About South Carolina State Income Tax

South Carolina uses a progressive tax system with six tax brackets. The state is known for its competitive business environment and moderate tax burden, making it an attractive destination for businesses and residents.

South Carolina Tax Brackets 2026

• $0 - $3,470: 0%
• $3,471 - $13,970: 2%
• $13,971 - $23,570: 3%
• $23,571 - $35,170: 4%
• $35,171 - $48,370: 5%
• Over $48,370: 6.5%

How South Carolina Tax is Calculated

South Carolina's progressive tax system works as follows:

1. Income is divided into six tax brackets
2. The first bracket ($0-$3,470) is taxed at 0%
3. Each subsequent bracket is taxed at its corresponding rate
4. Most middle-income taxpayers pay between 3-5% on the majority of their income
5. Standard deduction significantly reduces taxable income

South Carolina Tax Features

• Zero-Tax First Bracket: Income up to $3,470 is not taxed at all
• Business-Friendly Environment: Competitive rates designed to attract business investment
• Social Security Exempt: Social Security benefits are completely exempt from state tax
• Military Retirement: Military retirement pay may be eligible for deductions

Frequently Asked Questions

What is South Carolina's income tax rate?

South Carolina has progressive tax rates from 0% to 6.5%. Notably, the first $3,470 of income is taxed at 0%, and the top rate of 6.5% applies to income exceeding $48,370.

Does South Carolina tax Social Security?

No, South Carolina does not tax Social Security retirement benefits. This makes it an excellent state for retirees living on Social Security income.

What about capital gains and investment income?

Capital gains are generally taxed as ordinary income in South Carolina. Long-term capital gains receive the same tax treatment as regular income, though certain investments may qualify for special treatment.

How does South Carolina compare to neighboring states?

South Carolina (6.5%) compared to neighbors: North Carolina (4.75%-7.5%), Georgia (5.55%), Tennessee (0%), and Florida (0%). South Carolina offers a middle ground with competitive rates for the Southeast.

South Carolina vs. Neighboring States

Tax comparison with surrounding southeastern states:

• North Carolina: Progressive up to 4.75%-7.5%
• Georgia: Progressive up to 5.55%
• Florida: No state income tax
• Tennessee: No state income tax (only Hall tax on investments)
• Virginia: Progressive up to 5.75%

Tips for South Carolina Taxpayers

• Take advantage of the 0% tax on the first $3,470 of income
• Social Security recipients enjoy complete tax exemption
• Retirees may be attracted by the state's tax-friendly policies
• Plan for the 6.5% top rate if you're a higher earner
• Consider South Carolina's overall business-friendly environment