HB 384 North Carolina House · 2025-2026 Session

National Guard Tax Deduction for Federal Pay.

HB 384 would allow enlisted members of the North Carolina National Guard (ranks E-1 to E-5) who live in North Carolina to deduct their federal basic military pay from their state income tax. This policy change applies only to their federal service pay, not other income, and would take effect for taxes filed in 2025 and later. The bill amends North Carolina’s tax code to include this deduction for qualifying National Guard members. It does not alter federal tax treatment or apply to higher ranks or other military personnel.

Issues: ✓ Budget & Taxes

Bill status in committee 1 of 4 stages cleared

Introduction

Mar 2025

Committee Review

Floor Vote

Governor

Introduced Mar 12, 2025 Last action Apr 8, 2025

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What changed between versions

Edition 1 → Edition 2 · 5 edits

MODERATE

This bill was revised to broaden its scope by removing the residency requirement for National Guard members, allowing all enlisted members regardless of where they live to deduct federal basic pay from state income tax. Additionally, the sports wagering tax proceeds distribution was updated to clarify percentages and add a new university to the list of institutions receiving funding. The effective date for the sports wagering tax transfer was also moved from January 1, 2025 to July 1, 2025.

Scope change

The bill's scope expanded from only National Guard members residing in North Carolina to all enlisted members of the National Guard with ranks E-1 through E-5, regardless of residency.

ELIGIBILITY

Removed the residency requirement for National Guard members to qualify for the federal basic pay tax deduction, now applicable to all enlisted members with ranks E-1 through E-5.

FISCAL

Updated sports wagering tax proceeds distribution to change the percentage allocated to the Major Events, Games, and Attractions Fund from 30% to 29%, with the remaining 1% presumably adjusted elsewhere.

Added Elizabeth City State University to the list of institutions receiving sports wagering tax proceeds for collegiate athletic departments.

TIMELINE

Changed the effective date for sports wagering tax transfers from January 1, 2025 to July 1, 2025, while the tax deduction provision remains effective for taxable years beginning on or after January 1, 2025.

TECHNICAL

Updated the bill title from 'NCNG Tax Deduction for Fed. Pay' to 'Nat. Guard Tax Deduction for Fed. Pay' and added 'Committee Substitute Favorable 4/8/25' designation.

Floor votes

How they voted

No floor votes recorded yet.

Full legislative history

Actions timeline

Total actions

Key actions

Committee

Apr 8, 2025

Committee

Re-ref Com On Finance

lower

Apr 8, 2025

Lower · Passed

Reptd Fav Com Substitute

lower

Mar 13, 2025

Committee

Ref to the Com on Homeland Security and Military and Veterans Affairs, if favorable, Finance, if favorable, Rules, Calendar, and Operations of the House

lower

Mar 12, 2025

Introduced

Filed

lower

3 primary · 5 co-sponsors