New SC Tax Law: 2025 Brackets, Top Rate, and Deductions

South Carolina income tax rates for tax year 2025 run across three brackets: 0% on the first $3,640 of state taxable income, 3% on income between $3,640 and $18,220, and 6.2% on everything above $18,220.¹ The top rate used to be 7%, and it is on a scheduled path down to 6.0%. One other thing worth knowing before you start a 2025 return: the South Carolina Department of Revenue has pushed the filing deadline for all 2025 individual returns to October 15, 2026.²

The 2025 Brackets

South Carolina uses three brackets, and the dollar thresholds adjust annually for inflation under Section 12-6-520.¹ For tax year 2025:

0% on the first $3,640 of South Carolina taxable income
3% on income between $3,640 and $18,220
6.2% on income above $18,220

These are marginal rates. The 6.2% applies only to the portion of your taxable income over $18,220, not to the whole amount.

How The Top Rate Got To 6.2%

Before 2022, South Carolina ran six brackets with rates from 2.5% up to 7%. The Comprehensive Tax Cut Act of 2022 (S.1087) collapsed the lower brackets into the current three-bracket structure and set the top rate on a glide path from 7% down to a floor of 6.0%.³ The top rate fell to 6.5% immediately for tax year 2022, with a mechanism to cut another 0.1 percentage point each following year.⁴

Each annual cut is conditional. The state Revenue and Fiscal Affairs Office has to project, by February 15, that general fund revenues will grow by at least 5% in the fiscal year beginning during that tax year. If the forecast falls short, the rate holds flat until the trigger is met the following year. Reductions that do take effect are permanent and cumulative.¹ The trigger has been met every year so far, so the rate has dropped on schedule: 6.5% in 2022, 6.4% in 2023, 6.3% in 2024, and 6.2% in 2025.⁴ If the February 2026 forecast clears the 5% threshold, the 2026 rate drops to 6.1%, and 2027 would reach the 6.0% floor on the same schedule.

A separate bill introduced in the 2025–2026 session (H.4216) would accelerate the cuts and flatten the structure further. It has not been enacted.

What Counts As South Carolina Taxable Income

The brackets apply to South Carolina taxable income, which is a derived number, not what you earned. You start with your federal adjusted gross income from line 11 of federal Form 1040 and work it down (or up) on the SC1040 using state-specific additions and subtractions.⁵ A few of those adjustments matter enough that they routinely change which bracket income lands in.

Social Security

Social Security benefits that are taxable at the federal level are fully exempt from South Carolina income tax. There is no deduction to claim; the income simply does not flow into your state taxable income.⁶

Military Retirement

Military retirement pay is fully deductible under Section 12-6-1171, with no dollar cap. A surviving spouse receiving military retirement attributable to a deceased spouse gets the same treatment, and that spouse can still claim a separate retirement deduction on their own retirement income.¹

Retirement Income And Age 65

Two overlapping deductions in Section 12-6-1170 cover retirement and senior income. Under subsection (A), the original owner of a qualified retirement account can deduct up to $3,000 of retirement income per year, rising to $10,000 once you turn 65. That covers distributions from 401(k)s, IRAs, pensions, and similar qualified plans.⁷

Subsection (B) gives residents 65 or older a deduction of up to $15,000 against any kind of income, but you have to subtract whatever you already claimed under the retirement income deduction. So if you deducted $10,000 of retirement income, the additional age-65 deduction is capped at $5,000. For a qualifying single senior, the ceiling across both provisions is $15,000. A married couple filing jointly where both spouses are 65 or older can claim up to $30,000 combined.⁷

The 2025 Standard Deduction Add-Back

South Carolina generally follows the federal Internal Revenue Code, including the federal standard deduction, but the state has not conformed to the standard deduction increases enacted by the federal One Big Beautiful Bill Act. The federal standard deduction for 2025 rose by $1,500 for married couples filing jointly and $750 for single filers. South Carolina does not recognize those increases. If you claim the higher federal standard deduction on your federal return, you have to add the difference back on your SC1040.⁸ Skip the add-back and you understate your state taxable income, which can trigger an underpayment notice and penalties.

Deadline, Extensions, And Penalties

All 2025 South Carolina individual income tax returns are due October 15, 2026. That extended deadline applies to everyone automatically, not just filers who request an extension.²

If you need more time past October 15, you can request a six-month extension. Making a payment through MyDORWAY automatically submits the extension request. You can also file Form SC4868 by mail, and if you already have a federal extension and owe no South Carolina tax, the state will accept a copy of the federal extension in place of a separate state filing.⁹ An extension gives you more time to file, not more time to pay. Estimate what you owe and pay it by the original due date to avoid late-payment penalties and interest.

The state’s penalty structure treats late filing and late payment as separate violations:

Late filing: 5% of the tax owed per month or partial month, capped at 25%.
Late payment: 0.5% of the unpaid tax per month or partial month, also capped at 25%.

Both apply to the balance still owed after credits and payments already made, and interest accrues on the penalties themselves, not just the underlying tax.¹⁰ The late-filing penalty is ten times the late-payment penalty, so if you cannot pay in full, file on time and pay what you can.

You file the SC1040 either electronically through MyDORWAY, through approved third-party tax software, or by mail to the address printed in the SC1040 instructions.¹¹ The Department of Revenue estimates most error-free returns are processed within eight weeks, and electronic filers who choose direct deposit tend to see refunds sooner than those who request a paper check.¹²

1
South Carolina Legislature. South Carolina Code 12-6 – South Carolina Income Tax Act
2
South Carolina Department of Revenue. IIT File and Pay Options
3
South Carolina Legislature. South Carolina General Assembly Bill 1087 – Comprehensive Tax Cut Act of 2022
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South Carolina Department of Revenue. Tax Legislative Update for 2022
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Internal Revenue Service. Adjusted Gross Income
6
South Carolina Department of Revenue. Retirees – Lower Your Individual Income Tax Bill With These Five Tips
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South Carolina Legislature. South Carolina Code 12-6-1170
8
South Carolina Department of Revenue. SC Information Letter 26-4 Revised
9
South Carolina Department of Revenue. SC4868 Request for Extension of Time to File
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South Carolina Legislature. South Carolina Code 12-54 – Procedure and Administration
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South Carolina Department of Revenue. IIT Forms
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South Carolina Department of Revenue. MyDORWAY