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Bill

HB 387

Eliminate Tax on Government Retirees.

2025-2026 Session Introduced by Pricey Harrison and 4 co-sponsors

HB 387 exempts government employee pensions and retirement income from North Carolina state income tax, reducing state revenue while providing tax relief to public sector retirees.

Passed 1st Reading
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WeVote Research Nonpartisan
Bill Summary · HB 387

Legislative bill overview

HB 387 would eliminate state income tax on retirement income received by government employees (state, local, and federal retirees). The bill aims to provide tax relief specifically to this population of retirees by exempting their pension and retirement distributions from North Carolina's state income tax.

Why is this important

This directly affects thousands of North Carolina government retirees' take-home income and reduces state tax revenue. The change would create different tax treatment for government retirees compared to private-sector retirees, potentially affecting state budget allocations for education, infrastructure, and other services that depend on income tax revenue.

Potential points of contention

  • Revenue impact: Eliminating this tax source reduces state coffers during a period when many states face fiscal pressures; the cost to the state budget is unclear from the bill title alone
  • Equity concerns: Creates preferential tax treatment for government employees versus private-sector workers with similar retirement income, raising questions about fairness
  • Targeted benefit: Critics may argue this benefits a specific, relatively advantaged group (government employees with pensions) while the general population pays taxes on retirement income

Compiled from official sources — confirm details with the bill’s official record.

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