Tax in South Carolina: a complete guide

South Carolina state income tax 

South Carolina has a graduated state income tax system. The rates range between 0 percent and 6.50 percent. This is a reduced rate, which saw the higher rate come in at seven percent. Tax brackets are adjusted annually for inflation and are expected to decrease further over the coming years. 

These ranges are broken down as follows:  

South Carolina uses a progressive system when it comes to state income tax. This means different portions of your income are taxed at different rates.  

For example, if you earn $150,000 annually, the first $3,200 of your income is taxed at 0 percent, the next portion of your income between $3,200 and $16,040 is taxed at three percent, and the remaining amount between $16,040 and $150,000 is taxed at 6.5 percent.  

South Carolina Sales Tax

South Carolina has a statewide sales tax rate of 6 percent.  

According to the South Carolina Department of Revenue, counties may impose an additional one percent local sales tax if voters in that county approve it.  

Like other states, South Carolina holds an annual sales tax holiday. The Sales and Use Tax Holiday, or ‘Tax Free Weekend,’ is a 72-hour event held each August. It begins at 12:01 a.m. on the first Friday in August and concludes that Sunday. In 2023, ‘Tax Free Weekend’ occurred between Friday, August 4, and Sunday, August 6.  

Certain items are also exempt from sales and use tax, including: 

South Carolina Property Tax

South Carolina is home to one of the lowest property tax rates in the country.  

According to data from the U.S. Census Bureau, the average American household spends $2,690 on real estate property taxes, with the national average around 1.07 percent.  

In South Carolina, the average property tax rate is 0.56 percent.  

Property tax is a significant source of revenue for South Carolina, with the majority of property tax revenue going back into the state’s education system. 

Property tax rates vary by county and by home value. Each county is responsible for assessing the collecting property tax.  

South Carolina Estate Tax

South Carolina does not have an estate tax, and there is no inheritance tax. 

However, it’s important to remember federal estate tax can still apply if your estate is above a certain threshold ($12.92 million in 2023); otherwise, there will be no fees on the estate or inheritance you leave behind.    

Also, if you live in South Carolina but inherit an estate from someone living in a state with estate tax, you must abide by local regulations.   

South Carolina Retirement Tax

South Carolina generally does not tax Social Security benefits. However, other retirement income, such as 401(k) or IRA account distributions, is subject to the state's income tax.  

The state does have some ways it helps retirees reduce the amount they pay. For example, residents aged 65 and older may deduct up to $15,000 of qualified retirement income, including military retirement, from their state income taxes. 

For homeowners 65 and over, South Carolina's homestead exemption allows the first $50,000 of a property's fair market value to be exempt from local property taxes. 

Understanding South Carolina's tax structure is crucial for residents and retirees. It's advisable to consult with a tax professional or financial advisor to navigate the state's tax laws effectively and make informed financial decisions. 

For further tax guidance and to ensure you’re not paying more tax than you need to, it’s wise to speak to an expert. A financial advisor can help you handle all your tax queries and ensure you’re not paying more tax than needed.       

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