South Carolina has a state income tax

South Carolina taxes your wages, salary, and most other income. The state does not have a flat tax rate — instead, it uses a progressive tax system with rates that climb as your income rises. The lowest rate is 0% on the first portion of your income, and the highest is 7% on income above a certain threshold. The exact amount you owe depends on how much you earned in the tax year and your filing status.

South Carolina's income tax applies to residents and part-year residents who earned money in the state. If you worked in South Carolina but live elsewhere, you may still owe state tax on that income. The state taxes wages, self-employment income, interest, dividends, capital gains, and retirement distributions — though some retirement income has special rules that can reduce or eliminate the tax.

Key Takeaways

  • South Carolina's income tax rates range from 0% to 7%, depending on your total income and filing status.
  • You owe tax on wages, self-employment income, investment income, and most retirement distributions, though some retirement income is partially or fully exempt.
  • The state taxes residents and anyone who earned income in South Carolina during the tax year.
  • You file South Carolina taxes using Form SC 1040, which you submit to the South Carolina Department of Revenue along with your federal return.

How South Carolina's tax brackets work

South Carolina uses tax brackets that change each year based on inflation. For the 2023 tax year, the brackets for single filers started at 0% on the first $3,110 of income, then moved to 3% on income between $3,110 and $6,220, and continued upward to 7% on income over $62,100. If you file as married filing jointly, the income ranges are wider — for example, the 7% bracket began at $124,200 for 2023. Married filing separately and head of household filers have their own bracket structures.

The brackets for 2024 and beyond shift slightly each year, so the exact dollar amounts change. You can find the current year's brackets on the South Carolina Department of Revenue website. The key point is that you do not pay 7% on all your income — you pay the lower rates on the lower portions and only the higher rate on income that falls into the highest bracket you reach.

What income is taxed and what is not

South Carolina taxes most types of income: W-2 wages, self-employment income, interest from savings accounts and bonds, stock dividends, capital gains from selling investments, rental income, and distributions from retirement accounts. However, certain types of income are partially or fully exempt from state tax.

Military retirement pay is exempt from South Carolina income tax if you served in the U.S. Armed Forces. Social Security benefits are not taxed by South Carolina. Distributions from a Roth IRA are not taxed. Traditional IRA and 401(k) distributions are taxed as ordinary income, but if you are over 59½ and meet other conditions, you may be able to exclude a portion of your retirement income — up to $10,000 per year for single filers and $20,000 for married couples filing jointly, depending on your total income. These retirement income exclusions have income limits, so higher earners may not may have access to.

Who must file a South Carolina tax return

You must file a South Carolina return if you are a resident or part-year resident and your income exceeds the state's filing threshold. For 2023, the threshold was $3,110 for single filers, $6,220 for married filing jointly, and $3,110 for most other filing statuses. These thresholds change yearly. If you earned less than the threshold, you generally do not have to file a state return, though filing may still benefit you if you are owed a refund.

Part-year residents — people who moved into or out of South Carolina during the tax year — must file if their income exceeds the threshold. You report only the income you earned while living in South Carolina. If you worked in South Carolina but lived in another state for the entire year, you may owe South Carolina tax on that income even though you are not a resident.

How to file your South Carolina return

You file South Carolina taxes using Form SC 1040, the state's individual income tax return. You can file on paper by mailing the form and supporting documents to the South Carolina Department of Revenue, or you can file electronically through the state's approved e-file system. Many tax software programs allow you to file both your federal and state returns at the same time.

You must include a copy of your federal return with your paper filing. If you file electronically, the software typically handles this automatically. South Carolina's tax year runs January 1 through December 31, and returns are due by April 15 unless you request an extension. If you owe money, payment is also due by April 15. If you are owed a refund, filing earlier usually means you receive it sooner.

Deductions and credits available in South Carolina

South Carolina allows a standard deduction, which reduces the amount of income you actually pay tax on. For 2023, the standard deduction was $3,110 for single filers and $6,220 for married filing jointly. You can also itemize deductions if they exceed the standard deduction, though South Carolina does not allow all the same deductions as the federal government.

The state also offers tax credits for certain situations. A dependent exemption credit provides a small reduction for each dependent you claim. If you paid property tax or rent, you may be able to claim a property tax relief credit or a renter's credit, though these have income limits. Some credits are refundable, meaning you can receive money back even if you owe no tax; others only reduce the tax you owe.

What happens if you do not pay

If you owe South Carolina income tax and do not pay by the deadline, the state charges interest and penalties. Interest accrues daily at a rate set by the state, and penalties can include a failure-to-pay penalty if you do not pay on time and a failure-to-file penalty if you do not file your return. These charges add up quickly, so paying what you owe or setting up a payment plan as soon as possible reduces the total amount you will owe.

If you cannot pay in full, you can contact the South Carolina Department of Revenue to discuss a payment plan. The state may also place a lien on your property or garnish your wages if the debt remains unpaid for a long time. Filing your return on time, even if you cannot pay, is important because it stops the failure-to-file penalty from growing.

Frequently Asked Questions

Does South Carolina tax Social Security?

No. South Carolina does not tax Social Security benefits. If Social Security is your only income, you do not owe state income tax on it. However, if you have other income that pushes your total above the filing threshold, you must still file a return and report all your income.

Can I claim a credit for taxes I paid to another state?

South Carolina does not offer a credit for income taxes paid to other states. If you worked in multiple states or moved during the year, you may owe tax to both states on the income earned in each. Some states offer credits to prevent double taxation, but South Carolina does not. You should check the other state's rules to see if they offer a credit for South Carolina taxes.

What if I moved to South Carolina partway through the year?

You file as a part-year resident and report only the income you earned after you moved to South Carolina. You will use the part-year resident tax brackets, which are different from the full-year resident brackets. You must include documentation of your move date, such as a lease or utility bill showing when you established residency in the state.

Are military pensions taxed in South Carolina?

No. If you retired from the U.S. Armed Forces, your military retirement pay is fully exempt from South Carolina income tax. You do not report it on your state return. Other types of retirement income, such as civilian pensions or 401(k) distributions, are taxed unless they may have access to for the retirement income exclusion.

How long do I have to file if I owe money versus if I am owed a refund?

The filing deadline is the same for everyone — April 15 of the following year. However, if you are owed a refund, filing early means you receive your money sooner. If you owe money, you should still file by April 15 to avoid penalties, even if you cannot pay the full amount right away.