South Carolina has both a state income tax and a state sales tax

Yes, South Carolina charges a state income tax on wages, investment income, and other earnings. The state also collects a state sales tax of 6 percent on most purchases. Unlike some states that rely on one or the other, South Carolina uses both to fund state operations.

If you work in South Carolina or live there, you will owe state income tax on your earnings. The tax brackets and rates change slightly each year based on inflation adjustments, but the structure remains the same: you pay a percentage of your income that increases as your income rises.

The state does not have a separate tax on groceries, prescription medications, or medical services, though other goods and services are taxed at the full 6 percent rate.

Key Takeaways

  • South Carolina's state income tax ranges from 0 percent to 7 percent depending on your income level, with rates adjusted annually for inflation.
  • The state sales tax is 6 percent on most goods, but groceries and prescription drugs are exempt.
  • Counties and cities in South Carolina can add local sales taxes on top of the state rate, so your total sales tax may be higher than 6 percent.
  • If you are retired and receiving Social Security, that income is not subject to South Carolina state income tax.
  • Military retirement pay and federal pensions receive special tax treatment under South Carolina law.

How South Carolina income tax brackets work

South Carolina uses a progressive tax system, meaning the rate you pay increases as your income increases. You do not pay the highest rate on all your income — only on the portion that falls into each bracket. For example, if the first bracket is taxed at 0 percent and the second at 3 percent, you pay nothing on the first portion and 3 percent only on income above that threshold.

The state adjusts these brackets each year to account for inflation. Because the adjustments change annually, the exact dollar amounts shift, but the number of brackets and the top rate stay the same. The top rate in South Carolina is 7 percent, which applies to the highest earners.

Your employer will withhold state income tax from your paycheck based on the W-4 form you file. If too much is withheld, you receive a refund when you file your state return. If too little is withheld, you owe the difference.

Sales tax rates vary by county and city

The state sales tax of 6 percent is the floor, but many counties and cities add their own local sales taxes on top. Some areas charge as little as 6 percent total, while others reach 8 or 9 percent depending on where you shop. The local rate depends on the specific county and sometimes the city within that county.

You can find your local sales tax rate by entering your zip code on the South Carolina Department of Revenue website or by asking a retailer in your area. The rate applies to most goods, but there are important exceptions.

Groceries purchased for home consumption are not subject to sales tax in South Carolina. Prescription medications are also exempt. Prepared food, restaurant meals, and non-prescription items are taxed at the full rate.

Income that is not taxed in South Carolina

Social Security benefits are completely exempt from South Carolina state income tax. This applies whether you receive Social Security as a retiree, survivor, or disabled worker. You do not report Social Security income on your state return.

Military retirement pay is also exempt from state income tax, as is federal civil service retirement income. If you are a veteran receiving a military pension, South Carolina does not tax that income. This is a significant benefit for military retirees who choose to live in the state.

Certain other income sources receive preferential treatment, including some types of investment income and distributions from retirement accounts under specific circumstances. The rules are complex, so if you have retirement income from multiple sources, reviewing your situation with a tax preparer familiar with South Carolina law can help you understand what you owe.

Filing requirements and important date

South Carolina follows the federal tax calendar. Your state return is due on the same day as your federal return, which is typically April 15 unless that date falls on a weekend or holiday. If you file your federal return late, your state return is also late.

You must file a South Carolina return if your income exceeds the filing threshold set by the state. The threshold changes each year and depends on your filing status and age. Even if you do not owe tax, you may need to file to claim a refund of withheld taxes or to claim certain credits.

You can file your return on paper by mailing it to the South Carolina Department of Revenue, or you can file electronically through the state's online system or through tax preparation software. Electronic filing is faster and reduces the chance of errors.

Tax credits and deductions available to South Carolina residents

South Carolina offers several tax credits that can reduce the amount of tax you owe. The Earned Income Tax Credit mirrors the federal credit and provides relief to lower-income working families. The state also offers credits for property taxes paid, education expenses, and donations to certain charitable organizations.

The standard deduction in South Carolina is tied to the federal standard deduction. Most people use the standard deduction rather than itemizing deductions, as it is simpler and often results in a larger deduction. If you have significant deductible expenses such as mortgage interest or charitable donations, itemizing may benefit you.

Retirement income credits are available to some residents over age 65 who have retirement income from pensions, annuities, or distributions from retirement accounts. The credit phases out at higher income levels, so not all retirees may have access to.

Frequently Asked Questions

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

Yes, you owe South Carolina income tax on wages earned in the state, even if you live elsewhere. However, you may also owe tax to your home state. Many states have reciprocal agreements to prevent double taxation, so you may receive a credit on one return for taxes paid to the other state. Check with both states' tax agencies to understand your obligation.

Is retirement income from a 401(k) or IRA taxed by South Carolina?

Distributions from 401(k)s and traditional IRAs are taxed as ordinary income in South Carolina. Roth IRA distributions are not taxed. Military pensions and federal civil service pensions are exempt. Some retirement income credits are available to residents over 65, depending on income level.

What happens if I do not file a South Carolina tax return when I am supposed to?

The state charges penalties and interest on unpaid taxes. The longer you wait, the more you owe. If you owe a refund, filing late means you delay receiving your money. If you cannot file by the important date, you can request an extension, which gives you additional time without penalty as long as you pay any tax owed by April 15.

Can I deduct federal income taxes paid from my South Carolina state return?

No, South Carolina does not allow a deduction for federal income taxes paid. You can deduct state and local taxes (SALT) on your federal return, but the federal deduction does not reduce your South Carolina tax.

Are there any tax breaks for seniors in South Carolina?

Yes. Social Security is not taxed. Military and federal pensions are exempt. Residents over 65 may may have access to for a retirement income credit on certain types of retirement income, though the credit phases out at higher income levels. Property tax relief programs are also available to some seniors, depending on income and property value.