North Carolina does not tax Social Security benefits. Regardless of your age, income level, or filing status, your Social Security retirement, disability, or survivor benefits are fully exempt from NC state income tax. You do not need to add Social Security income to your NC taxable income on Form D-400.
That's the state picture. Federally, however, up to 85% of your Social Security benefits may be subject to federal income tax depending on your total income. This guide explains both, with specific thresholds and examples for NC residents.
NC State Tax: Social Security Is Fully Exempt
North Carolina excludes Social Security benefits from state taxable income. This applies to:
- Social Security retirement benefits
- Social Security Disability Insurance (SSDI) benefits
- Survivor benefits paid to a spouse or dependents
- Supplemental Security Income (SSI)
When you file NC Form D-400, Social Security income is not included in your NC taxable income calculation. You don't need to claim a special deduction — it's excluded from the start. NC's flat 3.99% income tax rate (tax year 2026) does not apply to any Social Security income, regardless of amount. A retiree with $200,000 in combined income still owes zero NC tax on their Social Security.
Federal Tax: Up to 85% of Benefits May Be Taxable
The federal government uses a "combined income" formula to determine how much of your Social Security benefits are subject to federal income tax. Unlike NC, the IRS does not fully exempt Social Security — though many lower-income retirees owe nothing federally either.
Combined income = Adjusted Gross Income (AGI) + Nontaxable interest + ½ of your annual Social Security benefits
| Filing Status | Combined Income | % of SS Benefits Federally Taxable |
|---|
| Single / Head of Household | Under $25,000 | 0% |
| Single / Head of Household | $25,000 – $34,000 | Up to 50% |
| Single / Head of Household | Over $34,000 | Up to 85% |
| Married Filing Jointly | Under $32,000 | 0% |
| Married Filing Jointly | $32,000 – $44,000 | Up to 50% |
| Married Filing Jointly | Over $44,000 | Up to 85% |
"Up to 85%" means a maximum of 85% of your benefits are included in federal taxable income — not that 85% is the tax rate. The actual federal tax you pay on that amount depends on your bracket.
Combined Income Examples for NC Retirees
Example 1: Single Retiree, Modest Income
Margaret receives $18,000/year in Social Security and $12,000 from a part-time job. Her combined income: $12,000 AGI + $9,000 (½ of SS) = $21,000. This falls under the $25,000 threshold — none of her Social Security is federally taxable. NC tax: $0 on her SS regardless.
Example 2: Married Couple with Pension Income
Robert and Linda receive $28,000 combined in Social Security and $35,000 from Robert's pension. Combined income: $35,000 AGI + $14,000 (½ of SS) = $49,000. This exceeds the $44,000 MFJ threshold — up to 85% of their SS ($23,800) is included in federal taxable income. NC: the pension may be partially exempt under the retirement income exclusion; their SS is fully NC-exempt either way.
How to Report Social Security on Your NC Return
Your Social Security benefits are reported on Form SSA-1099, mailed by the Social Security Administration each January. Box 5 shows your net benefits for the year.
On NC Form D-400:
- Social Security benefits are not entered as income — they are excluded from NC gross income entirely
- If a portion of your SS is federally taxable (reported on line 6b of Form 1040), that amount is included in your federal AGI — but NC subtracts it back out through the Social Security exclusion
- No separate worksheet is required on the NC return for Social Security; the exclusion is built into NC's starting-point adjustment from federal AGI
Tax software handles this automatically. If filing manually, confirm your NC taxable income does not include any Social Security amount.
Other NC Retirement Income Tax Benefits
The Social Security exemption is one of several NC retirement tax advantages:
- Retirement income exclusion: NC allows a $35,000 exclusion ($65,000 if both spouses are 65+) for qualifying retirement income including pensions, 401(k) distributions, and IRA withdrawals — in addition to the SS exclusion.
- Bailey Settlement: Military and government retirees who vested in a retirement system on or before August 12, 1989 can fully exclude retirement pay from NC tax. See our NC Military Pay and Taxes guide.
- Railroad Retirement: Tier 1 Railroad Retirement benefits are treated like Social Security and are fully exempt from NC income tax.
- No income-based phaseout: Unlike some states that phase out the SS exemption at higher incomes, NC's exclusion is unconditional at every income level.
For a full picture of how retirement income is taxed in NC, see our NC Retirement Income Taxes guide.
Frequently Asked Questions
Does NC tax Social Security disability (SSDI)?
No. SSDI benefits are treated the same as retirement Social Security — fully exempt from NC state income tax. Federally, SSDI follows the same combined income thresholds as retirement SS benefits.
Do I need to file an NC return if Social Security is my only income?
If Social Security is your only income, you likely have no NC filing requirement — SS is excluded from NC taxable income entirely. If you have other income (pension, IRA withdrawals, part-time wages) that exceeds the NC standard deduction ($12,750 single / $25,500 MFJ for tax year 2025), you'll need to file. Your SS income still won't be taxed, but the return is required.
If I move to NC from a state that taxes Social Security, do I still owe that state?
Once you establish NC as your domicile, you owe NC income tax on income earned after your move — and NC doesn't tax SS. Your prior state may tax SS for the portion of the year you lived there, depending on their rules. After establishing NC residency, your SS is fully protected from state income tax going forward.
Does NC tax Social Security survivor benefits?
No. Survivor benefits paid to a spouse, child, or dependent under the Social Security program are exempt from NC state income tax, the same as retirement and disability benefits.
Related: NC Retirement Income Taxes Guide | How to Open a Roth IRA in NC | NC 401(k) Planning Guide
