South Carolina has a state income tax

Yes, South Carolina charges state income tax on wages, retirement income, and other earnings. The state tax rate ranges from 0% to 7%, depending on your income bracket. Unlike some states, South Carolina does not have a flat tax — the more you earn, the higher percentage you pay.

South Carolina also taxes capital gains, dividends, and interest income at the same rates as regular income. If you work in South Carolina or live there, you will owe state income tax on money earned in the state, even if you live elsewhere.

Key Takeaways

  • South Carolina state income tax ranges from 0% to 7% depending on your income bracket, with rates increasing as earnings rise.
  • The state taxes wages, retirement income, capital gains, dividends, and interest at the same progressive rates.
  • You file South Carolina state taxes using Form SC 1040, which you submit to the South Carolina Department of Revenue separate from your federal return.
  • South Carolina offers a standard deduction and allows you to claim dependents, similar to federal tax rules but with different dollar amounts.
  • If you are retired or over 65, South Carolina has special deductions that may reduce your taxable income.

The seven tax brackets and what they mean for your income

South Carolina uses seven income brackets. Your bracket depends on your filing status — single, married filing jointly, married filing separately, or head of household. The lowest bracket starts at 0% for very low incomes, and the highest is 7% for income above a certain threshold.

The exact dollar amounts for each bracket change each year. For the current tax year, you can find the brackets on the South Carolina Department of Revenue website. Because the brackets shift annually, do not assume last year's numbers apply to this year's return.

The progressive system means you do not pay 7% on all your income — only on the portion that falls into the 7% bracket. The rest is taxed at the lower rates of the brackets below it.

What income counts toward South Carolina taxes

South Carolina taxes most types of income: wages from a job, self-employment income, rental income, interest, dividends, and capital gains. Retirement distributions from IRAs and 401(k)s are also taxable, though some retirement income has special treatment.

Military retirement pay is exempt from South Carolina state tax. Certain federal pensions may also may have access to for exemption, depending on when you retired and your age. If you receive Social Security, that income is not taxed by South Carolina.

If you have income from multiple sources — a job plus rental property, for example — all of it combines to determine your tax bracket and total state tax owed.

Standard deduction and personal exemptions

South Carolina allows a standard deduction, which reduces the income you actually pay tax on. The standard deduction amount depends on your age and filing status. For 2024, the standard deduction ranges from around $3,000 to $4,500 depending on whether you are single, married, or over 65.

You can also claim a personal exemption for yourself and each dependent. The exemption amount is set by the state and changes yearly. Unlike the federal system, South Carolina still uses personal exemptions in addition to the standard deduction.

If you do not itemize deductions, you use the standard deduction. If you itemize, you list specific expenses like mortgage interest or charitable donations instead. Most South Carolina taxpayers use the standard deduction because it is simpler and often results in a lower tax bill.

Special deductions for retirees and older residents

If you are 65 or older, South Carolina offers an additional deduction beyond the standard deduction. This extra amount reduces your taxable income further, which can lower your state tax bill significantly.

Retirement income from certain sources may also may have access to for partial or full exemption. If you retired from a South Carolina public employee pension, from the military, or from certain federal jobs, portions of that income may not be taxed by the state. The rules vary by pension type and when you retired, so check with the Department of Revenue or a tax preparer about your specific situation.

How to file South Carolina state taxes

You file South Carolina state taxes using Form SC 1040, which is separate from your federal tax return. You can file by mail, electronically through approved software, or through an authorized tax preparer. The South Carolina Department of Revenue accepts e-filed returns and processes them faster than paper returns.

Your state return is due on the same date as your federal return — typically April 15. If you get an extension on your federal return, the extension applies to your state return as well. You can request an extension directly from the Department of Revenue if you need more time.

When you file, you will need your Social Security number, income records (W-2s, 1099s, K-1s), and documentation of any deductions you claim. If you paid state taxes through withholding at your job, those payments will be credited against your total state tax owed.

Withholding and estimated taxes

If you work for an employer in South Carolina, your employer withholds state income tax from your paycheck. The amount withheld depends on the W-4 form you complete. If too much is withheld, you get a refund when you file. If too little is withheld, you owe when you file.

If you are self-employed or have income with no withholding, you may need to pay estimated taxes quarterly. Estimated taxes are payments you make directly to the state four times a year to cover the tax you expect to owe. Missing estimated payments can result in penalties and interest.

Frequently Asked Questions

Do I have to file South Carolina taxes if I live out of state?

No, unless you earned income in South Carolina. If you worked in the state or have rental property there, you file a South Carolina return on that income even if you live elsewhere. You may also owe taxes to your home state on the same income, though you can usually claim a credit to avoid double taxation.

What is the difference between South Carolina state tax and federal tax?

Federal tax goes to the U.S. government and uses federal tax brackets and deductions. South Carolina state tax goes to the state and uses different brackets, deduction amounts, and rules. You file both returns separately, though they use similar income information.

Can I deduct federal taxes paid from my South Carolina return?

No. South Carolina does not allow you to deduct federal income taxes as an itemized deduction. You can only deduct state and local taxes (SALT) up to $10,000 on your federal return, but that is a federal rule, not a South Carolina one.

What happens if I do not file South Carolina taxes?

The Department of Revenue can assess penalties and interest on unpaid taxes. If you owe a significant amount, the state can place a lien on your property or garnish your wages. Filing late is better than not filing at all — you can request a payment plan if you cannot pay in full.

Where do I send my South Carolina tax return?

Mail paper returns to the South Carolina Department of Revenue at the address listed on Form SC 1040. Electronic returns go directly through approved tax software or a tax preparer's system. The Department of Revenue website lists current mailing addresses and e-file options.