Amends GS 105-153.5(b)(5) setting forth allowed income tax deductions from adjusted gross income (AGI) to exempt from taxation funds received from State and local NC retirement plans and federal retirement plans. Deletes prior language limiting deductions for those same government retirement plans to the extent they were exempt from taxation under certain court cases.

Amends GS 105-153.5(b)(5a) to exempt from AGI all federal survivor benefits payments received under 10 USC § 1447 paid to a beneficiary of a retired member of the Armed Forces of the United States that either (1) served at least 20 years or (2) medically retired because of physical disability as set forth in 10 USC Chapter 61. Deletes language exempting retirement pay paid directly to the qualified military servicemember from AGI and prohibiting such payments from also being deducted under the subsection permitting deduction of funds received by federal retirement plans, set forth above. Deletes statutory language excluding severance pay due to separation from the armed forces from the exemption.  Deletes language setting the applicable taxable years as on or after January 1, 2021, and before January 1, 2022.

Effective for taxable years beginning on or after January 1, 2024.