VA Disability Tax Rules in North Carolina

VA disability compensation is tax-free at the federal level. North Carolina has a state income tax, but VA disability compensation is generally excluded from taxable income.

North Carolina income tax treatment

• North Carolina has a flat personal income tax.
• VA disability compensation itself is generally not taxed as state income.
• If you also receive taxable retirement distributions, review filing rules with NCDOR.

Property tax exemptions for disabled veterans in North Carolina

North Carolina offers a Disabled Veteran Homestead Exclusion.

• The first $45,000 of assessed value of a qualifying permanent residence may be excluded from property tax.
• Generally applies to qualifying veterans with permanent and total service-connected disability and eligible surviving spouses.
• Applications are filed with the county tax office (deadline timing matters).

Other veteran-related tax benefits in North Carolina

• North Carolina provides additional military/veteran tax benefits in certain categories (such as military retired pay treatment and related exclusions).
• County-level relief programs may differ.

For complex scenarios, check with your county tax assessor and the North Carolina Department of Revenue.

Track your VA income and net worth in one place

Nova helps veterans track tax-free VA income as part of monthly cash flow and total net worth growth.

Related reading

• VA benefits and net worth: complete guide
• TSP optimization for military retirement
• How to calculate net worth