State Tax in South Carolina: Rates, Deductions, and Filing Requirements
Understand South Carolina's tax system, including rates, deductions, and filing rules, to help you navigate your state tax obligations efficiently.
South Carolina imposes various state taxes on residents and businesses, including income and sales taxes. Understanding these taxes is key to compliance and potential savings.
This article covers essential aspects of South Carolina’s tax system, including filing requirements, deductions, and payment processes.
Income Tax Rates
South Carolina has a progressive income tax system, with rates increasing as earnings rise. In 2024, the state has five tax brackets, ranging from 0% to 6.4%. The first $3,200 of taxable income is exempt, while earnings above that are taxed at higher rates, with the top bracket applying to income over $16,040. These brackets are adjusted annually for inflation.
The top rate of 6.4% was lowered from 6.5% as part of a phased tax cut plan enacted in 2022, with a goal of eventually reaching 6%, depending on revenue growth.
Unlike neighboring North Carolina, which has a flat income tax rate of 4.5% in 2024, South Carolina’s progressive system allows lower-income residents to pay a smaller percentage of their earnings. This benefits retirees and workers with modest incomes, while higher earners may find the state’s top rate less favorable.
Filing Requirements
Residents and nonresidents with South Carolina income must file a state tax return if their earnings meet the federal filing threshold. The state follows federal guidelines, meaning those required to file a federal return generally need to file a South Carolina return. Full-year residents report all income, while part-year residents and nonresidents report only South Carolina-sourced earnings.
Taxpayers use Form SC1040 for individual income tax filings. Those earning income in multiple states may need to complete Schedule NR. The South Carolina Department of Revenue (SCDOR) encourages electronic filing through the SC Free File program, which speeds up processing and reduces errors.
Self-employed individuals and those with income not subject to withholding, such as rental earnings or investment gains, may need to make estimated tax payments. These are due quarterly on April 15, June 15, September 15, and January 15. Late or insufficient payments can result in penalties.
Exemptions and Deductions
South Carolina offers deductions and exemptions that reduce taxable income. Social Security benefits are fully exempt, and taxpayers 65 or older can deduct up to $15,000 of other retirement income, including pensions and IRA withdrawals. Those under 65 can deduct up to $3,000 from retirement distributions.
Military retirees receive a full exemption on military retirement pay. Contributions to South Carolina’s Future Scholar 529 College Savings Plan qualify for a dollar-for-dollar state tax deduction.
Homeowners 65 and older, as well as those who are permanently disabled, can benefit from the Homestead Exemption, which exempts the first $50,000 of a primary residence’s fair market value from property taxes.
Sales and Use Tax
South Carolina has a statewide sales tax of 6% on most retail purchases, leases, and rentals of tangible personal property. Local governments can impose additional sales taxes, bringing the total rate as high as 9% in some counties.
Use tax applies to out-of-state purchases when sales tax was not collected at the point of sale, such as online or catalog purchases. Individuals and businesses must report and pay use tax to the SCDOR.
Certain items are exempt or taxed at reduced rates. Groceries are exempt from state sales tax, though local taxes may still apply. Prescription medications and medical devices are also tax-exempt. Manufacturing equipment is taxed at a reduced 1% rate to encourage industrial investment.
Tax Payment Process
South Carolina taxpayers can make payments electronically through the SCDOR’s MyDORWAY portal, which allows direct bank withdrawals or credit card transactions. While electronic payments are encouraged, taxpayers can also mail checks or money orders with payment vouchers.
For those unable to pay in full, the SCDOR offers installment agreements for balances under $10,000. Interest and penalties continue to accrue, so paying as much as possible upfront minimizes additional costs. Unpaid tax debts can result in liens, wage garnishments, or other collection actions.
Refunds and Appeals
Taxpayers expecting a refund can check their status online through MyDORWAY. Most refunds are processed within six to eight weeks for paper filings, with electronic submissions processed faster. Delays may occur if additional verification is needed. Direct deposit is the fastest way to receive a refund.
If a taxpayer disagrees with an SCDOR assessment, they can file an appeal within 90 days of receiving the notice. The first step is submitting a written protest explaining the disagreement. If unresolved, the case may proceed to the South Carolina Administrative Law Court. Providing supporting documents, such as income records or deduction receipts, strengthens the appeal. Seeking professional tax assistance can improve the chances of a favorable outcome.