South Carolina has one of the lowest per capita tax rates in the country, according to the U.S. Bureau of Census. South Carolina ’s lawmakers, political leaders and local officials are dedicated to ensuring that the Palmetto State ’s tax structure remains competitive and attractive to individuals, manufacturers and small businesses considering our state as their new home.
Income Tax: South Carolina ’s income tax structure follows federal income tax laws, allowing many of the same adjustments, exemptions and deductions with only a few modifications. In fact, the starting point for calculating your state tax liability is your federal taxable income. South Carolina ’s individual income tax rate starts at 2.5 percent of taxable income, graduating to a maximum of 7 percent on taxable income exceeding $12,650. The individual income tax brackets are adjusted annually to help offset inflation.
Comparison: South Carolina ’s overall tax rates are lower than most other states. To really understand how favorable the tax structure is, look at each state’s total tax package, not just the tax rates. For example, some states may have a lower individual income tax rate but tax Social Security benefits. South Carolina does not. South Carolina also allows special exemptions for retirees and senior adults. Beginning the first year you receive retirement income and until you reach age 65, you can take an annual deduction from your taxable income of up to $3,000. You can claim this deduction for income received from any qualified retirement plan, including IRAs, government pension plans, Keough plans and private sector pensions. At age 65, the deduction increases to a maximum of $15,000 on any source of income.
South Carolina counties, cities and school districts impose ad valorem (property) taxes on real and personal property. Local governments assess and collect property taxes. The market value of a legal residence and up to five acres of surrounding land is assessed at 4 percent. The tax liability on the property is determined when local government applies its millage rate to the assessed value. Millage rates vary, but the state average is 289 mills (.289). South Carolina also allows a $50,000 homestead exemption on the fair market value of a home for residents who are age 65 or older, totally and permanently disabled, or legally blind.
In summary, South Carolina ’s balanced tax policy and lower cost of living are refreshing changes from many other states. Review the chart below and you will see the difference. This chart includes best estimates of South Carolina county, city and school portions of taxes. Remember, the first $100,000 in home value is exempt from school operating costs millage. Property tax relief is reflected in the amounts shown above. The homestead exemption is not reflected in this table. (In some areas local option sales tax offsets property taxes.)
Sales & Use, Motor Fuels Taxes
South Carolina ’s state sales and use tax rate is 5 percent, but county voters may approve local sales taxes as well. Local sales taxes are used for property tax relief, construction or repair of roads, bridges and schools, or other specific projects. Prescription drugs, insulin, dental prosthetics and hearing aids are exempt from sales tax. The sales tax on the purchase of motor vehicles, including recreational vehicles, boats, motorcycles and airplanes, is capped at $300 regardless of value.
Estate Tax, Gift Tax
Estates left by a deceased individual are subject to tax in South Carolina . Estates are taxed at the amount claimed as a state death tax credit on the federal estate return. Estates left to the surviving spouse are not taxed. There is no South Carolina gift tax.
For More Information
Contact the Department of Revenue Publications Line at (803)898-5464 and ask for a free copy of the "Moving to South Carolina " brochure. Information also is available at the Department of Revenue Web site.