You may deduct up to $35,000 of any severance wages you received as a result of your permanent involuntary termination from employment through no fault of your own. The severance wages deducted as a result of the same termination may not exceed $35,000 for all taxable years in which the wages were received. "Stay on pay" does not qualify for the deduction.
The severance pay which qualifies for this deduction is limited to the amount of severance pay included in your federal adjusted gross income or $35,000, whichever is less.
Enter this deduction on line 45 on page 3 of your Form D-400. This amount will become part of the amount on line 9 of page 1 of your Form D-400.
For tax years beginning on or after January 1, 2014, this deduction is no longer available.
Note: There is no longer a deduction of up to $35,000 for severance wages you received as a result of your permanent involuntary termination from employment through no fault of your own. Therefore, all severance wages are subject to North Carolina withholding.
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