South Carolina has a flat income tax rate that is declining annually: approximately 6.2% in 2025, with legislated reductions heading toward 6.0% by 2027 (and potentially lower if revenue conditions are met). Social Security is fully exempt. Military retirement income is fully exempt. South Carolina provides a $10,000 retirement income deduction per person (ages under 65) and a $15,000 deduction per person (ages 65+). SC has no estate or inheritance tax. Moving to Florida (no income tax) from South Carolina saves approximately 6% on wages and investment income for high earners.
At a glance
Key Facts
South Carolina Income Tax Rate (2025)
Flat rate: approximately 6.2% in 2025. Declining schedule under 2022 reform (HB 3516): 7% (2021) → 6.5% (2022) → reduced by 0.1% per year until reaching 6.0% (2027), with potential further reduction to 5.9% if state revenue benchmarks are met.
Social Security Exemption
South Carolina does NOT tax Social Security benefits — 100% exempt at all income levels.
Military Retirement Exemption
South Carolina fully exempts military retirement income from state income tax — a significant benefit for retirees near Fort Jackson (Columbia), Marine Corps Recruit Depot Parris Island, Shaw AFB, and Joint Base Charleston.
Retirement Income Deduction
Under 65: $10,000 retirement income deduction per person (pension, IRA distributions, 401(k) withdrawals — not wages). Age 65+: $15,000 retirement income deduction per person. For a retired couple both 65+: $30,000 combined retirement income deduction reduces SC taxable income significantly.
No Estate or Inheritance Tax
South Carolina has no estate tax and no inheritance tax.
Property Tax
South Carolina property tax effective rate approximately 0.56% — below the national average. Primary residences are assessed at 4% of market value (investment properties/second homes at 6%). The 4% owner-occupied assessment is a significant break vs investment properties.
Introduction
South Carolina enacted significant income tax reform in 2022 that moved the state from a graduated six-bracket system (with a 7% top rate) to a single flat rate declining annually until reaching 6.0% by 2027. The reform simplified South Carolina's tax structure and meaningfully reduced rates for higher earners. South Carolina's retirement-friendly provisions — including full military retirement exemption, Social Security exemption, and a generous retirement income deduction — make it a competitive retirement destination in the Southeast. This guide explains what South Carolinians considering a move need to know.
Section 01
South Carolina Tax Structure and Retirement Benefits
South Carolina's tax structure makes it particularly favorable for certain retirees:
The Rate Reduction Glide Path
Under HB 3516 (signed 2022), South Carolina's top income tax rate declines annually:
Year
South Carolina Top Rate
2021
7.0%
2022
6.5%
2023
6.4%
2024
6.3%
2025
6.2%
2026
6.1%
2027
6.0% (floor, or lower if revenue permits)
The rate is a flat rate applied to all South Carolina taxable income — the old 6-bracket graduated system no longer applies.
Who Benefits Most from SC's Exemptions
South Carolina's tax structure benefits certain profiles more than others:
Military retirees: Military retirement fully exempt + SS exempt + $10K–$15K retirement deduction = most military retirees pay near-zero SC income tax
Early retirees (under 65) with modest pension/IRA: $10,000 deduction per person helps but doesn't eliminate all SC tax at higher income levels
Retirees 65+: $15,000 deduction + SS exempt + military exempt — a retired couple 65+ can shelter $30,000 + SS + military retirement from SC tax
High-income workers: The 6.2% rate is meaningful — $300,000 in SC income = approximately $18,600 in SC tax. Moving to Florida saves the full amount.
South Carolina vs North Carolina Comparison
Two common destinations for SC residents: NC has a 4.5% flat rate (declining to 3.99% by 2026 under NC reform) vs SC's 6.2% (declining to ~6%). NC's lower rate benefits high earners, but NC taxes military retirement differently (partially taxable above a threshold vs fully exempt in SC). Military retirees are better off in SC than NC.
Section 02
South Carolina Residency Exit Rules
South Carolina uses domicile-based residency with a 183-day statutory test:
SC Residency Rules
South Carolina defines a resident as someone domiciled in South Carolina, or someone maintaining a permanent place of abode and spending more than 183 days in SC. To exit SC residency: establish domicile in the new state (driver's license, voter registration, vehicle registration, estate documents) and spend fewer than 183 days in South Carolina in the departure year. South Carolina is not known for aggressive post-departure residency audits — less aggressive than California or New York.
SC Military Residents: Special Consideration
Active duty military stationed in South Carolina are generally not subject to SC income tax on their military pay under the Servicemembers Civil Relief Act (SCRA) — they pay income tax only to their state of domicile. Many active duty members stationed at Fort Jackson, Parris Island, Shaw AFB, or Joint Base Charleston maintain domicile in no-income-tax states (Florida, Texas, Nevada, etc.) and pay zero state income tax despite living in South Carolina. Upon retirement, they can remain in SC — and with military retirement fully exempt, their South Carolina income tax bill remains near zero.
SC's Retiree Destination Appeal
The Myrtle Beach and Hilton Head corridors, the Lowcountry (Beaufort, Bluffton), and the Upstate (Greenville-Spartanburg) have all attracted significant retiree migration from Northeastern states (particularly New York, New Jersey, Connecticut, Massachusetts). These retirees often find SC significantly more favorable than their origin states: NJ top rate 10.75% vs SC 6.2%; NY top rate 10.9% vs SC 6.2%.
South Carolina domicile changes, military retirement exemption planning, partial-year returns, and retirement income deduction optimization require CPA guidance. TaxHub connects you with state tax specialists.
⚠ Not for simple single-state returns. Free filing is fine for straightforward W-2 situations.
South Carolinians moving abroad face state residency termination and US expat filing requirements. Greenback specialises in US expat state tax exit planning.
⚠ Not the cheapest option — best for complex situations and expats who want a dedicated CPA.
Does South Carolina have a 4% property tax rate for homeowners?
South Carolina's property tax system assesses owner-occupied primary residences at 4% of fair market value, while investment properties, second homes, and commercial properties are assessed at 6%. This 4% rate is a legal assessment ratio — it means the taxable base for your home is 4% of its appraised value, and county millage rates are then applied to that base. The effective property tax rate on a primary residence works out to approximately 0.4–0.7% of market value depending on the county. For a $400,000 primary residence: assessed value $16,000 (4% × $400K); at a typical county millage of 300 mills (0.3%), property tax = $4,800 — but millage rates vary widely by county. SC's 4% owner-occupied rate is one of the most favorable primary residence tax structures in the Southeast.
Q
How does South Carolina compare to Georgia for retirees?
South Carolina vs Georgia for retirees: Georgia has a 5.49% flat rate (declining to 4.99% by 2029) with a $65,000 per-person retirement income exclusion for age 62+ (covering pensions, IRA, and capital gains — not wages). South Carolina has a 6.2% rate with full military retirement exemption, Social Security exemption, and a $15,000 per-person retirement income deduction for 65+. For military retirees: South Carolina wins — military retirement is fully exempt vs Georgia's $65K overall retirement exclusion that covers all income types. For large IRA/pension earners (both 65+): Georgia's $65,000 per-person exclusion ($130,000 combined) is more generous than SC's $30,000 combined deduction. For working-age earners: Georgia's lower 5.49% rate edges out SC's 6.2%.
Q
What are the best areas in South Carolina for retirees from a tax perspective?
From a pure tax perspective, the state-level rules are the same throughout South Carolina — so the tax advantage of Myrtle Beach vs Charleston vs Hilton Head vs Greenville comes down to county property tax rates. Among the most popular retirement areas: Beaufort County (Hilton Head, Bluffton) has effective property tax rates around 0.55–0.65% for primary residences; Horry County (Myrtle Beach area) is among the lowest in the state at approximately 0.45–0.55%; Charleston County rates are moderate at around 0.55–0.65%. All benefit from the 4% owner-occupied assessment ratio. The financial advantage of moving to South Carolina from high-tax states (NY, NJ, CT) is substantial — but moving from another no-income-tax state like Florida to South Carolina would cost you the full SC income tax rate.
Disclaimer:This guide provides general tax information for educational purposes only. South Carolina's income tax rate is subject to annual adjustment under the 2022 reform legislation. This is not tax advice. Consult a CPA for South Carolina-specific tax planning.