For many, the dream of retiring to South Eastern North Carolina is built on visions of mild winters, boat days on the Intracoastal, and walkable historic downtowns. But for the savvy retiree, the decision is often just as much about the spreadsheet as it is about the scenery.

As of late 2025, North Carolina has solidified its reputation as a "moderately tax-friendly" state, but the specific benefits for seniors can be substantial if you know where to look. Whether you are eyeing a golf course home in Brunswick Forest or a condo in Wrightsville Beach, here is the financial reality of retiring to the coast.

1. The Social Security Bonus

Let’s start with the headline: North Carolina does not tax Social Security retirement benefits. Regardless of your total income, your Social Security check is yours to keep. In a time of rising costs, this 100% exemption provides a critical baseline of tax-free income for coastal residents.

2. The Military Pension Exemption

If you served, North Carolina serves you back. As of the 2025 tax year, military retirees who have served at least 20 years or were medically retired are fully exempt from state income taxes on their military pension.

Beneficiaries: This exemption also extends to survivor benefits, ensuring your spouse is protected.

The "Bailey" Settlement: If you are a federal or state government retiree who was vested in your retirement system prior to August 12, 1989, your pension is also 100% tax-exempt.

3. The Flat Tax Rate (and Where It’s Going)

For other forms of income—like wages from a part-time job or withdrawals from a 401(k) or Traditional IRA—North Carolina applies a flat income tax rate.

2025 Rate: The rate is currently 4.25%.

Future Outlook: The state has legislated a scheduled reduction, with the rate set to drop to 3.99% in 2026. This predictable, lowering tax environment is a major draw for retirees planning long-term budgets.

4. Property Tax Relief for Seniors

Rising property values in New Hanover and Pender counties are great for sellers, but can be daunting for retirees on a fixed income. The state offers the Elderly or Disabled Homestead Exclusion to help.

The Benefit: If you are 65+ and meet income eligibility requirements (approx. $37,900 for 2025), you can exclude the greater of $25,000 or 50% of your home's appraised value from property taxes.

The Circuit Breaker: For those with slightly higher incomes, the Circuit Breaker Deferment limits your property tax bill to a percentage of your income (4–5%), deferring the rest until the home is sold.

5. No Estate Tax

Finally, for those focused on legacy, North Carolina has no state estate tax and no inheritance tax. This simplifies estate planning significantly compared to many northern states, allowing you to pass wealth to your heirs without a state-level penalty.

The Bottom Line

Retiring to the coast isn't just a lifestyle upgrade; for many, it's a smart fiscal move. You get the beach and the benefits.

At Aspyre Realty Group, we work with retirees every day to find homes that fit both their lifestyle goals and their financial futures.