South Carolina Income Tax Guide 2026 | Rates, Brackets & Calculator

South Carolina has been on a deliberate path of income tax reduction since 2022, cutting its top marginal rate from 7% in 2021 toward an eventual target of 6.0%. For 2026, the top rate stands at 6.2% — a meaningful reduction that, combined with generous exemptions for Social Security and retirement income, makes South Carolina far more competitive than its headline rate suggests.

The state also offers a compelling 44% exclusion on long-term capital gains, reducing the effective maximum rate on investment gains to approximately 3.47%. Add very low property taxes (averaging just 0.57%), a favourable 4% primary-residence assessment ratio, and no local income tax — and South Carolina's full tax picture becomes particularly attractive for retirees, investors, and transplants from high-tax states who favour coastal living at Myrtle Beach or Hilton Head.

South Carolina Income Tax Brackets 2026 and the Rate Reduction Roadmap

South Carolina uses six income tax brackets that apply identically to single filers and married filing jointly (MFJ) — an unusual feature that avoids a marriage penalty on bracket thresholds. The 2026 bracket structure is:

Source: South Carolina Department of Revenue (dor.sc.gov). Verify exact thresholds for your tax year, as SC adjusts brackets annually during the phase-down period.

The Phase-Down Roadmap

South Carolina enacted income tax reform in 2022 with the stated goal of reducing the top rate from 7% (in 2021) to 6.0% over several years. The schedule:

South Carolina is also moving toward simplifying the bracket structure over time — reducing the number of brackets and raising thresholds. Always verify the current rate at dor.sc.gov before filing.

Sample Tax Calculation: $100,000 Single Filer

To illustrate how brackets interact with deductions:

• Gross income: $100,000
• Federal standard deduction (conformed): −$14,600
• Personal exemption: −$4,610
• SC taxable income: $80,790

Total SC tax: $3,789 — effective rate 3.79%. Despite the 6% bracket applying to a large portion of income, the personal exemption and 0%/3% lower brackets pull the effective rate well below the nominal top rate.

Standard Deduction and Personal Exemption: SC Conforms to Federal

South Carolina conforms to the federal standard deduction — a major advantage compared to states that set their own lower deduction amounts. For 2026:

This conformity means South Carolina taxpayers benefit directly from any future federal standard deduction increases under federal legislation (such as TCJA extensions or modifications). The personal exemption is a distinct South Carolina-specific deduction layered on top of the federal standard deduction amount.

Starting Point: Federal AGI

South Carolina income tax starts from federal adjusted gross income (AGI), not gross income. This means pre-tax retirement contributions (401(k), HSA, traditional IRA), self-employment deductions, and alimony deductions already reduce your SC taxable income base before any SC-specific deductions are applied.

Itemisers

If you itemise for federal purposes, South Carolina also allows itemised deductions — though SC caps the deduction for state income taxes paid. For most middle-income filers, the federal standard deduction + SC personal exemption produces a better outcome than itemising.

Social Security Exemption and Retirement Income Deductions

South Carolina is one of the most retirement-friendly states in the Southeast when it comes to income tax treatment of retirement income — a major attraction for retirees choosing between South Carolina, Georgia, North Carolina, and Florida.

Social Security: Fully Exempt

South Carolina fully exempts Social Security benefits from state income tax, regardless of income level or filing status. There is no means-testing, no AGI phaseout, and no partial inclusion. A retiree receiving $30,000 per year in Social Security pays $0 in South Carolina income tax on those benefits.

Military Retirement Pay

Military retirees receive a $15,000 annual deduction against their retirement pay. This is one of the most generous military retirement exemptions in the Southeast. A retired colonel receiving $60,000 in annual military pension would reduce their SC taxable retirement income by $15,000, effectively taxing only $45,000 of that income.

Other Retirement Income: $10,000 Deduction

All other qualifying retirement income — including pension distributions, 401(k) and 403(b) withdrawals, traditional IRA distributions, and similar sources — qualifies for a $10,000 annual deduction. This applies per taxpayer, so a married couple can deduct $20,000 combined from other retirement income sources.

Age 65+ Enhanced Exemption

Taxpayers aged 65 and older receive a $15,000 total retirement income deduction (up from $10,000 for those under 65). This applies to the combined pool of retirement income excluding Social Security (which remains separately and fully exempt at all ages).

Retirement Income Comparison: SC vs. Southeast States

The 44% Capital Gains Exclusion: Why Investors Notice South Carolina

South Carolina offers one of the more attractive capital gains tax treatments in the Southeast through a 44% exclusion on long-term capital gains. This is a significant planning advantage often overlooked in surface-level state tax comparisons.

How It Works

When you sell a long-term capital asset (held more than 12 months) at a gain, South Carolina allows you to exclude 44% of the gain from your South Carolina taxable income. Only 56% of the long-term gain is included in SC taxable income.

• Federal long-term capital gains rate: 0%, 15%, or 20% depending on income
• South Carolina top rate: 6.2%
• Effective SC rate on long-term gains: 6.2% × 56% = approximately 3.47% maximum

Illustrative Example

Suppose you sell stock with a $100,000 long-term capital gain:

• SC taxable portion: $100,000 × 56% = $56,000
• SC tax at 6.2% (assuming all in top bracket): $56,000 × 6.2% = $3,472
• Effective SC capital gains rate: 3.47%

By comparison, North Carolina taxes capital gains as ordinary income at a flat 4.5%. Georgia also taxes capital gains as ordinary income at its top rate. South Carolina's 44% exclusion makes it more competitive for investors than its top headline rate implies.

Qualification

The 44% exclusion applies to gains from assets held more than 12 months — the same federal definition of long-term. Short-term gains (assets held 12 months or less) are taxed as ordinary income with no exclusion. The exclusion applies to most capital assets including stocks, real estate (excluding primary residence), business interests, and collectibles.

Real Estate Considerations

The federal primary residence exclusion ($250,000 single / $500,000 MFJ) still applies for South Carolina purposes and takes priority. Gains above those thresholds on a primary residence would qualify for the 44% SC exclusion on the long-term portion. Investment property gains qualify for the 44% exclusion, making SC relatively attractive for real estate investors compared to neighbouring states that tax such gains as ordinary income.

Property Tax: 0.57% Effective Rate and the 4% Primary Residence Rule

South Carolina has one of the lowest effective property tax rates in the Southeast — approximately 0.57% of market value on average. This is nearly half the national average of about 1.0% and compares very favourably with North Carolina (~0.78%), Virginia (~0.82%), and Georgia (~0.91%).

How South Carolina Property Tax Works

South Carolina uses an assessment ratio system — property is assessed at a percentage of market value, and the tax rate (millage) applies to the assessed value:

• Primary residence (owner-occupied): 4% assessment ratio
• Investment/rental property: 6% assessment ratio
• Commercial property: 6% assessment ratio
• Agricultural land: 4% assessment ratio (current use)

The 4% vs. 6% distinction is significant. On a $400,000 home:

The primary residence advantage is 33% lower taxes — a tangible benefit for owner-occupants, and a reason why South Carolina attracts retirees who sell their primary residence and purchase in SC.

Property Tax Cap: 15% Assessment Increase Limit

South Carolina's 15% cap limits how much a property's assessed value can increase between reassessments (typically every 5 years). In rising real estate markets like Hilton Head and Charleston, this cap protects long-term owners from rapid tax increases even as market values climb sharply.

Property Tax Estimates by Area

Note: Coastal areas frequently have lower effective rates than inland counties due to higher market values against lower millage rates.

No Local Income Tax

South Carolina has no local income tax at the county or city level. Workers in Charleston, Columbia, Greenville, or Myrtle Beach pay only the single state income tax — no additional city or county wage tax on top. This contrasts with states like Pennsylvania, Ohio, and Maryland where local income taxes can add 1–3% to the state rate.

Southeast Tax Comparison: South Carolina vs. North Carolina vs. Georgia

For residents choosing between Southeast states — a common scenario for retirees, remote workers, and families relocating from the Northeast or Midwest — the three-way comparison between South Carolina, North Carolina, and Georgia defines the key decision points.

Income Tax Comparison

Property Tax Comparison

The Key Trade-offs

North Carolina wins on headline income tax rate (4.5% flat vs. SC's 6.2% top), making it better for high-earning workers with ordinary income. However, SC's 44% capital gains exclusion and stronger retirement deductions can make SC more competitive for retirees and investors. NC also has higher property taxes than SC.

Georgia's $65,000 retirement income deduction (for age 65+) is far more generous than SC's $15,000, making Georgia more attractive for wealthy retirees with large pension or IRA distributions. But SC's lower property taxes ($2,280 vs. $3,640 annual on a $400K home) and its 44% capital gains exclusion provide partial offsets for asset-rich retirees.

South Carolina's overall profile is strongest for: (1) retirees with modest pension/IRA income supplementing Social Security, (2) investors with significant long-term capital gains, and (3) property owners in coastal areas seeking low effective property tax rates.

South Carolina for Retirees and Snowbirds: Myrtle Beach and Hilton Head Appeal

South Carolina consistently ranks among the top 10 states for retirees in national surveys, driven by a combination of tax benefits, coastal lifestyle, and cost of living that competes directly with Florida — but with what many retirees find a more manageable climate and smaller crowds.

Why Retirees Choose South Carolina Over Florida

Florida has no state income tax, which is its primary advantage. However, South Carolina's full package is competitive:

• Social Security: Fully exempt in both states
• Retirement income: SC offers a $10K–$15K deduction; FL has no tax at all — FL wins on income
• Property tax: SC's 0.57% average is very competitive with Florida's 0.86% average; SC's 4% assessment ratio provides strong protection for primary homes
• Home prices: Myrtle Beach and Inland SC are typically 30–50% less expensive than comparable Florida coastal markets (Naples, Sarasota, Palm Beach)
• Property insurance: Florida's property insurance crisis (rates 2–4x national average in many coastal areas) has made SC's insurance market more attractive by comparison
• Income tax on working spouse: If one spouse continues part-time work, SC's 6.2% top rate applies vs. Florida's 0% — Florida still wins for working-income households

Myrtle Beach: Tax Profile

Horry County (Myrtle Beach) has one of the lowest property tax rates in South Carolina — approximately 0.37% effective rate on primary residences. On a $350,000 home, this translates to roughly $1,295 per year. The area has seen significant retiree migration from the Northeast and Midwest in recent years.

Hilton Head / Beaufort County

Beaufort County's effective rate of approximately 0.43% on primary residences is higher than Horry County but still very low by national standards. Hilton Head homes often carry higher values ($600K–$1.5M+), but the 4% assessment ratio and 15% cap on reassessment increases provide meaningful protection against rising taxes as values appreciate.

Snowbird Considerations

For those splitting time between South Carolina and another state, South Carolina establishes residency through the standard 183-day rule. Importantly, South Carolina's 4% primary residence assessment ratio requires the property to be your legal domicile — snowbirds who maintain their northern state as their legal domicile do not qualify for the 4% rate on their SC property (they pay 6%). Establishing SC domicile triggers the 4% benefit and access to SC income tax rules, including the Social Security exemption and retirement deductions.

The $100K Retiree: SC Tax Example

A 68-year-old SC resident with $30,000 Social Security, $40,000 pension, $20,000 IRA withdrawals, and $10,000 long-term investment income ($100,000 total):

• Social Security ($30,000): fully exempt
• Pension ($40,000): $15,000 age-65+ exemption reduces to $25,000 taxable
• IRA withdrawals ($20,000): included in the age-65+ $15,000 exemption (combined with pension)
• Long-term capital gains ($10,000): 44% excluded → $5,600 included
• Standard deduction: $14,600 (federal conformity) + $4,610 personal exemption
• Approximate SC taxable income: ~$21,000
• Approximate SC tax: ~$500–600 (largely in 3%–4% brackets)

A similar retiree in North Carolina (4.5% flat) with standard deduction but no capital gains exclusion and more limited retirement deductions could pay $2,000–$3,000+ in state income tax on the same gross income. The SC retirement tax package is genuinely competitive.