Yes, South Carolina has a state income tax

South Carolina charges state income tax on wages, investment income, and other earnings. The tax rate depends on your income level — the state uses a progressive tax system with rates ranging from 0% to 7%, meaning higher earners pay a higher percentage. Unlike some states, South Carolina does not have a flat tax rate that applies equally to everyone.

The state taxes both residents and non-residents who earn money within South Carolina. If you live in South Carolina, you pay tax on all income you earn, whether it comes from a job in the state or elsewhere. If you live outside South Carolina but work there, you typically owe tax only on the income you earned in the state.

Key Takeaways

  • South Carolina's income tax rates range from 0% to 7% depending on your income bracket, with higher earners paying higher percentages.
  • The state taxes residents on all income and non-residents on income earned within South Carolina only.
  • You report South Carolina income tax on Form SC 1040 when you file your state return, separate from your federal return.
  • South Carolina offers a standard deduction that reduces the income you owe tax on, and the amount changes each year.
  • If your employer withholds too much tax from your paychecks, you can claim a refund when you file your return.

How South Carolina's tax brackets work

South Carolina divides income into brackets, and you pay the listed rate only on income that falls within each bracket. For example, if you are single and earn $35,000, you do not pay 7% on all of it — you pay lower rates on the first portions and only the highest rate on the amount above the threshold for that bracket.

The exact brackets change slightly each year because the state adjusts them for inflation. For the most current year, the South Carolina Department of Revenue publishes the brackets on its website. The lowest bracket starts at 0% (meaning no tax on the first portion of your income), and the highest bracket reaches 7% on income above a certain threshold that varies by filing status — single, married filing jointly, or head of household.

Your filing status matters because the income ranges for each bracket differ. A married couple filing jointly reaches higher income levels before moving into the top bracket compared to a single filer. This is why it is important to use the correct bracket table for your situation when estimating what you owe.

Standard deduction and what it means for your tax bill

Before you calculate tax on your income, South Carolina allows you to subtract a standard deduction — a set dollar amount that reduces the income you owe tax on. For the 2024 tax year, the standard deduction varies by age and filing status. Younger filers get a smaller deduction, and filers age 65 and older get an additional amount.

The standard deduction means many lower-income residents owe no state income tax at all. If your income is below the standard deduction for your filing status, you have no state tax liability. For example, a single filer under 65 with income below the standard deduction owes nothing, even though the state has an income tax.

You can also choose to itemize deductions instead of taking the standard deduction if you have significant expenses like mortgage interest or charitable donations. Most people benefit from the standard deduction, but it is worth comparing both options when you file.

How to report your South Carolina income tax

You report South Carolina income tax on Form SC 1040, the state's individual income tax return. This is a separate form from your federal return — you file both with the IRS and the South Carolina Department of Revenue. If you use tax software, it typically handles both forms in one process.

You must file a state return if your income exceeds the standard deduction for your filing status, even if you do not owe any tax. Some people file anyway to claim a refund if their employer withheld too much tax throughout the year. The state's filing important date is the same as the federal important date, usually April 15.

If you are self-employed or have income not subject to withholding, you may need to make quarterly estimated tax payments to South Carolina. The Department of Revenue provides a worksheet to calculate these payments. Missing quarterly payments can result in penalties, so it is worth calculating them if you have significant self-employment income.

Tax withholding from your paycheck

When you start a job in South Carolina, your employer uses a withholding form to determine how much state income tax to take from each paycheck. The amount withheld depends on your income, filing status, and the number of dependents you claim. If your employer withholds the correct amount, you will owe nothing when you file — or receive a small refund.

If too much tax is withheld, you get a refund when you file your return. If too little is withheld, you owe the difference. You can adjust your withholding at any time by submitting a new form to your employer. This is useful if your life circumstances change — for example, if you get married, have a child, or take a second job.

Some people intentionally have extra tax withheld so they receive a larger refund at tax time. Others adjust their withholding to take home more pay each month. There is no single correct approach — it depends on your preference and financial situation.

Special situations: Military, retirement, and other income

South Carolina offers tax breaks for certain types of income. Military retirement pay is exempt from state income tax, meaning service members and veterans do not owe South Carolina tax on those benefits. Some pension income is also exempt, though the rules depend on when you retired and your age.

Social Security benefits are not taxed by South Carolina, even though they may be taxed at the federal level. If you receive distributions from a traditional IRA or 401(k), those are taxed as regular income. Distributions from a Roth IRA are generally not taxed because you already paid tax on the money when you contributed it.

If you have income from multiple states — for example, you worked in North Carolina and South Carolina in the same year — you report all income on your South Carolina return and claim a credit for taxes paid to other states. This prevents you from paying tax twice on the same income.

What happens if you do not file or pay

If you owe South Carolina income tax and do not file or pay, the Department of Revenue can take collection action. This includes placing a lien on your property, garnishing your wages, or intercepting your state tax refund. The state can also assess penalties and interest on unpaid tax, which grow over time.

If you cannot pay what you owe, contact the Department of Revenue to discuss payment options. The state may allow you to set up a payment plan, request a short delay, or in some cases reduce penalties if you have a valid reason for non-payment. Ignoring the debt makes the situation worse, so reaching out early is important.

If you believe you made a mistake on your return, you can file an amended return using Form SC 1040X. You have a limited time to do this — typically three years from the original filing date — so do not delay if you discover an error.

Frequently Asked Questions

Do I have to file a South Carolina tax return if I live out of state?

Only if you earned income in South Carolina during the year. If you worked in South Carolina but live elsewhere, you file a part-year resident return reporting only the income you earned in the state. If you earned no income in South Carolina, you do not file a state return.

Is South Carolina income tax deductible on my federal return?

You can deduct state income tax paid on your federal return, but only if you itemize deductions instead of taking the standard deduction. Most people benefit more from the federal standard deduction, so they do not deduct state taxes. Check both options when you file to see which gives you a larger deduction.

What if my employer did not withhold enough state tax?

You will owe the difference when you file your return. You can adjust your withholding going forward by submitting a new form to your employer so less tax is withheld in future paychecks. If you expect to owe again next year, making this adjustment prevents a large bill at tax time.

Can I get a refund if I overpaid state income tax?

Yes. If your employer withheld more tax than you owe, you receive a refund when you file your return. The refund is issued by check or direct deposit, depending on how you file. Refunds typically arrive within four to six weeks of the Department of Revenue processing your return.

Does South Carolina tax retirement income differently?

Military retirement is completely exempt. For other pensions and retirement account distributions, the rules vary by age and when you retired. The Department of Revenue website has a detailed guide on retirement income. If you receive a pension, it is worth reviewing to understand whether your specific income is taxed.