South Carolina’s state income tax is a primary mechanism for funding public services, including education, infrastructure, and law enforcement. The tax system requires residents, and certain non-residents with income from the state, to contribute a portion of their earnings. This article provides a look at the state’s income tax rates, how taxable income is determined, and the deductions and credits that can affect a taxpayer’s final liability.
South Carolina’s Current Income Tax Rates and Brackets
South Carolina employs a marginal tax rate system, meaning your income is taxed at progressively higher rates as it increases. For the 2024 tax year, the state has simplified its structure, with rates ranging from 0% to a top rate of 6.2%, a reduction from previous years. The state legislature has passed measures to continue lowering this top marginal rate in subsequent years, contingent on state revenue projections.
The tax brackets are adjusted annually for inflation. In this progressive system, not all of your income is taxed at the highest rate you qualify for; a portion falls into the 0% bracket, the next into the 3% bracket, and only income above a certain threshold is taxed at the top rate. The South Carolina Department of Revenue (SCDOR) provides official tax tables each year to help taxpayers determine their tax based on their taxable income.
Determining Your South Carolina Taxable Income
The starting point for calculating your South Carolina income tax is your federal taxable income. This is the income figure from your federal return after you have taken either the federal standard or itemized deductions. The state conforms to the Internal Revenue Code as of December 31, 2023.1Justia. South Carolina Code Section 12-6-40 (2024) – Application of federal Internal Revenue Code to State tax laws.
From your federal taxable income, you must make certain state-specific adjustments to arrive at your South Carolina taxable income. For instance, you must add back interest earned from obligations of other states but can subtract income such as military retirement pay or Social Security benefits. Another subtraction is the 44% deduction for net long-term capital gains.2Justia. South Carolina Code Section 12-6-1150 (2024) – Net capital gain; deduction from taxable income for individuals, estates, and trusts.
Your filing status—Single, Married Filing Jointly, or Head of Household—directly corresponds to the tax brackets used to calculate your tax.
Common South Carolina Income Tax Deductions
South Carolina does not offer its own standard deduction but provides several state-specific deductions. A deduction is available for retirement income, and all military retirement pay is fully deductible. For other qualifying retirement income, taxpayers can deduct up to $3,000 annually until age 65, which increases to a maximum of $10,000 at age 65 and older.3Justia. South Carolina Code Section 12-6-1170 (2024) – Retirement income deduction from taxable income for individual; Section 12-6-1171 deduction.
Social Security benefits are also exempt from state tax. Additionally, the state offers a dependent exemption of $4,790 for each eligible dependent for the 2024 tax year.
Valuable South Carolina Tax Credits
Unlike deductions that reduce your taxable income, tax credits directly reduce your tax liability on a dollar-for-dollar basis. These are applied after your tax has been calculated and can significantly lower the final amount you owe. South Carolina offers several credits aimed at providing relief to specific groups of taxpayers and encouraging certain activities. These include:
- A credit for child and dependent care expenses, which is equal to 7% of your federally allowed expenses for this care.4Justia. South Carolina Code Section 12-6-3380 (2024) – Tax credit for child and dependent care expenses.
- A credit for taxes paid to another state, which prevents double taxation for residents who earn income in another state.5Justia. South Carolina Code Section 12-6-3400 (2024) – Credit for income tax paid by South Carolina resident to another state.
- A non-refundable earned income tax credit that is 125% of the federal credit, providing relief to low-to-moderate income working families.
- A credit for up to $400 in unreimbursed supply expenses for classroom teachers.
- A college tuition credit that allows you to claim 50% of tuition paid to a South Carolina college or university, up to a maximum of $1,500 per year.6Justia. South Carolina Code Section 12-6-3385 (2024) – Income tax credit for tuition; definitions.
Filing Your South Carolina Income Tax Return
Once your tax liability is calculated, you must file a return with the South Carolina Department of Revenue. The standard deadline for filing your individual income tax return is April 15.7Justia. South Carolina Code Section 12-6-4970 (2022) – Time to file returns. The SCDOR encourages electronic filing, which can be done through approved tax preparation software or directly via their online portal, MyDORWAY, as it is faster, more secure, and results in quicker processing of any refund.
If you choose to file by paper, you must use the correct forms, primarily the SC-1040, and mail them to the address specified in the form instructions. Tax forms are available for download on the SCDOR website. If you owe taxes, payment can be made online through MyDORWAY or by mailing a check or money order with a payment voucher.
Should you need more time to prepare your return, you can request an extension to file, but this does not extend the deadline to pay any taxes owed.8Justia. South Carolina Code Section 12-6-4980 (2021) – Extension of time for filing return. After filing, you can track the status of your refund online through the SCDOR website.