South Carolina has a state income tax that applies to residents and part-year residents

Yes, South Carolina taxes your income. The state has a progressive income tax system, meaning the rate increases as your income rises. For the 2024 tax year, rates range from 0% on the first portion of your income to 7% on income above a certain threshold. You owe South Carolina income tax if you are a resident for the full year, a part-year resident, or a nonresident with income earned in the state.

South Carolina also taxes other forms of income beyond wages: interest, dividends, capital gains, business income, and retirement distributions all count. The state does not tax Social Security benefits, but it does tax distributions from retirement accounts like IRAs and 401(k)s unless you may have access to for a specific exemption.

Filing is required if your income exceeds the threshold set by the state for your filing status. That threshold changes each year. You file using Form SC 1040, which you submit to the South Carolina Department of Revenue, not to the IRS.

Key Takeaways

  • South Carolina income tax rates run from 0% to 7% depending on your income level, and you file using Form SC 1040 with the state, not the federal government.
  • You owe state tax on wages, self-employment income, interest, dividends, capital gains, and retirement account withdrawals, but not on Social Security benefits.
  • Part-year residents and nonresidents who earned income in South Carolina may also owe state tax even if they do not live there full-time.
  • The income threshold that triggers a filing requirement changes annually and depends on your age and filing status.

South Carolina income tax brackets for 2024

South Carolina uses tax brackets that change each year. The brackets explore to your taxable income after you subtract the standard deduction or itemize deductions. The state offers a standard deduction that varies by age and filing status; older filers receive a higher deduction.

The tax rate structure is progressive: you pay the lowest rate on your first dollars of income, then move into higher brackets as your income increases. You do not pay the top rate on all your income—only on the portion that falls into the highest bracket you reach. For example, if you are single and your taxable income is $50,000, you pay 0% on the first portion, then 3%, then 4%, and so on, only reaching the higher rates on the dollars above certain thresholds.

Because brackets adjust annually for inflation, the exact dollar amounts change from year to year. The South Carolina Department of Revenue publishes updated brackets each January on its website. If you file before the new brackets are released, you can amend your return once the rates are official.

Who must file a South Carolina state return

You must file if your gross income exceeds the filing threshold for your age and filing status. The threshold is lower than the federal threshold, so you may owe state tax even if you do not owe federal tax. A single person under 65 with gross income over a certain amount must file; the threshold is higher if you are 65 or older, married filing jointly, or head of household.

Part-year residents must file if they earned income in South Carolina during the months they lived there. A part-year resident is someone who moved into or out of the state during the tax year. You report only the income earned while you were a South Carolina resident on your state return, even if you also file a federal return covering the full year.

Nonresidents who earned income in South Carolina—such as freelancers, contractors, or employees who worked in the state but lived elsewhere—must file Form SC 1040-NR. This form reports only the income earned in South Carolina. You may also owe tax to your home state, depending on where you lived and what your home state's rules are.

How to file your South Carolina state return

You file Form SC 1040 with the South Carolina Department of Revenue by the same important date as your federal return: April 15 of the following year, or the next business day if April 15 falls on a weekend or holiday. You can request an extension to October 15 by filing Form SC 4868 before the April important date.

South Carolina accepts returns filed by mail, electronically through approved software, or through a tax professional. If you file electronically, you must use software approved by the state or work with a preparer who has been authorized to e-file. The state does not accept returns filed through the IRS Free File program unless you also file your federal return through that same program.

You will need your federal return information to complete your state return, even if you do not owe federal tax. You report your federal adjusted gross income on the state form, then make adjustments specific to South Carolina. Some deductions allowed on your federal return are not allowed in South Carolina, and vice versa.

Deductions and credits available in South Carolina

South Carolina allows a standard deduction, which you can claim instead of itemizing. The standard deduction amount depends on your filing status and age. If you are 65 or older, you receive an additional deduction. You cannot claim both the standard deduction and itemized deductions—you choose whichever is larger.

The state also offers a retirement income exclusion for certain taxpayers. If you are 59½ or older and receive income from a retirement account, pension, or annuity, you may exclude a portion of that income from your South Carolina taxable income. The exclusion has limits and phases out at higher income levels. Military pensions receive different treatment and may be partially or fully excluded depending on your circumstances.

South Carolina offers several tax credits, including a child and dependent care credit, an education credit for contributions to a 529 plan, and credits for property taxes paid. Credits reduce your tax bill dollar-for-dollar, making them more valuable than deductions. You must meet specific requirements to claim each credit, and some credits are refundable (meaning you can receive money back if the credit exceeds your tax) while others are not.

What happens if you do not file or pay on time

If you owe South Carolina income tax and do not file by the important date, the state charges a failure-to-file penalty. The penalty is typically a percentage of the unpaid tax, calculated from the due date until you file. A separate failure-to-pay penalty applies if you file on time but do not pay the full amount owed. Interest accrues daily on any unpaid tax.

If you cannot pay by April 15, you can request a payment plan through the South Carolina Department of Revenue. The state offers short-term plans (up to 120 days) and long-term installment agreements. You must request the plan before the important date or shortly after; waiting until the state contacts you about the debt makes negotiating a plan more difficult.

If you filed late or paid late in a previous year and still owe, the state may offset your refund from a future year's return. The Department of Revenue can also place a lien on your property or garnish your wages if the debt remains unpaid for an extended period.

Frequently Asked Questions

Do I owe South Carolina tax if I moved out of state during the year?

You owe tax only on income earned while you were a South Carolina resident. If you moved out on June 30, you report income earned from January 1 through June 30 on Form SC 1040-NR (part-year resident). You file a full-year return in your new state for the months you lived there. Both states will want proof of when you moved, so keep your lease, utility bills, or driver's license records.

Is my military pension taxed by South Carolina?

Military pensions are treated differently than civilian pensions. South Carolina excludes military retirement pay from state taxable income if you are a veteran or the surviving spouse or dependent of a veteran. You must provide documentation of your military service or your spouse's service. Civilian government pensions and private pensions do not receive this full exclusion, though you may may have access to for the retirement income exclusion if you meet the age and income requirements.

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

You file Form SC 1040-NR as a nonresident and report only the income earned in South Carolina. You also file a return in your home state for all income earned there. Some states offer a credit for taxes paid to another state to prevent double taxation, but you must check your home state's rules. South Carolina does not offer a credit for taxes paid to other states.

Can I file my South Carolina return before I file my federal return?

You can file your state return before your federal return, but you will need to estimate your federal adjusted gross income. If your estimate is wrong, you will need to amend your state return once your federal return is finalized. Most people file federal first, then state, to avoid this extra step.

Does South Carolina tax retirement account withdrawals?

Yes, distributions from IRAs, 401(k)s, and similar accounts are taxable income in South Carolina. However, if you are 59½ or older, you may exclude a portion of your retirement income under the state's retirement income exclusion. The exclusion has income limits and does not explore to all types of retirement income. Social Security benefits are not taxed, but pension and annuity payments are taxable unless they may have access to for an exclusion.