VFW NC News Release (NC Military Retirees Losing Tax Exemption)

Elree Smith

esmith@8623@nc.rr.com

Ernest E. Allis

eea1182@aol.com

 

VFW Webmail News Release

 

For Immediate Release

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NC Military Retirees Losing Tax Exemption

NC General Assembly Eliminates Benefit in HB 998

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Raleigh, NC (July 23, 2013) – The NC General Assembly eliminated the tax exemption for military retirees who had the first $4000 of their retirement income free from state tax in North Carolina making our state not so veteran friendly beginning this tax year. Retirees’ income from military government pensions will now be subject to full dollar income taxation.

 

Certain retirees whose pensions and retirement income fall under the protection of the 20-year-old court settlement known as the Bailey Act remain exempt providing they do not re-characterize their Bailey pension income into another type of retirement plan subject to taxation. Discuss with your tax professional when filing your 2014 NC return as HB 998 should not affect your Bailey pension income. However, for those who have retired and enjoyed that first $4000 of tax-exempt income will no longer reap the benefit in the upcoming tax year.

 

What may soften the blow are the increases in standard deductions, but some quick math will tell you that the increases will not be as lucrative as the first $4000 fully exempted from taxation. Increases in the standard deduction-currently ranging from $3,000 to $6,000 will have a new range of $7,500 to $15,000:

    • $15,000 for married taxpayers filing jointly.
    • $12,000 for head-of-household filers.
    • $7,500 for single and married taxpayers filing separately.

 

While most military retirees in North Carolina will feel the pinch of the new tax changes, those in the private sector will share the pain, too.  Last year private sector retirees had their first $2000 of income exempted. Under HB 998 that relief will no longer be available.

 

Also called the Tax Simplification and Reduction Act it remains unclear how simple our tax structure will become; or if the reduction will be in the number of military retirees considering residency in our state. Contact your local representative to offer your views and opinions.

 

 

About Smith and Allis

Elree Smith, US Army Special Forces – Vietnam, has served our state combat veterans as a past VFW Department Commander and recently retired from his position as a VFW National Legislative Committee Member representing North Carolina in DC.

 

Ernie Allis, US Army National Security Agency – Vietnam, past VFW Department Commander serves veterans in our state as current VFW National Legislative Committee Member for North Carolina in DC.

 

Both continue to support veterans’ issues in our state with elected officials and through Veterans Service Organization initiatives. With personal and professional accomplishments, these two veterans bring their unique brand of leadership and unity to issues they endorse on behalf of all North Carolina veterans. Contact them or your local VFW Post to learn more about membership and eligibility.