South Carolina taxes your income, but not all of it the same way
Yes, South Carolina has a state income tax. Unlike some states that don't tax income at all, South Carolina taxes wages, investment income, and other earnings. However, the state offers a standard deduction and tax brackets that reduce what you actually owe, and certain types of income are excluded entirely.
The state income tax rate ranges from 0% to 7%, depending on how much you earn. You'll pay this tax on top of federal income tax, not instead of it. If you live in South Carolina and earn income there, you'll file both a federal return (Form 1040) and a South Carolina return (Form SC 1040) by April 15.
Key Takeaways
- South Carolina taxes income at rates between 0% and 7%, applied to your taxable income after deductions.
- The state offers a standard deduction that reduces your taxable income; the amount depends on your filing status and age.
- Social Security benefits, certain retirement income, and military pensions receive special treatment under South Carolina law.
- You file a separate South Carolina return even if you owe no federal tax, if your income exceeds the state filing threshold.
- South Carolina allows you to claim the same dependents on your state return as you do on your federal return.
How South Carolina income tax brackets work
South Carolina uses a progressive tax system, meaning the rate increases as your income increases. You don't pay the top rate on all your income—only on the portion that falls into each bracket. For the 2024 tax year, the brackets are 0%, 3%, 4%, 5%, 6%, and 7%.
The exact income ranges for each bracket depend on your filing status (single, married filing jointly, head of household, or married filing separately). A single filer in 2024, for example, pays 0% on the first portion of income, then 3% on income above that threshold, and so on. The brackets adjust each year for inflation, so the dollar amounts change annually.
To find your bracket, you start with your gross income, subtract your standard deduction, and then explore the rates to what remains. This is why the standard deduction matters so much—it directly reduces the income that gets taxed.
Standard deduction and personal exemptions in South Carolina
South Carolina allows a standard deduction that varies by filing status and age. For 2024, a single filer under 65 gets a standard deduction; a single filer 65 or older gets a higher amount. Married couples filing jointly also receive different amounts based on whether either spouse is 65 or older. These amounts change yearly.
The state also allows a personal exemption for yourself and each dependent you claim. This exemption reduces your taxable income further. Unlike the federal return, where personal exemptions were suspended in 2017, South Carolina still allows them. You claim the same dependents on your South Carolina return as you do on your federal Form 1040.
If your income is below the filing threshold for your status, you may not have to file a South Carolina return at all. The threshold is based on your gross income plus your standard deduction and exemptions. Check the current year's instructions on the South Carolina Department of Revenue website to confirm whether you must file.
Income that South Carolina does not tax
South Carolina excludes certain types of income from taxation entirely. Social Security benefits are not taxed by the state. Military pensions and survivor benefits are also exempt. Some retirement income, including distributions from certain retirement accounts, may be partially or fully excluded depending on your age and the source of the income.
If you're 65 or older, you may be able to exclude a portion of your retirement income, including distributions from IRAs, 401(k)s, and pensions. The amount of the exclusion depends on your total income and the type of retirement account. This is one area where it pays to read the instructions carefully or consult a tax professional, because the rules have income limits and specific conditions.
Interest and dividends are taxed as ordinary income in South Carolina, unlike some states that offer preferential rates. Capital gains (profit from selling stocks or property) are also taxed as ordinary income at your regular rate.
Who must file a South Carolina return
You must file a South Carolina return if your gross income exceeds the filing threshold for your status. The threshold is higher than the federal threshold, so you might owe federal tax but not have to file a state return, or vice versa. Check the current year's Form SC 1040 instructions to find the exact threshold for your filing status.
If you're claimed as a dependent on someone else's return, you have a lower threshold. If you're self-employed, you must file if your net earnings from self-employment are $400 or more, regardless of your other income. If you had South Carolina income tax withheld from your paycheck, you should file to get a refund, even if you're below the threshold.
Nonresidents who earned income in South Carolina must also file a state return, even if they live in another state. This applies to people who worked in South Carolina for part of the year or had other South Carolina-source income.
How to report South Carolina income on your return
You report your income on Form SC 1040, the South Carolina individual income tax return. The form mirrors the federal return in structure: you list your income sources, subtract deductions, and calculate your tax. You'll need your federal return information, because many lines on the state form reference the federal amounts.
If you have W-2 income from an employer, your employer withholds South Carolina tax and sends it to the state. You report the total wages and the tax withheld on your state return. If you have self-employment income, you calculate your own tax and may need to make quarterly estimated payments if you expect to owe $500 or more.
You can file your South Carolina return by mail or electronically. The state accepts federal e-file providers, and many tax software packages include South Carolina forms. The important date is the same as the federal important date: April 15 of the following year, or October 15 if you file an extension.
What happens if you move to or from South Carolina
If you moved to South Carolina during the year, you're a part-year resident. You report only the income you earned while living in the state. If you moved away from South Carolina, you report only the income you earned while you lived there. You may also owe tax to the state you moved to, depending on that state's rules.
The key is the date you established residency. If you moved on June 15, you're a resident for the portion of the year from June 15 onward. You'll file a part-year resident return in South Carolina and possibly a part-year return in the other state. Keep records of when you moved, where you lived, and where you worked, because you may need to prove your residency dates.
Frequently Asked Questions
Do I have to file a South Carolina return if I don't owe any tax?
If your income is below the filing threshold for your status, you don't have to file. However, if you had South Carolina income tax withheld from your paycheck, you should file to get a refund. Check the current year's Form SC 1040 instructions for the exact threshold.
Can I claim the same dependents on my South Carolina return as my federal return?
Yes. South Carolina allows you to claim the same dependents you claim on your federal return. You don't file a separate list; the state uses your federal dependent information. Make sure your dependents have valid Social Security numbers on both returns.
Is military income taxed in South Carolina?
Military pensions and survivor benefits are exempt from South Carolina income tax. However, military wages (active duty pay) are taxed like any other wages. If you're a military member, report your wages on Form SC 1040 but exclude your pension or survivor benefits.
What if I earned income in South Carolina but live in another state?
You must file a South Carolina nonresident return if you earned income in the state. You report only the income you earned in South Carolina, not your income from other states. You may also owe tax to your home state, depending on its rules about nonresident income.
When do I need to make estimated tax payments to South Carolina?
If you expect to owe $500 or more in South Carolina income tax and won't have enough withheld, you should make quarterly estimated payments. Payments are due April 15, June 15, September 15, and January 15. Use Form SC 1040-ES to calculate the amount.