Amends GS 105-153.5, establishing a new deduction allowable for individual taxpayers. Allows taxpayers to deduct amounts received from the federal government as retirement pay from the US Armed Forces if the taxpayer meets four conditions. Conditions include (1) establishing North Carolina residency by December 1, 2023, or within two years of the taxpayer's date of retirement from the US Armed Forces, whichever is later; (2) continued residency once established; (3) being at least 55 years of age on January 1 of the taxable year; and (4) serving at least 20 years in the US Armed Forces or having a service-connected disability. Bars deducting the described amount from both the enacted deduction provision and the existing provision for certain state, local, or federal retirement pay. Effective for taxable years beginning on or after January 1, 2022.