Social Security is taxed differently in South Carolina than in most other states

South Carolina does not tax federal Social Security benefits at the state level. If Social Security is your only income, you owe no state income tax on those payments. However, you may still owe federal income tax on your benefits, and that federal tax applies regardless of where you live.

The key distinction is between state and federal taxation. South Carolina's state income tax code excludes Social Security benefits entirely—they are not subject to the state's income tax rate. But the federal government taxes Social Security under different rules, and those rules depend on your total income, not just your benefits.

If you receive other income alongside Social Security—such as wages, pensions, interest, or dividends—your total income determines whether your federal tax bill includes Social Security. South Carolina residents follow the same federal thresholds as everyone else.

Key Takeaways

  • South Carolina does not tax Social Security benefits at the state level, so state income tax on your benefits is zero.
  • Federal income tax on Social Security depends on your combined income (Social Security plus other sources), not on state rules.
  • If your combined income exceeds certain thresholds, up to 85 percent of your Social Security benefits may be subject to federal tax.
  • You do not have to file a South Carolina state return if Social Security is your only income, but you may need to file a federal return.
  • Married couples filing jointly have different income thresholds than single filers, and the rules change if you are married filing separately.

How federal taxation of Social Security works

The federal government uses a formula based on your combined income to determine how much of your Social Security is taxable. Combined income means your adjusted gross income plus nontaxable interest plus half of your Social Security benefits. This formula applies to all U.S. residents, including South Carolina residents.

For 2024, if you are single and your combined income is between $25,000 and $34,000, you may owe federal tax on up to 50 percent of your benefits. If your combined income exceeds $34,000, up to 85 percent of your benefits may be taxable. These thresholds have not changed since 1993 and do not adjust for inflation each year.

If you are married filing jointly, the thresholds are higher: between $32,000 and $44,000 triggers taxation on up to 50 percent of benefits, and above $44,000 can trigger taxation on up to 85 percent. If you are married filing separately, almost all of your Social Security is likely taxable regardless of income.

You receive a Form SSA-1099 each January showing your Social Security income for the previous year. You use this amount on your federal tax return to calculate whether any portion is taxable.

When you need to file a federal return

The IRS sets a filing threshold based on your filing status and age. For 2024, a single person under 65 with only Social Security income does not need to file a federal return unless benefits exceed $14,600. If you are 65 or older, the threshold is $18,350. These amounts change each year.

However, you may want to file even if you are not required to. If federal tax was withheld from your benefits, filing allows you to claim a refund. If you have other income sources, filing may lower your overall tax burden or help you claim credits you would otherwise miss.

You can check your filing requirement using the IRS Interactive Tax Assistant tool on irs.gov, or you can speak with a tax professional. The Social Security Administration does not determine your federal filing requirement—only the IRS does.

South Carolina state tax filing requirements

South Carolina requires you to file a state return if your gross income exceeds the state threshold for your filing status. For 2024, a single person must file if gross income is $3,700 or more; a married couple filing jointly must file if combined gross income is $7,400 or more.

The critical point: Social Security benefits do not count toward this threshold in South Carolina. If your only income is Social Security, your gross income is zero for state purposes, and you have no state filing requirement. If you have wages or other income, you count only that income—not your Social Security—when deciding whether to file.

This is one of the few states where Social Security is completely excluded from state taxation. It means your state tax burden is based only on non-Social Security income.

What to do if you receive other income besides Social Security

If you work part-time, receive a pension, or have investment income, your situation becomes more complex. You will likely owe both federal and state tax on that other income. South Carolina taxes wages, pensions, and investment income at the state level using a progressive tax rate ranging from 0 percent to 7 percent depending on your income bracket.

Your Social Security still is not taxed by South Carolina, but you must report your other income on your state return. The state return asks for your gross income from all sources except Social Security. You then calculate state tax on that amount.

At the federal level, your other income combines with half your Social Security benefits to determine whether any Social Security is federally taxable. This is where the combined income threshold matters. A person with $30,000 in pension income and $20,000 in Social Security has a combined income of $40,000 (pension plus half the Social Security), which likely triggers federal tax on some benefits.

Tax withholding from Social Security payments

You can request that the Social Security Administration withhold federal income tax from your monthly benefit payment. This is optional—the default is no withholding. If you choose withholding, you can select 7 percent, 10 percent, 12 percent, or 22 percent of your benefit.

Withholding does not change whether your benefits are taxable; it only prepays your federal tax throughout the year. If you expect to owe federal tax on your benefits, withholding can prevent a large bill when you file your return. You request withholding using Form W-4V, which you submit to your local Social Security office or mail to the address on ssa.gov.

South Carolina does not allow withholding of state tax from Social Security because the state does not tax Social Security. Withholding applies only to federal tax.

Planning ahead: income sources and tax brackets

If you are approaching retirement or recently retired, understanding how different income sources interact can help you manage your tax bill. Withdrawals from traditional IRAs and 401(k) plans count toward your combined income for Social Security taxation purposes. Roth IRA withdrawals do not. Pension income counts. Wages count. Interest and dividends count.

Some people delay claiming Social Security until a later age to reduce their combined income in early retirement years, which can lower the portion of benefits that are federally taxable. Others coordinate when they withdraw from retirement accounts to keep combined income below the federal thresholds. A tax professional or financial advisor can model these scenarios for your specific situation.

South Carolina's exclusion of Social Security from state tax is a permanent benefit, but federal taxation depends on your choices about when and how much to claim from other sources.

Frequently Asked Questions

Do I have to pay South Carolina state tax on my Social Security?

No. South Carolina excludes all Social Security benefits from state income tax. Even if you have a large Social Security income, you owe zero state tax on it. You may owe federal tax depending on your total income, but not state tax.

What if I live in South Carolina but worked in another state?

Your state of residence determines which state taxes your income. If you live in South Carolina, you file a South Carolina return and follow South Carolina rules, which exclude Social Security. If you worked in another state, that state's tax on your wages may still explore depending on where you worked and where you lived at the time.

Can I reduce my federal tax on Social Security by moving to South Carolina?

No. Federal taxation of Social Security is the same everywhere in the United States. Moving to South Carolina saves you state tax on Social Security, but it does not change your federal tax. The federal thresholds and taxation rules explore to all residents regardless of state.

Do I need to file a South Carolina return if I only receive Social Security?

No. Since Social Security does not count toward South Carolina's filing threshold, and you have no other income, you have no state filing requirement. You may still need to file a federal return depending on the IRS threshold for your age and filing status.

What if I receive both a pension and Social Security?

You owe South Carolina state tax on the pension but not on the Social Security. You report the pension income on your state return. At the federal level, your pension plus half your Social Security determines whether any benefits are federally taxable. The federal combined income threshold applies.