State Income Taxes in South Carolina – South Carolina offers one of the Southeast’s most competitive state income tax structures. Whether you’re a current resident, planning a move to the Palmetto State, or comparing taxes across the USA, understanding state income taxes in South Carolina is essential for accurate planning and filing. South Carolina starts with your federal taxable income and applies state-specific adjustments, deductions, exemptions, and credits. For tax year 2025 (returns filed in 2026), the top marginal rate is 6%. Major reform legislation signed in 2026 will reshape brackets and deductions starting with tax year 2026.
Overview of State Income Taxes in South Carolina
South Carolina imposes a graduated individual income tax on residents and on nonresidents with South Carolina-source income. The state conforms to the Internal Revenue Code as of December 31, 2024 (with specific exceptions), which simplifies filing by using your federal taxable income as the starting point.
There are no local income taxes in South Carolina—only the state-level tax applies. Most residents who must file a federal return will also file a South Carolina return. The Department of Revenue (SCDOR) processes returns primarily through its free online portal, MyDORWAY.
South Carolina Income Tax Rates and Brackets for 2025
For tax year 2025, South Carolina uses a three-bracket graduated rate structure that does not vary by filing status (single, married filing jointly, head of household, etc.). The brackets apply to South Carolina taxable income (after additions and subtractions).
| Taxable Income | Marginal Tax Rate |
|---|---|
| $0 – $3,560 | 0% |
| $3,561 – $17,830 | 3% |
| $17,831 and above | 6% |
- Taxpayers with South Carolina taxable income under $100,000 use the official SC1040TT tax tables (available on dor.sc.gov) for exact liability.
- For income of $100,000 or more, use the rate schedule in the same tables.
The top marginal rate for 2025 is 6% (down from 6.2% in 2024 due to prior revenue-triggered reductions).
Example: A single filer with $50,000 in South Carolina taxable income would pay 0% on the first $3,560, 3% on the next $14,270, and 6% on the remaining amount—resulting in a modest effective rate.
How South Carolina Calculates Your Taxable Income
South Carolina taxable income is not the same as your federal taxable income. Follow these steps on Form SC1040:
- Start with federal taxable income (from your Form 1040).
- Add South Carolina additions (e.g., state tax refund if previously deducted, out-of-state losses, certain federal interest, state and local tax addback if you itemized federally, and other adjustments).
- Subtract South Carolina subtractions (e.g., state tax refunds included federally, retirement income deductions up to $10,000 for those 65+, Social Security benefits if taxed federally, net capital gain deduction of 44%, volunteer firefighter/EMS deduction up to $12,000, and more).
Key subtractions for 2025 include:
- Dependent exemption: $4,930 per eligible dependent (qualifying children and relatives claimed on your federal return).
- Additional deduction for dependents under age 6: Another $4,930 per child under 6.
- Age 65+ deduction: Up to $15,000 (phased by other retirement deductions).
- Retirement income, U.S. obligation interest, and other targeted relief.
After adjustments, apply the tax rates or tables to arrive at your South Carolina tax liability.
Who Must File a South Carolina State Income Tax Return?
You generally must file a SC1040 (residents) or SC1040NR + Schedule NR (nonresidents/part-year residents) if:
- You are required to file a federal return, or
- You have South Carolina taxable income, or
- You want to claim a refund of South Carolina withholding or credits.
Nonresidents file only on South Carolina-source income (wages from SC jobs, rental property in SC, etc.). Military personnel and certain out-of-state workers may qualify for exemptions.
2025 filing deadline: Automatically extended to October 15, 2026 for all individual returns (originally April 15). Refund claims remain open until April 15, 2029.
Deductions, Exemptions, and Tax Credits in South Carolina
South Carolina offers generous targeted relief:
- Dependent exemption — $4,930 each (plus extra for children under 6).
- Retirement income — Up to $10,000 (65+) or $3,000 (under 65); full military retirement deduction.
- Age 65+ deduction — $15,000 per qualifying taxpayer/spouse.
- Net capital gains — 44% deduction.
- Volunteer emergency services — Up to $12,000.
- College savings/ABLE contributions — Full deduction.
- Active trade/business income — Optional 3% flat rate election via Form I-335.
Tax credits (claimed on SC1040TC) include the two-wage-earner credit, tuition tax credit, and various economic development/incentive credits. Many are nonrefundable but can reduce your liability to zero.
Important: South Carolina did not conform to the federal One Big Beautiful Bill Act (OBBBA) provisions for 2025 (no state-level deduction for tips, overtime, or the enhanced senior deduction). You must add back these federal amounts when calculating South Carolina taxable income.
How to File Your South Carolina Income Tax Return?
- Complete your federal return first.
- Use MyDORWAY (mydorway.dor.sc.gov) for free e-filing—over 90% of returns are filed online.
- Attach required schedules (NR for nonresidents, TC for credits, federal forms if itemizing or claiming certain credits).
- Pay any balance due or direct-deposit your refund.
Mailing options and vouchers are available on dor.sc.gov. Estimated payments (SC1040ES) are required if you expect to owe $500+ after withholding.
Upcoming Changes to South Carolina Income Taxes in 2026 and Beyond
In March/April 2026, Governor McMaster signed H.4216 (Act 110), enacting sweeping income tax reform effective for tax year 2026 (retroactive to January 1, 2026).
Key 2026 changes:
- New two-bracket structure: 1.99% on the first $30,000 of taxable income + 5.21% (or 5.2%) on income above $30,000.
- South Carolina Income Adjusted Deduction (SCIAD) replaces federal standard/itemized deductions (which must now be added back).
- Graduated deduction up to $30,000 for lower-to-middle earners (under $110,000).
- Revenue triggers for further rate reductions: top bracket phases down to 1.99%, then the overall rate drops to zero over time.
This reform positions South Carolina for one of the nation’s lowest (potentially zero) income tax rates while simplifying the code.
Comparing South Carolina State Income Taxes to Other States
South Carolina’s 2025 top rate of 6% is competitive in the Southeast (lower than North Carolina’s 4.75% flat rate but higher than Florida, Tennessee, and Texas at 0%). The 2026 reform will make it even more attractive. No state or local income tax on Social Security or most retirement income adds further appeal for retirees.
Frequently Asked Questions About SC State Income Taxes
Does South Carolina tax Social Security?
Generally no—Social Security benefits are fully subtracted if included in federal income.
Are there local income taxes in South Carolina?
No—only the state tax applies.
When will I receive my 2025 refund?
Most e-filed refunds with direct deposit arrive within 2–3 weeks after processing.
How do I update my address or name?
Use the free MyDORWAY portal.
For the latest forms, tax tables, and guidance, visit the official South Carolina Department of Revenue at dor.sc.gov/iit. Tax laws can change, so consult a tax professional or the SCDOR for your specific situation. Filing accurately can maximize your refund and keep you compliant with state rules.