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Old 07-22-2017, 09:29 AM
 
10 posts, read 12,439 times
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Good morning everyone,

Currently living in Northern Virginia, I am planning on retiring to Wilmington area in 2019. I've already picked the community, Brunswick Forest and looking forward to it. My question is this: For federal retirees, what is actually taxed? According to National Active and Retired Federal Employees Association (NARFE), this is what is says: "NORTH CAROLINA: SS is exempt. Correction: The deductions for certain taxpayers of up to $4,000 for federal, state or local government retirement benefits or up to $2,000 for private retirement benefits are no longer available as of 2014. Pursuant to the North Carolina Supreme Courtís decision in Bailey v. State of North Carolina, the state may not tax certain retirement benefits received by federal civil service and military retirees or retirees of the state of North Carolina and its local governments if the retiree has five or more years of creditable service as of Aug. 12, 1989."

Obviously I do not have creditable service as of 1989. I started with the federal government in 1994. The above statement just does not make sense to me. I've read 5.75% flat tax rate for everyone in NC. I like a flat tax rate. Is the Federal pension taxed in addition to your IRA? What is the sales tax in NC?

Any clarification that you could give would be most appreciated.
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Old 07-22-2017, 11:02 AM
 
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NC does not tax social security benefits. All other income, including pensions not covered by the Bailey Decision, is taxed at the flat rate of 5.499% in 2017. The standard deduction for a married couple is $17,500.

The Bailey Decision, as you noted, only applies to certain pensions when the individual had 5 years of service prior to 8/12/89. If you don't meet that test then it doesn't apply to you.

NC state sales tax is 4.75%. Counties add up to an additional 2.75% to that, but not all counties are the same. The total sales tax in Brunswick County is 6.75%. It is applied to a wide variety of goods AND services, including clothes, electricity, restaurant meals, etc. The tax on non-prepared food in a grocery store is 2%.
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Old 07-22-2017, 11:49 AM
 
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Thank you BC1960. You explained it much better! Much better than the tax rate in Northern Virginia. By any chance, is the real estate tax in Brunswick county still .4425? I pay $1.1950 so anything below this is a pay raise in my book.
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Old 07-22-2017, 01:08 PM
 
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Yes, thanks for the clear response. It is definitely a perk for my husband and I to both be eligible for the Bailey exclusion and exclusion from the SS checks we get as well. It will definitely be more beneficial from a tax perspective to move to NC from Northern Virginia. We will be moving down in early 2018---can't wait. I am sure we will spend our "tax savings" on exploring the Wilmington area and beyond!!!
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Old 07-22-2017, 06:52 PM
 
Location: Sneads Ferry, NC
11,253 posts, read 19,782,454 times
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Quote:
Originally Posted by Hamilto01 View Post
By any chance, is the real estate tax in Brunswick county still .4425? I pay $1.1950 so anything below this is a pay raise in my book.
This site appears to have the full story. The county tax rate is .4850, but you have to add on the rates for specific areas. The add-on for Leland is .1833. Thus, the total would still be lower than what you pay now. Check below: http://wrar.com/buyers-sellers-local...ates-menu.html

However, watch out for sewer and water charges. You will typically also pay extra for trash and recycling collection.
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Old 07-23-2017, 05:05 AM
 
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Thanks again for the information. Sounds like we are looking at .60 which is almost half of what we pay in Northern Virginia!!! I am sure we will have some extra expenses such as those you listed but looks like we will have some "tax savings" to pay them with. Looking forward to exploring NC!!
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Old 07-23-2017, 06:50 AM
 
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Thank you goldenage1. You are always a wealth of information on these boards. Can't wait to move in early spring 2019!
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Old 07-23-2017, 10:01 AM
 
Location: Conway
711 posts, read 590,593 times
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Quote:
Originally Posted by Hamilto01 View Post
Good morning everyone,

Currently living in Northern Virginia, I am planning on retiring to Wilmington area in 2019. I've already picked the community, Brunswick Forest and looking forward to it. My question is this: For federal retirees, what is actually taxed? According to National Active and Retired Federal Employees Association (NARFE), this is what is says: "NORTH CAROLINA: SS is exempt. Correction: The deductions for certain taxpayers of up to $4,000 for federal, state or local government retirement benefits or up to $2,000 for private retirement benefits are no longer available as of 2014. Pursuant to the North Carolina Supreme Courtís decision in Bailey v. State of North Carolina, the state may not tax certain retirement benefits received by federal civil service and military retirees or retirees of the state of North Carolina and its local governments if the retiree has five or more years of creditable service as of Aug. 12, 1989."

Obviously I do not have creditable service as of 1989. I started with the federal government in 1994. The above statement just does not make sense to me. I've read 5.75% flat tax rate for everyone in NC. I like a flat tax rate. Is the Federal pension taxed in addition to your IRA? What is the sales tax in NC?

Any clarification that you could give would be most appreciated.
We moved to South Carolina from Northern Virginia (Woodbridge/Montclair). SC offers better tax rates than NC. Both Carolinas are great. We did consider NC also. You can't go wrong with either Carolina. Anything is better than NOVA. We do not miss the 2 1/2 hr commute for a 20 min. drive to work.

I retired from the military and federal government. That Bailey law didn't help me any.
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