South Carolina's 2026 income tax has two brackets: 1.99% on taxable income below $30,000 and 5.21% (minus $966) at or above $30,000. Social Security is fully exempt. Residents 65+ can claim up to $15,000 in total retirement and age-based deductions. Property taxes average just 0.49% — one of the lowest in the USA, with a $50,000 homestead exemption for those 65+. No estate tax, no inheritance tax.
At a glance
Key Facts
State Income Tax
Two brackets: 1.99% below $30,000; 5.21% (minus $966) at or above $30,000
Social Security
Fully exempt from South Carolina income tax at all income levels
Retirement Income Deduction
Retirement deduction up to $10,000 (65+) or $3,000 (under 65); age 65+ deduction up to $15,000 reduced by it; military retirement fully deductible
Property Tax
Effective average ~0.49% — one of the lowest in the USA; homestead exemption: $50,000 off fair market value for 65+
Sales Tax
6% state rate; counties may add local sales taxes
Estate and Inheritance Tax
None — South Carolina has no estate tax and no inheritance tax
Introduction
South Carolina has been quietly making itself one of the most tax-friendly states in the Southeast, particularly for retirees. For 2026 (Act 110 of 2026) the state replaced its three income tax brackets with two: 1.99% on taxable income below $30,000 and 5.21% (minus $966) at or above $30,000.
Property taxes are where South Carolina truly stands out: at an average effective rate of just 0.49%, South Carolina has among the lowest property taxes in the country. For homeowners aged 65 and older, the homestead exemption removes the first $50,000 of fair market value from all property taxes. This combination of low property taxes and a strong homestead exemption makes South Carolina an exceptionally affordable state for homeowners.
For retirees specifically, South Carolina offers a compelling package: Social Security fully exempt, retirement deductions for those 65+ (up to $15,000 in total per person), a full military retirement deduction, low property taxes, warm climate, and lower cost of living than Northeast or Mid-Atlantic states.
Section 01
South Carolina’s 2026 Income Tax: Two Brackets, 1.99% and 5.21%
South Carolina’s income tax reform has been one of the more significant state tax changes in the Southeast over the past several years. For 2026 the state replaced its three brackets with two: 1.99% on taxable income below $30,000 and 5.21% (minus $966) at or above $30,000.
The Rate Reduction Timeline
Before 2026: three income tax brackets
2026 (Act 110 of 2026): two brackets, 1.99% below $30,000 and 5.21% (minus $966) at or above
From 2027: the top rate may fall if revenue triggers are met
South Carolina taxable income now starts from federal adjusted gross income, less the new South Carolina Income Adjusted Deduction (SCIAD): $15,000 for single filers with AGI up to $40,000, phasing down to $0 at $95,000.
South Carolina’s top rate of 5.21% sits above North Carolina (3.99%) and Georgia (4.99%). South Carolina’s retirement income exemptions, low property taxes, and homestead exemption create a total package that is highly competitive for retirees.
Who Pays South Carolina Income Tax
South Carolina does not have local income taxes. The state income tax is the only income tax applied to South Carolina residents, regardless of whether they live in Charleston, Greenville, Columbia, Myrtle Beach, or a rural county. Non-residents earning income from South Carolina sources (rental income, business income) are also subject to the rate on SC-sourced income.
Section 02
Why South Carolina Is One of America’s Best Retirement Tax States
The Retirement Income Deduction
South Carolina’s retirement income tax treatment is among the most generous in the country for older residents:
Age 65 and older: Up to $10,000 of qualifying retirement income (pension, IRA, 401(k) and similar) may be deducted each year, plus an age 65+ deduction of up to $15,000 against any income, reduced by the retirement deduction claimed — up to $15,000 in total per person.
Under age 65: A $3,000 retirement income deduction is available for qualifying retirement income.
Social Security income: Fully exempt at all ages and all income levels — no South Carolina income tax on SS benefits.
Military retirement pay: Fully deductible from South Carolina income tax regardless of age.
For a married couple both aged 65+, each can claim up to $15,000 in combined retirement and age-based deductions, so up to $30,000 per couple (plus any Social Security, which is separately exempt).
Practical Example: A Retired Couple in South Carolina
Income Source
Amount
South Carolina Tax?
Social Security (combined)
$48,600
Exempt — $0 SC tax
Military retirement pension
$30,000
Exempt — $0 SC tax
IRA distributions (each $15,000)
$30,000
Offset by $30,000 of age 65+ deductions
Additional IRA distribution
$20,000
Taxable before the SCIAD deduction
This couple has $128,600 in annual retirement income. Filing jointly, with $50,000 of IRA income, $20,000 of retirement deductions and $10,000 of remaining age 65+ deductions, they have $20,000 left before the SCIAD. Their federal AGI is about $121,310 (IRA income, the military pension and 85% of Social Security), so the joint SCIAD is $18,740 and about $1,260 is taxable: roughly $25 of South Carolina tax at 1.99%.
South Carolina vs Florida for Retirees
Factor
South Carolina
Florida
Income tax on SS
Exempt
Exempt (no income tax)
Income tax on pensions
Up to $15,000 of deductions (65+)
Exempt (no income tax)
Property tax (avg)
0.49%
0.78%
Homestead exemption
$50,000 off assessed value (65+)
$50,000 off assessed value
State sales tax
6%
6%
Cost of living
Lower (outside coastal areas)
Higher (especially coastal)
Section 03
South Carolina Property Tax, Sales Tax, and No Estate Tax
Property Tax: Among the Lowest in the USA
South Carolina’s average effective property tax rate of approximately 0.49% is one of the lowest in the country. The low rate results from a combination of lower assessed values, assessment limits, and state policies designed to keep the tax burden on primary residences modest.
South Carolina assesses owner-occupied residential property at 4% of fair market value (not 100%), and then applies the local millage rate to that 4% assessed value. This assessment ratio is one of the lowest in the country and is the primary mechanism that keeps property tax bills low despite local millage rates that might appear high on paper.
The Homestead Exemption for 65+
South Carolina’s Homestead Exemption removes the first $50,000 of fair market value from all property taxes for:
Homeowners aged 65 or older
Disabled homeowners (permanently disabled)
Legally blind homeowners
The exemption applies to the primary residence only. For a $200,000 home, the first $50,000 of value is completely exempt, and the remaining $150,000 is assessed at 4% ($6,000 assessed value) and taxed at local rates.
Sales Tax
South Carolina’s state sales tax rate is 6%, and counties may add local sales taxes, so combined rates vary by location. Prepared restaurant meals are taxable.
No Estate Tax, No Inheritance Tax
South Carolina has no state estate tax and no inheritance tax. All assets pass free of state transfer tax regardless of estate size, with only the federal estate tax potentially applying for very large estates (over $15M per individual in 2026, OBBBA — permanent). This is consistent with the trend among Southeastern states — most of South Carolina’s neighbors have also eliminated estate and inheritance taxes. The absence of these taxes makes South Carolina favorable for estate planning, particularly for large property holdings like coastal real estate, which can appreciate substantially over time.
Whether you’re retiring to South Carolina and want to maximize your retirement income deductions, planning around the homestead exemption, or need help with income tax planning as you relocate from a higher-tax state, TaxHub connects you with licensed CPAs who understand South Carolina’s tax advantages.
âš Not for simple single-state returns. Free filing is fine for straightforward W-2 situations.
What is South Carolina’s income tax rate in 2026?
South Carolina has two income tax brackets for 2026: 1.99% on taxable income below $30,000 and 5.21% (minus $966) at or above $30,000, replacing the previous three brackets. There are no local income taxes in South Carolina. The retirement and age-based deductions for those 65+ can further reduce effective tax rates for retirees.
Q
Does South Carolina tax Social Security income?
No — Social Security benefits are fully exempt from South Carolina income tax at all income levels. Unlike some states that only partially exempt Social Security or phase out exemptions at higher incomes, South Carolina provides a complete exemption regardless of total income. This is one of South Carolina’s key advantages for retirees. Federal income tax on Social Security still applies (at the federal level, 0–85% of benefits may be included in taxable income depending on your combined income), but South Carolina adds zero state tax on top.
Q
What is South Carolina’s retirement income deduction?
South Carolina allows taxpayers aged 65 and older to deduct up to $10,000 of qualifying retirement income (pension, IRA, 401(k) and similar), plus an age 65+ deduction of up to $15,000 against any income that is reduced by the retirement deduction claimed. That is up to $15,000 in total per person, or $30,000 for a married couple both aged 65+. Taxpayers under 65 can deduct up to $3,000 of retirement income. Military retirement pay is fully deductible regardless of age or amount.
Q
How low are property taxes in South Carolina?
South Carolina’s average effective property tax rate of approximately 0.49% is among the lowest in the United States. The low rate results primarily from South Carolina’s 4% assessment ratio on owner-occupied primary residences (only 4% of fair market value is used as the assessed value for tax purposes). For residents aged 65+, the homestead exemption removes the first $50,000 of market value from all property taxes.
Q
What is the South Carolina homestead exemption?
South Carolina’s homestead exemption exempts the first $50,000 of fair market value of a primary residence from all property taxes for homeowners who are age 65 or older, permanently and totally disabled, or legally blind. The exemption applies to the primary residence only. It is automatic once you qualify — you apply once and it continues as long as you maintain eligibility. At South Carolina’s typical property tax rates, the homestead exemption reduces annual property tax bills by several hundred dollars for modest homes and can eliminate the tax bill entirely on lower-value properties.
Q
Does South Carolina have an estate tax or inheritance tax?
No — South Carolina has no state estate tax and no state inheritance tax. Any South Carolina resident who dies leaves all assets free of state transfer tax, regardless of the total estate value. Only the federal estate tax potentially applies, and only for estates exceeding $15M per individual (2026 exemption, OBBBA — raised from $13.61M and made permanent). South Carolina is an excellent state for estate planning, particularly for those with significant real estate holdings in coastal areas like Charleston, Hilton Head, or Myrtle Beach where property values have appreciated dramatically.
Q
Is South Carolina a good state for retirement?
South Carolina is generally tax-friendly for retirees. Key advantages: Social Security fully exempt, up to $15,000 in retirement and age-based deductions per person aged 65+ (up to $30,000 per couple), military retirement fully deductible, a low average effective property tax rate of about 0.49%, a $50,000 homestead exemption for seniors and no estate tax. The top income tax rate is 5.21%, higher than Florida (0%) or Tennessee (0%), but deductions reduce the effective rate for many retirees.
Q
How does South Carolina compare to North Carolina for taxes?
North Carolina has a lower flat income tax rate at 3.99% compared to South Carolina’s top rate of 5.21%. However, South Carolina has lower property taxes (0.49% vs North Carolina’s approximately 0.66%) and offers retirement and age-based deductions for those 65+ (up to $15,000 per person), while North Carolina has no general pension exclusion. That can make South Carolina the better choice for some retirees even at the higher top rate. For working-age earners without retirement income, North Carolina’s lower 3.99% rate is a clearer advantage. The choice depends significantly on age, retirement income sources, and property values.
Disclaimer:This guide provides general tax information for educational purposes only. South Carolina tax rates and rules change regularly. Future reductions of the top income tax rate are subject to revenue triggers. Retirement income deduction amounts and homestead exemption rules may be modified by the South Carolina General Assembly. Always consult a qualified tax professional before making significant tax decisions.