Updated October 19, 2026. Quick answer: Line 20 of North Carolina’s D-400 Schedule S is where retirement benefits received by vested state government, local government or federal government retirees are deducted. It sits in Part B, which covers deductions from federal adjusted gross income. The Part B total on line 41 is carried to Form D-400.
What this form does
The schedule is titled “2025 N.C. Adjustments for Individuals” and the printed instruction at the top of the page says when it is needed: “If you are required to add certain items to federal adjusted gross income on Form D-400, Line 7, or if you are entitled to take deductions from federal adjusted gross income on Form D-400, Line 9, you must complete and attach this schedule to Form D-400.”
Part A covers additions and Part B covers deductions. Line 20 is one of the Part B lines. A retiree who receives a state, local or federal government pension and reads it on their federal return (see Form 1040 line 5a and 5b for where pension and annuity amounts sit on the federal form, and 1099-R boxes for the statement the payer sends) will find the matching North Carolina deduction here instead of on the D-400 itself.
Who it applies to
The schedule does not describe line 20 in a separate paragraph. The only statement of who it covers is the line’s own label: “Retirement Benefits Received by Vested N.C. State Government, N.C. Local Government, or Federal Government Retirees, i.e. Bailey Settlement”. The label has three parts: the benefits must be retirement benefits, the person receiving them must be a vested retiree, and the employer must be North Carolina state government, North Carolina local government or the federal government.
Part B adds one more condition that applies to every deduction line: “Only deduct items that are included in federal adjusted gross income”. The schedule prints no age condition for line 20 and no income test for it. If you are unsure whether a particular pension is a government retirement benefit of this kind, the payer’s Form 1099-R and the plan’s own paperwork are where that is answered, and the North Carolina pages on whether North Carolina taxes pensions and on North Carolina retirement taxes give the wider picture.
The lines, one by one
| Line | What the form says |
|---|---|
| Part B heading | “Part B. Deductions From Federal Adjusted Gross Income (Only deduct items that are included in federal adjusted gross income)” |
| Line 20 | “Retirement Benefits Received by Vested N.C. State Government, N.C. Local Government, or Federal Government Retirees, i.e. Bailey Settlement” |
| Line 21 | “Certain Retirement Benefits Received by a Retired Member of the United States Uniformed Services Not Deducted on Line 20” |
| Line 41 | “Total Deductions” “Add Lines 17 through 22, 23f, 24f, 25 through 37, 38c, 39, and 40 (Enter the total here and on Form D-400, Line 9)” |
Line 21 is printed directly under line 20 and its label says it is for amounts “Not Deducted on Line 20”, so the two lines are read together when a retirement benefit could fit either one. Lines 17 to 19 and 22 onward cover other kinds of deductions and are not part of this page.
Where the result goes next
Each Part B line you complete is added into line 41. The form’s own instruction on that line is “Enter the total here and on Form D-400, Line 9”, which is the same Line 9 named in the schedule’s opening statement. The schedule also warns about how it is submitted: “you must attach both pages of this schedule to Form D-400, even if you are only required to complete one part of the schedule”. For IRA and 401(k) amounts the federal starting point is Form 1040 line 4a and 4b and the state overview is at North Carolina 401(k) and IRA withdrawals.
Edition and line numbers
This page reads 2025 N.C. Adjustments for Individuals, D-400 Schedule S (Web-Fill version) for tax year 2025, the current file the North Carolina Department of Revenue served on 2026-10-19. Check the edition printed on your own form and use that edition’s line numbers.
Common mistakes
- Attaching only the page you filled in. The schedule says “you must attach both pages of this schedule to Form D-400, even if you are only required to complete one part of the schedule”.
- Deducting an item that is not in federal adjusted gross income. Part B says “Only deduct items that are included in federal adjusted gross income”.
- Sending a photocopy. The schedule’s first page says “Do not send a photocopy of this form.”
Related: North Carolina retirement taxes, whether North Carolina taxes pensions, North Carolina 401(k) and IRA withdrawals, Form 1040 line 5a and 5b, and 1099-R boxes.
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Answer againSources
- 2025 N.C. Adjustments for Individuals, D-400 Schedule S (Web-Fill 9-25), North Carolina Department of Revenue: www.ncdor.gov
- Related official page (not quoted): North Carolina Department of Revenue, 2025 D-400 Schedule S page: www.ncdor.gov
Read from the state revenue documents linked above on October 19, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer or the state revenue department is the right place to confirm anything consequential.