What Is South Carolina State Income Tax?

South Carolina imposes a state income tax on individuals to fund public services and programs, including infrastructure and education. This tax system aligns with federal income tax laws, using federal taxable income as a starting point. Individuals earning income within South Carolina are generally subject to this tax. Understanding these rules helps taxpayers fulfill their obligations and identify available benefits.

Determining Who Pays

South Carolina’s income tax obligations vary based on an individual’s residency status. Residents are generally subject to tax on all income earned, regardless of its source, while non-residents are taxed only on income derived from South Carolina sources. Individuals who move into or out of the state during the tax year are considered part-year residents, facing specific rules for income allocation.

A South Carolina resident for tax purposes is typically anyone domiciled in the state, meaning it is their permanent home. Residents are taxed on their total income, whether earned within or outside South Carolina. To prevent double taxation, South Carolina offers a tax credit for income taxes paid to another state on income earned there.

Non-residents are taxed exclusively on income earned from South Carolina sources. This includes wages for work performed in the state, income from property located in South Carolina, or earnings from businesses operating within the state. Non-residents report only their South Carolina-sourced income.

Part-year residents are individuals who establish or abandon residency in South Carolina during the tax year. They have two filing options: compute their tax as a full-year resident, claiming a credit for taxes paid to another state, or file as a non-resident, reporting only income earned while a South Carolina resident or from South Carolina sources.

Understanding Taxable Income and Adjustments

South Carolina’s income tax system largely mirrors federal income tax laws, using federal taxable income as its foundation. This means many of the income components, adjustments, and deductions accepted at the federal level are also recognized by the state. However, South Carolina applies its own specific modifications that can impact a taxpayer’s final taxable income amount.

Gross income components generally included in South Carolina taxable income encompass common earnings such as wages, salaries, and tips. Other forms of income like interest, dividends, business income, and capital gains are also typically included. South Carolina generally conforms to the Internal Revenue Code.

Taxpayers can reduce their gross income to arrive at South Carolina taxable income through various adjustments and deductions. South Carolina allows taxpayers to choose between a standard deduction or itemized deductions, similar to federal tax rules. For the 2025 tax year, the standard deduction is $15,000 for single filers and $30,000 for married couples filing jointly. Common itemized deductions include state income taxes paid, property taxes, mortgage interest, and charitable contributions.

South Carolina also provides specific exemptions and deductions that can further reduce taxable income. For instance, the dependent exemption for 2024 is $4,790 for each eligible dependent, encompassing both qualifying children and qualifying relatives. A notable deduction for retirees allows individuals receiving qualified retirement income to deduct up to $3,000 annually until age 65, and up to $10,000 annually after reaching age 65. Residents aged 65 or older may claim an additional deduction of up to $15,000 against any South Carolina income. Social Security benefits and military retirement pay are exempt from South Carolina income tax.

Calculating Your Tax Obligation

After determining taxable income, the next step involves calculating the actual tax obligation using South Carolina’s progressive tax bracket system. This system means that different portions of an individual’s income are taxed at increasing rates. South Carolina utilizes three tax brackets, with rates ranging from zero to a top marginal rate, which is scheduled to reduce to 6% for the 2025 tax year.

To apply the rates, taxable income is divided into segments, with each segment taxed at its corresponding bracket rate. Income within the lowest bracket is taxed at 0%, while income exceeding certain thresholds is subject to higher rates. Unlike some other states, South Carolina applies the same tax brackets regardless of filing status, whether single, married filing jointly, or head of household.

Once the preliminary tax liability is determined, various South Carolina tax credits can directly reduce the amount owed, dollar-for-dollar. For instance, the Child and Dependent Care Credit allows full-year residents to claim 7% of their federal child and dependent care expenses, with a maximum credit of $210 for one child or $420 for two or more children. The Two Wage Earner Credit is available for married couples filing jointly where both spouses have earned income taxed in South Carolina, providing a credit based on the lower-earning spouse’s qualified income.

Additionally, South Carolina offers an Earned Income Tax Credit (EITC) that is 125% of the federal EITC, designed to assist low- to moderate-income working individuals and families. A refundable tuition tax credit is also available for students attending in-state higher education institutions, equal to 50% of tuition paid, not to exceed $1,500 per tax year for both two-year and four-year institutions. These credits directly lower the final tax bill, differing from deductions which reduce the amount of income subject to tax.

Filing and Payment

Individuals generally required to file a South Carolina income tax return include residents who must file a federal return, and non-residents or part-year residents with income from South Carolina sources. The standard annual filing deadline for South Carolina income tax returns is April 15th. South Carolina has sometimes extended the deadline for electronically filed returns to May 1st without penalty, though this does not apply to federal returns or paper filings.

If more time is needed to file, taxpayers can request a six-month filing extension. An extension to file is not an extension to pay; any taxes owed are still due by the original deadline.

Various methods are available for paying South Carolina income tax, including online and mail options. For estimated tax payments, which may be required if a taxpayer expects to owe an amount not covered by withholding, payments are generally due in four installments throughout the year: April 15, June 15, September 15, and January 15 of the following year.