Is Social Security Taxed in South Carolina for Retirees?

No, Social Security benefits are not taxed in South Carolina. Under Section 12-6-1120 of the South Carolina Code, retirement, survivor, and disability benefits are excluded from state gross income entirely, no matter how much other income you receive.¹ Even when the IRS taxes part of your benefits on your federal return, South Carolina leaves them alone.

How the State Exemption Works

Section 12-6-1120 instructs the state to ignore Internal Revenue Code Section 86, the federal provision that pulls Social Security into taxable income. Because South Carolina builds your state gross income without that federal rule, your benefits never enter the state calculation.²

The exemption has no income ceiling. A retiree collecting $30,000 in Social Security and $50,000 from a pension owes no South Carolina tax on the Social Security portion. It applies the same way to retirement benefits, survivor benefits, and Social Security disability.

Federal Tax Still Applies

The state exemption doesn’t change your federal return. The IRS may tax up to 85% of your benefits depending on “combined income,” which is your adjusted gross income (excluding Social Security), plus any tax-exempt interest, plus half of your benefits.³

For single filers, head of household, or qualifying surviving spouses:

Below $25,000: none of your benefits are federally taxable
$25,000 to $34,000: up to 50% taxable
Above $34,000: up to 85% taxable

For married couples filing jointly:³

Below $32,000: none of your benefits are federally taxable
$32,000 to $44,000: up to 50% taxable
Above $44,000: up to 85% taxable

If you’re married filing separately and lived with your spouse at any point during the year, up to 85% of your benefits may be federally taxable regardless of income.⁴ These federal thresholds haven’t been adjusted for inflation since 1983 and 1993, so more retirees cross them each year. Whatever the federal outcome, South Carolina adds nothing to it.

Other Retirement Income Is Partially Deductible

Pensions, 401(k) distributions, IRA withdrawals, and similar accounts are taxable at the state level, but Section 12-6-1170 provides a deduction based on your age at year-end:⁵

Under 65: up to $3,000 of qualifying retirement income
65 or older: up to $10,000 of qualifying retirement income

Qualifying income covers distributions from plans under IRC Sections 401, 403, 408, and 457, plus all federal, state, and local government retirement plans, including public pensions from other states. You must be the original account owner, though a surviving spouse receiving benefits attributable to a deceased spouse may also claim it.⁵

The Age 65 General Deduction

At 65, South Carolina opens a broader deduction that can offset any type of taxable income, not just retirement accounts. Section 12-6-1170(B) allows up to $15,000 off your state taxable income, applied against wages, interest, rental income, business income, or investment income.⁶ Married couples filing jointly can claim up to $30,000 if both spouses are 65 or older; if only one spouse has reached 65, the maximum stays at $15,000.

There’s a catch. The $15,000 age deduction is reduced dollar-for-dollar by any retirement income deduction you claim under Section 12-6-1170. Deduct $10,000 of pension income under the retirement rule, and your age 65 deduction drops to $5,000. The combined ceiling from both deductions is $15,000 per qualifying person.⁵

A single filer, age 67, with $24,000 in Social Security, $20,000 in pension income, and $10,000 in part-time wages would work through it this way:

Social Security ($24,000): fully exempt, never enters the calculation
Retirement income deduction: $10,000 off the pension
Age 65 deduction: $5,000 off remaining income ($15,000 minus the $10,000 already claimed)
South Carolina taxable income: $15,000

Your age for this deduction is fixed as of December 31 of the tax year.⁶

Military Retirement Pay

Military retirement pay is fully exempt from South Carolina income tax with no earned-income cap, effective for tax years beginning after 2021 under Section 12-6-1171.⁷ A surviving spouse receiving military retirement attributable to a deceased spouse can also claim the exemption.⁶

Capital Gains

Selling investments or property? Section 12-6-1150 lets you deduct 44% of your net long-term capital gains from state taxable income, leaving only 56% subject to tax.⁸ At the 2025 top rate of 6%, that works out to an effective state tax of roughly 3.4% on long-term gains.

What’s Taxed and at What Rate

Income that survives the exemptions and deductions runs through South Carolina’s progressive brackets, with a top marginal rate of 6.0% in 2025.⁹ Brackets adjust annually for inflation, and rates have been trending down in recent years, so check the Department of Revenue for the schedule that matches your filing year.

1
Justia Law. South Carolina Code 12-6-1120 – Gross Income; Computation; Modifications
2
South Carolina Legislature. South Carolina Code 12-6-1120 – Gross Income; Computation; Modifications
3
Internal Revenue Service. Publication 915, Social Security and Equivalent Railroad Retirement Benefits
4
Internal Revenue Service. IRS Reminds Taxpayers Their Social Security Benefits May Be Taxable
5
South Carolina Legislature. South Carolina Code 12-6-1170 – Retirement Income Deduction From Taxable Income for Individual
6
South Carolina Department of Revenue. Income Tax – Age 65 and Older Deduction, General and Military Retirement Deductions, and Earned Income Offset
7
South Carolina Department of Veterans’ Affairs. Claiming Military Retiree State Income Tax Exemption in SC
8
South Carolina Legislature. South Carolina Code 12-6-1150 – Net Capital Gain; Deduction From Taxable Income
9
South Carolina Department of Revenue. Individual Income Tax