Waldorf, MD asked in Tax Law for Maryland

Q: I am a federal employee looking to retire in North Carolina and wondering if I will have to pay state income tax?

My Service Computation Date is February 1983 and I am under the FERs retirement system. I heard that my retitrement income will not be taxed by the state due to that Bailey Act?

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1 Lawyer Answer
Marie-Yves Nadine Jean-Baptiste
Marie-Yves Nadine Jean-Baptiste
  • Tax Law Lawyer
  • Towson, MD
  • Licensed in Maryland

A: According to the decision of Bailey v. State of North Carolina, you are correct, the state cannot collect tax on your FERS as long as you have the eligible number of years as of 1989. In your case, 1983. If you would like to read more, there is a wonderful explanation here: https://www.ncdor.gov/taxes-forms/individual-income-tax/bailey-decision-concerning-federal-state-and-local-retirement-benefits.

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