installations including Fort Liberty (formerly Fort Bragg), Camp Lejeune, Seymour Johnson AFB, and Cherry Point — creating strong veteran infrastructure throughout the state
- North Carolina: Strengths and Gaps for Veterans
- Your Federal VA Benefit Baseline
- Income Tax Benefits
- Property Tax Exclusion at 100% P&T
- Pending Legislation: SB 660 and What It Would Change
- Vehicle Benefits
- Hunting, Fishing, and Outdoor Recreation
- Education Benefits
- Employment Benefits
- Veterans Homes and Cemeteries
- Full Stack Example: 100% P&T Veteran in North Carolina
- How to Claim Your North Carolina Benefits
- Frequently Asked Questions
North Carolina has one of the largest active-duty and veteran populations in the Southeast, anchored by Fort Liberty (formerly Fort Bragg), Camp Lejeune, Seymour Johnson AFB, and Marine Corps Air Station Cherry Point. The state’s veteran benefit package is solid but uneven — outstanding for military retirees due to the full retirement pay exemption, and meaningfully helpful for 100% P&T veterans through the property tax exclusion and vehicle benefits, but notably thin for veterans rated below 100% who are not military retirees.
The biggest story in North Carolina veteran benefits in 2025 and 2026 is pending legislation — Senate Bill 660, the Honoring Sacrifice: NC Veterans Relief Act, which would dramatically expand the property tax exclusion from $45,000 to eventually the full home value. That bill remained in committee as of mid-2026 and has not been enacted. This guide reports current law accurately and covers the proposed changes separately so you know what to watch for.
North Carolina: Strengths and Gaps for Veterans
| Category | North Carolina | Notes |
|---|---|---|
| VA disability compensation — state income tax | Fully exempt at all rating levels | Same as all 50 states — federal law controls |
| Military retirement pay — state income tax | Fully exempt (20+ years service or medically retired) | Strong — one of 37 states with full exemption |
| SBP annuity — state income tax | Fully exempt | Strong for surviving spouses |
| Property tax — veterans below 100% | No benefit | Gap vs. Texas (starts at 10%), Florida (starts at 10%) |
| Property tax — 100% P&T | $45,000 exclusion (proposed: up to $500,000 by 2027) | Modest vs. Texas/Florida/Virginia full exemption at current law |
| Vehicle benefits at 100% P&T | Free plates, free registration, personal property tax exemption | Comparable to other states |
| Dependent education | Scholarship for Children of Wartime Veterans (funding limited) | Weaker than Virginia VMSDEP or Texas Hazlewood |
| Outdoor recreation — 50%+ | Discounted lifetime hunting and fishing licenses | Solid; available at reduced but not free rates below 100% |
The honest assessment: North Carolina is an excellent state for military retirees and 100% P&T veterans primarily because of the full retirement pay exemption and the vehicle benefits package. Veterans rated 10% to 90% who are not military retirees receive fewer state-level stacking benefits than they would in Texas, Florida, or Virginia. If SB 660 passes, that picture changes significantly for 100% P&T veterans — but it has not passed as of this writing.
Your Federal VA Benefit Baseline
These are the 2026 monthly VA disability compensation rates for a veteran with a spouse and no children. North Carolina veterans receive these amounts completely free from both federal and North Carolina state income tax:
| VA Rating | Monthly (Veteran Alone) | Monthly (With Spouse) | Annual (With Spouse) |
|---|---|---|---|
| 10% | $175.51 | $175.51 | $2,106 |
| 20% | $346.95 | $346.95 | $4,163 |
| 30% | $537.42 | $601.58 | $7,219 |
| 40% | $774.16 | $856.56 | $10,279 |
| 50% | $1,102.04 | $1,204.66 | $14,456 |
| 60% | $1,395.93 | $1,516.78 | $18,201 |
| 70% | $1,759.55 | $1,900.11 | $22,801 |
| 80% | $2,044.89 | $2,203.46 | $26,441 |
| 90% | $2,297.96 | $2,474.53 | $29,694 |
| 100% | $3,737.85 | $3,938.58 | $47,263 |
Use the VA Disability Compensation Calculator to estimate your specific monthly rate based on rating and dependent status.
Income Tax Benefits
VA Disability Compensation — Fully Exempt
VA disability compensation is completely exempt from North Carolina state income tax at all rating levels. This includes monthly disability compensation, Dependency and Indemnity Compensation (DIC) for surviving spouses, grants for adapted housing or vehicle modifications, and Combat-Related Special Compensation (CRSC). The exemption applies from 10% through 100% with no income limit or phase-out. No application is required — the exemption is automatic.
North Carolina operates a flat income tax rate of 3.99% for 2026 — one of the lower flat rates among states with an income tax. A veteran receiving $22,801 annually at 70% P&T saves roughly $910 in state income tax that would otherwise be owed on equivalent taxable income.
Military Retirement Pay — Fully Exempt
North Carolina fully exempts military retirement pay from state income tax for veterans who served at least 20 years or were medically retired — which covers essentially all recipients of military pension. The exemption has been in effect since January 1, 2021. TSP distributions are not exempt and remain subject to North Carolina income tax.
At NC’s 3.99% flat rate, the annual savings by retirement pay level:
| Annual Military Retirement Pay | NC Income Tax Saved (3.99%) |
|---|---|
| $30,000 | ~$1,197 |
| $45,000 | ~$1,796 |
| $60,000 | ~$2,394 |
| $80,000 | ~$3,192 |
North Carolina’s rate of 3.99% is lower than Virginia’s top rate of 5.75% — meaning the full exemption produces somewhat less absolute savings than Virginia’s $40,000 subtraction at higher income levels, but benefits all retirement pay rather than just the first $40,000. A retiree receiving $80,000 in retirement pay saves $3,192 in North Carolina vs. $2,300 in Virginia (where only $40,000 is subtracted).
SBP Annuity — Fully Exempt
SBP annuity payments received by surviving spouses are fully exempt from North Carolina state income tax with no cap and no income limit — stronger treatment than Virginia (capped at $40,000) and California (capped at $20,000, income-limited). For surviving spouses receiving substantial SBP annuity payments, North Carolina’s unlimited full exemption is a meaningful financial advantage.
Property Tax Exclusion at 100% P&T
Under North Carolina General Statute § 105-277.1C, veterans with a 100% permanent and total service-connected disability rating — or veterans who receive specially adapted housing benefits — can exclude the first $45,000 of appraised value of their primary residence from property taxes. There is no income limit and no age requirement.
Annual Savings by County
North Carolina’s effective property tax rates are moderate — typically 0.7% to 1.1% depending on county and municipality. The $45,000 exclusion produces the following annual savings:
| County / Area | Approx. Effective Tax Rate | Annual Savings on $45,000 Exclusion |
|---|---|---|
| Wake County (Raleigh) | ~0.83% | ~$374 |
| Mecklenburg County (Charlotte) | ~0.87% | ~$392 |
| Cumberland County (Fort Liberty area) | ~0.93% | ~$419 |
| Onslow County (Camp Lejeune area) | ~0.75% | ~$338 |
| Statewide average | ~0.80% | ~$360 |
At current law, the $45,000 exclusion saves a 100% P&T veteran roughly $340 to $420 per year — meaningful but modest compared to the full exemptions in Texas, Florida, and Virginia, which eliminate property tax entirely on the primary residence. This is the most significant gap in North Carolina’s veteran benefit package compared to neighboring states.
TDIU and the Property Tax Exclusion
Veterans receiving TDIU — rated as totally disabled for compensation purposes — qualify for the exclusion if their TDIU determination carries the permanent and total (P&T) designation. Veterans with TDIU but without a P&T designation may not qualify. Review your VA award letter specifically for language confirming both the TDIU status and the P&T designation before applying.
Surviving Spouse Eligibility
The unremarried surviving spouse of a qualifying disabled veteran retains the $45,000 exclusion on the primary residence as long as she remains unmarried and continues using the property as her permanent residence. The surviving spouse of a veteran who died from a service-connected condition also qualifies. Apply at the county tax assessor’s office using Forms AV-9 and NCDVA-9.
Pending Legislation: SB 660 and What It Would Change
Senate Bill 660 — the Honoring Sacrifice: NC Veterans Relief Act — was introduced in the 2025 North Carolina General Assembly session and would dramatically expand the disabled veteran property tax exclusion on a phased schedule:
| Effective Date | Property Tax Exclusion Amount |
|---|---|
| Current law (through June 2026) | $45,000 of appraised value |
| July 1, 2025 (proposed) | $75,000 of appraised value |
| July 1, 2026 (proposed) | $125,000 of appraised value |
| July 1, 2027 (proposed) | Lesser of $500,000 or 100% of appraised value |
The bill would also exempt one primary vehicle from personal property tax for 100% P&T veterans, allow veterans to prequalify for the exclusion before purchasing a home, and establish a $10 million Veterans’ Economic Development Incentive Grant Program for affordable housing and employment programs. If the 2027 provision were enacted, North Carolina would join Texas, Florida, and Virginia in offering effective full property tax exemption for 100% P&T veterans.
As of mid-2026, SB 660 was referred to the Senate Rules and Operations Committee and had not been enacted into law. The $45,000 exclusion remains current law. Veterans should monitor the bill’s progress through the NC General Assembly bill tracker — if enacted, contact your county tax assessor to confirm the updated exclusion amount applies to your account.
Vehicle Benefits
| Benefit | Who Qualifies | Details |
|---|---|---|
| Free Disabled Veteran license plate | Any service-connected disability or TDIU | One free DV plate; includes disabled parking privileges |
| Discounted DV plate (additional vehicles) | Any service-connected disability | Reduced fee for additional DV plates on additional vehicles |
| Free vehicle registration | 100% P&T or TDIU | Complete waiver of annual registration fees for one vehicle with DV plates |
| Motor vehicle personal property tax exemption | 100% P&T or TDIU | Exemption from county personal property tax on one primary vehicle |
| Highway use tax exemption (adapted vehicles) | Veterans receiving VA adapted vehicle grant | No highway use tax on vehicles acquired with VA adaptive equipment grant |
To obtain the Disabled Veteran plate, file Form MVR-33A with your local NC DMV office, accompanied by your DD-214 and VA rating letter. The North Carolina Division of Motor Vehicles requires certification from the NC Division of Military and Veterans Affairs (DMVA) before issuing plates — the DMVA certification step is an additional administrative step not required in all states, so build in extra processing time.
Hunting, Fishing, and Outdoor Recreation
North Carolina’s wildlife benefits for veterans are tiered by disability rating and residency:
| License Type | Who Qualifies | Approximate Cost |
|---|---|---|
| Lifetime Resident Sportsman License (hunting and fishing combined) | 100% P&T NC residents | Free |
| Discounted annual hunting license | 50%+ service-connected disability, NC residents | Significantly reduced — approximately $10–$20 |
| Discounted annual fishing license | 50%+ service-connected disability, NC residents | Significantly reduced — approximately $10–$20 |
| Nonresident reduced licenses | 100% P&T nonresident veterans | Reduced rates — contact NC Wildlife Resources Commission for current pricing |
Apply for hunting and fishing license benefits through the NC Wildlife Resources Commission with your VA disability rating letter. The 50% threshold for discounted licenses is an important benefit for veterans rated below 100% — it is one of the few state-level benefits in North Carolina that applies below the 100% P&T threshold.
North Carolina State Parks does not maintain a dedicated disabled veteran pass program equivalent to the free lifetime passes offered in California, Florida, or Texas, though some parks offer discounted rates for veterans — contact individual parks for current offerings.
Education Benefits
Scholarship for Children of Wartime Veterans
North Carolina administers the Scholarship for Children of Wartime Veterans, which provides financial assistance for up to eight semesters at North Carolina institutions for qualifying dependents. Eligible dependents include children (and in some cases spouses) of veterans who were killed in action, died from service-connected conditions, or are rated 100% permanently and totally disabled.
An important caveat: the program has faced funding limitations in recent academic years. The 2025–2026 academic year saw limited availability due to funding constraints — prospective applicants should verify current availability and funding status with the North Carolina Division of Military and Veterans Affairs (DMVA) before relying on this benefit for enrollment planning. The scholarship does not cover the full cost of attendance at most institutions — it provides a set dollar amount per semester rather than a tuition waiver like Virginia’s VMSDEP or Texas’s Hazlewood Act.
National Guard Tuition Assistance
Members of the North Carolina National Guard may qualify for state tuition assistance at North Carolina public colleges and universities under the North Carolina National Guard Tuition Assistance Program. This benefit applies to currently serving Guard members rather than veterans, but is worth noting for veterans who have transitioned to Guard service after active duty.
Employment Benefits
Veterans’ Preference in State Hiring
North Carolina provides veterans’ preference in state government employment for honorably discharged veterans and disabled veterans. The preference applies at the point of initial hire rather than ongoing promotion decisions. Disabled veterans with a service-connected condition receive enhanced preference compared to non-disabled honorably discharged veterans. Surviving spouses of veterans killed in action also qualify for preference.
Occupational Licensing Credit for Military Experience
North Carolina allows veterans to apply military training and experience toward state occupational licensing requirements. Veterans who held a military occupational specialty equivalent to a licensed civilian trade — HVAC, electrical, plumbing, medical, transportation, and others — can petition the relevant licensing board to credit that experience toward licensure. This reduces or eliminates additional training or examination requirements for veterans entering licensed occupations, accelerating their path to self-sufficiency in the civilian workforce.
Veterans Homes and Cemeteries
North Carolina operates four State Veterans Homes providing skilled nursing care for eligible veterans:
- Fayetteville State Veterans Home — near Fort Liberty
- Kinston State Veterans Home
- Salisbury State Veterans Home
- Black Mountain State Veterans Home
Care costs are subsidized by VA per diem payments and adjusted on an income basis. Veterans with service-connected disabilities receive priority admission. North Carolina also operates four State Veterans Cemeteries providing free burial for eligible veterans and their spouses:
- Western Carolina State Veterans Cemetery — Black Mountain
- Eastern Carolina State Veterans Cemetery — Goldsboro
- Coastal Carolina State Veterans Cemetery — Jacksonville
- Sandhills State Veterans Cemetery — Spring Lake (near Fort Liberty)
Burial in a state veterans cemetery includes the gravesite, opening and closing of the grave, and perpetual care at no cost to the family. Contact the NC DMVA for eligibility and scheduling information.
Full Stack Example: 100% P&T Veteran in North Carolina
Here is the complete annual benefit picture for a 100% P&T veteran near Fayetteville (Cumberland County), North Carolina, who is also a military retiree with a spouse and a $350,000 primary residence. The veteran receives $45,000 annually in military retirement pay:
| Benefit | Source | Annual Value |
|---|---|---|
| VA disability compensation (100%, with spouse) | Federal | $47,263 |
| Military retirement pay — zero NC state tax (full exemption) | Federal + NC | $1,796 in tax savings at 3.99% |
| VA healthcare (no copays at 50%+) | Federal | Variable — replaces private insurance premiums |
| Property tax exclusion ($45,000 off $350K home, Cumberland County ~0.93%) | NC | ~$419 |
| Motor vehicle personal property tax exemption (one vehicle) | NC | Variable by vehicle value — typically $200–$600 |
| Free vehicle registration | NC | ~$50 |
| Free lifetime hunting and fishing license | NC | ~$75/year equivalent |
| Commissary and exchange access (Fort Liberty) | Federal | Variable — estimated $1,000–$3,000/year in savings |
Quantifiable annual total: approximately $49,500+ in compensation and direct savings — primarily driven by the federal disability compensation base. The NC state layer adds roughly $2,500 in direct annual value for this scenario, with the military retirement tax exemption being the largest single state contribution. A 100% P&T veteran who is not a military retiree sees a thinner state benefit stack — approximately $750 to $1,000 in direct annual state savings — which highlights the gap in North Carolina’s benefits for veterans without military pension income.
If SB 660 were enacted at the $125,000 exclusion level for 2026, the property tax savings in this scenario would increase from $419 to approximately $1,163 per year — meaningful but still well below what Texas, Florida, or Virginia provide through full exemption.
How to Claim Your North Carolina Benefits
NC DMVA — Free Veterans Services
The North Carolina Division of Military and Veterans Affairs (DMVA) provides free benefits counseling through County Veterans Service Officers (CVSOs) in all 100 North Carolina counties. CVSOs assist with both federal VA claims and state benefit applications and can certify the NCDVA-9 form required for the property tax exclusion. Find your county VSO through the NC DMVA website or call 1-800-433-0048.
Property Tax Exclusion — County Tax Assessor
To apply for the disabled veteran property tax exclusion:
- Have your County Veterans Service Officer certify Form NCDVA-9 (Certification for Disabled Veteran’s Property Tax Exclusion)
- Complete Form AV-9 (Application for Property Tax Relief) for your county
- Submit both forms to your county tax assessor’s office by June 1 for the current tax year
The June 1 deadline is firm — late applications are not accepted for the current year but can be filed for the following year. Retroactive refunds for prior years are generally not available in North Carolina, making timely filing important.
Vehicle Benefits — NC DMV
Apply for Disabled Veteran plates using Form MVR-33A at your local NC DMV office. The form requires DMVA certification in addition to your DD-214 and VA rating letter — obtain the DMVA certification first through your county VSO before going to the DMV. For the personal property tax exemption on your vehicle, notify your county tax office that you have obtained the DV plate and are eligible for the exemption.
Frequently Asked Questions
As of mid-2026, Senate Bill 660 had been referred to committee and had not been enacted into law. The current property tax exclusion remains $45,000 under existing North Carolina law. Some sources have reported the proposed increased amounts as if they were current law — they are not. If SB 660 passes, the NC DMVA and county tax assessors will notify veterans of the change and the updated exclusion amount should apply automatically to veterans already approved for the exclusion. Monitor the bill’s progress at the NC General Assembly website and contact your county tax assessor if you believe your account has not been updated after any legislative change.
No. The North Carolina military retirement pay exemption applies specifically to uniformed services retirement pay — the monthly pension received from DFAS. Thrift Savings Plan (TSP) distributions — whether traditional or Roth withdrawals from a traditional TSP — are subject to North Carolina state income tax as ordinary income. Roth TSP qualified distributions are tax-free at the federal level, but North Carolina does not provide a separate exemption for Roth TSP withdrawals beyond the federal exclusion. Veterans with significant TSP balances should factor this into retirement income planning — structuring Roth TSP withdrawals alongside exempt military retirement pay can minimize overall North Carolina tax liability.
For military retirees specifically, North Carolina has a meaningful advantage at higher retirement pay levels. Virginia allows a $40,000 subtraction from military retirement pay, saving a retiree at Virginia’s top 5.75% rate approximately $2,300 per year regardless of how high retirement pay goes above $40,000. North Carolina fully exempts all military retirement pay at a 3.99% flat rate — a retiree receiving $80,000 saves $3,192 in North Carolina vs. $2,300 in Virginia on the retirement pay alone. On property taxes, Virginia is significantly more favorable — Virginia provides a full property tax exemption at 100% P&T while North Carolina provides only a $45,000 exclusion. For a 100% P&T veteran with a $500,000 home, Virginia saves $4,100 to $5,000 per year in property taxes while North Carolina saves approximately $400. The right choice depends on retirement pay level, home value, proximity to installations, and personal preference — but the property tax gap favors Virginia substantially for higher-value homes.
Most North Carolina state veteran benefits require North Carolina residency — specifically, that the veteran’s primary permanent residence is in North Carolina. Active duty servicemembers stationed at Fort Liberty, Camp Lejeune, Seymour Johnson, or Cherry Point who maintain a different state as their legal domicile generally do not qualify for NC state veteran benefits like the property tax exclusion or vehicle benefits. However, military pay earned in North Carolina by non-resident active duty servicemembers is exempt from NC income tax under the Servicemembers Civil Relief Act. Veterans who formally establish North Carolina as their domicile and register to vote, obtain an NC driver’s license, and register vehicles in NC can then qualify for NC state veteran benefits going forward.
Funding availability for the Scholarship for Children of Wartime Veterans has been inconsistent in recent years. The program faced funding limitations for the 2025–2026 academic year — meaning some eligible applicants may have received reduced amounts or been waitlisted. Before relying on this scholarship for enrollment planning, contact the NC DMVA directly at 1-800-433-0048 to confirm current funding status, award amounts, and application deadlines for the upcoming academic year. Veterans’ families planning for college expenses should not count the scholarship as a guaranteed funding source without first confirming current availability.
Related Guides
- How to Stack VA + State Benefits — the complete framework for combining federal and state programs
- VA Disability Compensation Calculator — calculate your 2026 federal monthly payment
- Benefits for 100% P&T Veterans — the complete federal benefit list to stack North Carolina benefits on top of
- VA Individual Unemployability (TDIU) — qualifying for 100% pay at a lower rating
- Virginia Veteran Benefits 2026 — stacking guide and NC vs. VA comparison
- Texas Veteran Benefits 2026 — full property tax exemption and Hazlewood Act compared
- Florida Veteran Benefits 2026 — stacking guide for veterans in Florida
- California Veteran Benefits 2026 — stacking guide for veterans in California
This article is provided by MilitaryBenefitGuide.com, an independent educational resource. We are not affiliated with the Department of Veterans Affairs, the North Carolina Division of Military and Veterans Affairs, or any government agency. State benefit programs change — verify current eligibility rules and amounts with the NC Division of Military and Veterans Affairs and your county tax assessor before making decisions based on this information. The status of pending legislation (SB 660) reflected in this article is current as of mid-2026 — confirm current law before making financial decisions based on proposed changes.