Question 1

What is South Carolina's state income tax rate for 2025?

Accepted Answer

South Carolina taxes personal income under a 3-bracket progressive structure for tax year 2025: 0% on the first $3,560, 3% on income from $3,561 to $17,830, and a top marginal rate of 6.0% on income above $17,830, uniform across filing statuses, per South Carolina Department of Revenue Form SC1040TT (Revised 6/17/25) and S.C. Code Ann. §12-6-510. The 6.0% top rate was reduced from 6.2% by a 2025 budget proviso; brackets are inflation-indexed annually per §12-6-520.

Question 2

What is South Carolina's standard deduction for 2025?

Accepted Answer

South Carolina conforms its standard deduction to the federal amount: $14,600 for single and married-filing-separately filers, $21,900 for head-of-household, and $29,200 for married-filing-jointly for tax year 2025, under S.C. Code Ann. §12-6-1140. South Carolina also allows a dependent exemption of $4,790 per dependent (inflation-indexed) under §12-6-1160, which is uncommon among states that already conform to the federal standard deduction.

Question 3

Does South Carolina tax Social Security and retirement income?

Accepted Answer

South Carolina fully exempts Social Security benefits from state income tax under S.C. Code Ann. §12-6-1120. It provides a retirement income deduction of up to $3,000 per taxpayer under age 65 and up to $10,000 per taxpayer age 65 or older (private pensions, IRAs, 401(k) distributions) under §12-6-1170(A). Additionally, taxpayers age 65 or older may claim a general $15,000 age-based deduction against any income under §12-6-1170(B), reduced dollar-for-dollar by the retirement income deduction claimed. Military retirement pay is fully exempt under §12-6-1171 regardless of age.

Question 4

Do South Carolina cities charge a local income tax?

Accepted Answer

No. South Carolina municipalities and counties do not levy a local income tax. Local tax burden in South Carolina comes primarily from property taxes and the state 6.0% sales tax combined with local option sales taxes averaging 1.5%, producing a combined average state-plus-local sales tax rate of approximately 7.5% under S.C. Code Ann. §4-10-10 et seq.

Question 5

How is South Carolina's income tax rate expected to change?

Accepted Answer

South Carolina enacted a rate-reduction trigger under H. 4880 of 2022 (S.C. Code Ann. §12-6-510(D)): whenever general fund revenue growth for a fiscal year exceeds 5%, the top marginal rate is automatically reduced by 0.1 percentage points on the following January 1 until the rate reaches a 6.0% floor. The 6.0% floor was reached for tax year 2025 via the 2025 budget proviso acceleration; further statutory action would be required to reduce below 6.0%. Governor McMaster's 2025 State-of-the-State proposal targets a 1.99% single flat rate over a multi-year phase-down, but no enacting legislation has been signed as of tax year 2025.

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