South Carolina charges a state income tax on wages, investment income, and other earnings

South Carolina has a state income tax that applies to residents and part-year residents who earn money within the state. Unlike some states, South Carolina does not have a flat tax rate — instead, the tax uses a progressive system where the percentage you pay increases as your income rises. The state also taxes certain types of investment income, retirement distributions, and business profits.

If you work in South Carolina or live there, you will owe state income tax on most types of income. The state Department of Revenue handles collection and enforcement. Your employer typically withholds state income tax from your paycheck automatically, similar to federal withholding, so you do not have to pay a lump sum at tax time — though you may owe more or receive a refund depending on your actual tax liability.

Key Takeaways

  • South Carolina uses tax brackets that range from 0% to 7%, with the rate depending on your total income for the year.
  • Your employer should withhold state income tax from each paycheck if you work in South Carolina or are a resident.
  • You must file a South Carolina state tax return if your income exceeds the filing threshold, which varies by age and filing status.
  • Certain types of income, including Social Security benefits and some retirement distributions, may be partially or fully exempt from state tax.
  • The state offers tax credits for things like dependent care expenses and education costs that can reduce what you owe.

South Carolina tax brackets and rates for 2024

South Carolina's income tax brackets are adjusted each year for inflation. For the 2024 tax year, the rates start at 0% for the lowest income earners and climb to 7% for the highest. The exact dollar amounts where each bracket begins depend on your filing status — whether you file as single, married filing jointly, head of household, or another category.

The brackets are structured so that you do not pay the top rate on all your income, only on the portion that falls within that bracket. For example, if you are single and your income falls partly in the 5% bracket and partly in the 6% bracket, you pay 5% on the lower portion and 6% on the higher portion. The South Carolina Department of Revenue publishes the exact bracket amounts each January on their website.

Because brackets change yearly, your tax bill can shift even if your income stays the same. It is worth checking the current year's brackets before you estimate what you will owe, especially if you are self-employed or have irregular income.

Who must file a South Carolina state tax return

You must file a South Carolina return if your income exceeds a certain threshold. That threshold depends on your age and filing status. Generally, if you are under 65 and single, you file if your income is above a set amount; if you are married filing jointly, the threshold is higher; and if you are 65 or older, you may have a higher threshold as well.

Even if you do not meet the filing requirement, you should file if your employer withheld state income tax from your paychecks. Filing allows you to claim a refund of any overpayment. You will also want to file if you are claiming tax credits, such as the Earned Income Tax Credit or the Child and Dependent Care Credit, because these credits can reduce your tax bill below zero and result in a refund.

The South Carolina Department of Revenue website lists the exact income thresholds for the current year. If you are unsure whether you need to file, checking those thresholds takes only a few minutes and can save you from missing a important date.

Types of income that are taxed in South Carolina

South Carolina taxes earned income — wages, salaries, tips, and self-employment income — at the rates shown in the brackets above. It also taxes unearned income such as interest, dividends, and capital gains (profit from selling stocks or property). Rental income, business income, and income from partnerships or S corporations are also subject to state tax.

Some types of income receive special treatment. Social Security benefits are generally not taxed by South Carolina, even though they may be taxed at the federal level. Distributions from a traditional IRA or 401(k) are taxed as ordinary income. However, South Carolina offers a deduction for certain retirement income: if you are 59½ or older, you may deduct up to $10,000 per year of retirement income, including IRA distributions, pension payments, and annuity income.

Military retirement pay, federal employee retirement pay, and certain other government pensions may also may have access to for deductions. The rules are specific, so if you receive retirement income, it is worth reviewing the Department of Revenue's guidance or speaking with a tax professional to understand what portion, if any, is exempt from state tax.

How withholding works and what to do if it is wrong

When you start a job in South Carolina, your employer asks you to complete a Form SC W-4, which tells them how much state income tax to withhold from your paycheck. The amount withheld is based on your filing status, the number of dependents you claim, and any additional withholding you request. Your employer sends the withheld amount to the South Carolina Department of Revenue on your behalf.

If too much tax is withheld, you will receive a refund when you file your return. If too little is withheld, you will owe money. You can adjust your withholding at any time by submitting a new Form SC W-4 to your employer. This is useful if your life circumstances change — for example, if you get married, have a child, or take on a second job.

To estimate whether your withholding is correct, add up all the income you expect for the year and calculate your estimated tax using the current brackets. Compare that to the total amount your employer will withhold over the year. If there is a large gap, ask your employer's payroll department to adjust your withholding, or file a new W-4 form yourself.

Tax credits and deductions that reduce what you owe

South Carolina offers several tax credits that directly reduce your tax bill. The Earned Income Tax Credit is available to lower-income workers and can result in a refund even if you owe no tax. The Child and Dependent Care Credit helps offset the cost of childcare or care for a dependent adult. The Education Credit provides relief for certain education expenses.

In addition to credits, South Carolina allows deductions that reduce your taxable income before tax is calculated. These include the standard deduction (a set amount based on your filing status) or itemized deductions if you choose to list specific expenses like mortgage interest or charitable donations. The retirement income deduction mentioned earlier is another example — it reduces your taxable income if you are over 59½ and receive may have access to retirement income.

The difference between a credit and a deduction matters: a credit reduces your tax dollar-for-dollar, while a deduction reduces the income on which tax is calculated. Credits are generally more valuable. The South Carolina Department of Revenue publishes a full list of available credits and deductions each year in their tax guide.

Filing your South Carolina state tax return

You can file your South Carolina return on paper or electronically. The state accepts returns filed through the IRS Free File program if you meet income limits, and many tax software providers allow you to file your state return at the same time you file your federal return. If you file on paper, you mail your return and any supporting documents to the South Carolina Department of Revenue.

The important date to file is the same as the federal important date, typically April 15 of the year following the tax year. If you cannot file by that date, you can request an extension, which gives you until October 15 to file without penalty — though any tax you owe is still due by April 15.

You will need your Social Security number, your W-2 forms from employers, and documentation of any other income or deductions you are claiming. If you are self-employed, you will also need records of your business income and expenses. Keep copies of everything you file for at least three years in case the Department of Revenue has questions.

Frequently Asked Questions

Do I have to pay South Carolina income tax if I work there but live in another state?

Yes. South Carolina taxes income earned within the state, regardless of where you live. However, your home state may also tax that income. To avoid double taxation, most states offer a credit for taxes paid to another state. You may need to file returns in both states and claim a credit on one of them.

Is Social Security taxed in South Carolina?

No. South Carolina does not tax Social Security benefits. However, if you have other income in addition to Social Security, that other income is taxed normally. Some retirement income, such as IRA distributions, may be partially deductible if you are 59½ or older.

What happens if I do not file a return when I should have?

The South Carolina Department of Revenue may assess penalties and interest on any unpaid tax. If you realize you missed a important date, file as soon as possible. The sooner you file, the lower the penalties will be. If you are owed a refund, there is no penalty for filing late, though you may lose the refund if you wait more than three years.

Can I file my South Carolina return if I do not have a Social Security number?

You need either a Social Security number or an Individual Taxpayer Identification Number (ITIN) to file. If you do not have a Social Security number, you can explore for an ITIN through the IRS. The process process takes several weeks, so plan ahead if you need one.

What is the difference between the standard deduction and itemizing?

The standard deduction is a fixed amount based on your filing status that reduces your taxable income automatically. Itemizing means listing specific expenses (mortgage interest, charitable donations, medical expenses) instead. You choose whichever method gives you the larger deduction. Most people use the standard deduction because it is simpler and often results in a larger reduction.