South Carolina Income Tax: Rates, Deductions, and Credits

South Carolina’s income tax for 2026 uses two brackets: 1.99% on the first $30,000 of taxable income and 5.21% on anything above that.¹ Returns are filed on Form SC1040. For the 2025 tax year (returns filed in 2026), the Department of Revenue has extended the deadline from April 15 to October 15, 2026, because the state has not yet conformed to several 2025 federal tax changes.²

Who Has to File in South Carolina

South Carolina recognizes three filing statuses. A full-year resident is anyone domiciled in the state for the whole calendar year, and pays tax on income from every source. A part-year resident moved into or out of the state during the year and pays tax only on income earned while a resident. A nonresident never lived in the state but earned income from South Carolina sources — rental property, a business operating in the state, or wages from a South Carolina employer — and owes tax on that portion.³

Domicile is your true, fixed, permanent home. You can only have one at a time, and it doesn’t shift just because you spend time elsewhere. Anyone required to file a federal return generally files a South Carolina return too if they have South Carolina income. Part-year residents and nonresidents file if their gross income from South Carolina sources exceeds the prorated filing threshold. Form SC1040 is on the Department of Revenue website.⁴

2026 Rates and What Changed

H.4216, retroactive to the 2026 tax year, collapsed the state’s old multi-bracket system into two rates:¹

1.99% on taxable income under $30,000
5.21% on taxable income of $30,000 and above, minus $966 to account for the lower rate applied to the first $30,000

The law also creates revenue-triggered rate cuts starting in 2027. If individual income tax collections grow enough, the 5.21% rate drops incrementally until it merges with the 1.99% bracket, and eventually the 1.99% rate itself would decline toward zero. Those future reductions are not guaranteed; they depend on actual revenue growth evaluated by the Revenue and Fiscal Affairs Office every February.

The 2025 return, filed in 2026, still uses the older schedule: 0% on the first $3,560, 3% on income from $3,560 to $17,830, and 6% above $17,830.⁵ Those brackets were adjusted annually for inflation using the Chained Consumer Price Index, capped at 4% growth per year.

How Taxable Income Is Calculated

South Carolina starts with your federal taxable income, then makes state-specific adjustments. The state generally conforms to the Internal Revenue Code, but conformity is not automatic. The legislature must pass a bill each session to adopt federal changes, and as of early 2026 South Carolina has not yet conformed to several provisions in the 2025 federal tax law, including the increased federal standard deduction amounts.⁶ That gap is why the 2025 filing deadline moved to October 15, 2026.²

Some income that escapes federal tax has to be added back. The most common addition is interest earned on municipal bonds issued by other states — tax-free federally, taxable in South Carolina. If the legislature has not conformed to a federal deduction or exclusion you claimed federally, you may need to add that amount back too.⁷

Subtractions can pull your state taxable income below the federal figure. The largest for many households is Social Security: all Social Security benefits are completely exempt from South Carolina income tax, even if a portion was taxed on your federal return.⁸ The state also allows its own standard deduction, which historically mirrors the federal amount.⁹

Deductions for Retirees and Seniors

South Carolina stacks two separate deductions for older taxpayers, and how they interact matters.

Retirement Income Deduction

Income from a qualified retirement plan — 401(k)s, 403(b)s, IRAs, 457 plans, government pensions — qualifies for a deduction of up to $3,000 before age 65 and up to $10,000 from age 65 on. A surviving spouse receiving retirement benefits attributable to a deceased spouse can claim this deduction the way the deceased spouse would have.¹⁰

Age 65 and Older General Deduction

A separate deduction of up to $15,000 is available to any resident 65 or older by year-end, applied to any income type — wages, investments, rentals, self-employment. On a joint return where both spouses are 65 or older, the cap doubles to $30,000. When only one spouse qualifies, the joint cap is $15,000.¹¹

The $15,000 general deduction is reduced dollar-for-dollar by anything claimed under the retirement income deduction. A 65-year-old claiming the full $10,000 retirement deduction can only take $5,000 more under the general deduction. Combined, one qualifying person tops out at $15,000; a joint return with two qualifying spouses tops out at $30,000.¹⁰

Credits Worth Knowing

Credits cut your tax bill directly. A $100 credit saves $100 of tax.

Earned Income Tax Credit

South Carolina’s EITC equals 125% of the federal credit.¹² A $2,000 federal EITC becomes a $2,500 state credit.

Two-Wage Earner Credit

Married couples filing jointly where both spouses earn South Carolina income can claim 0.7% of the lesser of $50,000 or the lower-earning spouse’s South Carolina qualified earned income. Maximum credit: $350. Retirement income, deferred compensation, and IRA distributions don’t count as earned income here.¹³

Child and Dependent Care Credit

South Carolina uses the same qualifying framework as the federal credit under IRC Section 21, but applies a flat 7% to qualifying expenses instead of the federal sliding scale. Expenses are capped at $3,000 for one dependent or $6,000 for two or more, making the state credit $210 or $420 at most. Only expenses tied to South Carolina income qualify.¹⁴

Tuition Tax Credit

Students at South Carolina colleges, universities, or technical schools can claim a refundable credit worth 50% of tuition paid, up to $1,500 a year. Because it’s refundable, it can generate money back even with no tax owed. Either the student or a parent or guardian who paid the tuition can claim it, and it’s available for up to four consecutive years after first enrollment, with exceptions for military service and medical necessity.¹⁵ Total statewide claims are capped at roughly $40 million per year, adjusted for higher education price inflation but no more than 3% annually; if claims exceed the cap, every taxpayer’s credit is reduced proportionally.

Estimated Tax Payments

South Carolina requires quarterly estimated payments if you expect to owe $100 or more when you file your SC1040. That threshold is much lower than the $1,000 federal one, which catches retirees, freelancers, and landlords whose income isn’t subject to withholding.¹⁶

For calendar-year filers, 2026 quarterly due dates are:

First quarter: April 15, 2026
Second quarter: June 15, 2026
Third quarter: September 15, 2026
Fourth quarter: January 15, 2027

Farmers and commercial fishermen whose farming or fishing income is at least two-thirds of total gross income can skip quarterly payments and either pay the full estimated amount by January 15, 2027, or file and pay all tax due by March 1, 2027. Taxpayers with zero tax liability for the full prior year are also exempt.¹⁶

Filing, Extensions, and Payment

The standard South Carolina filing deadline is April 15. For tax year 2025 returns only, the Department of Revenue has automatically extended the deadline to October 15, 2026 for all filers, in response to unresolved federal conformity questions.²

In normal years, you request more time on Form SC4868. If you already have a federal extension and owe no South Carolina tax, the department accepts a copy of the federal extension with no separate state form required. If you owe state tax, you can request the extension and pay through MyDORWAY, the state’s online portal; making the payment on MyDORWAY submits the extension automatically.¹⁷

An extension gives you more time to file, not more time to pay. Interest and penalties accrue on unpaid tax from the original deadline regardless of any extension.

Returns can be e-filed through MyDORWAY or commercial tax software that supports South Carolina.¹⁸ Payment options include electronic funds withdrawal and credit card. Refunds on error-free electronic returns take up to eight weeks from February 2 or the filing date, whichever is later.¹⁹

Penalties and Interest

South Carolina charges separate penalties for filing late and paying late, and they stack:

Late filing: 5% of the tax due per month or partial month, capped at 25%.
Late payment: 0.5% of unpaid tax per month or partial month, capped at 25%.
Underpayment of estimated tax: figured the same way as the federal penalty under IRC Section 6654, except the “small amount” threshold is $100 rather than $1,000.²⁰

Interest accrues on any unpaid balance from the original due date until paid in full. The rate is set by the Department of Revenue to match the federal underpayment rate under IRC Section 6621, which changes quarterly. The department can waive up to 30 days of interest for administrative convenience.²¹

A taxpayer 60 days late on a $2,000 balance would face a 10% late filing penalty ($200), a 1% late payment penalty ($20), and interest, all before the return is processed. Filing on time even when you can’t pay in full avoids the steeper filing penalty.

Military Families

Active-duty servicemembers and their spouses get special treatment. Under the Servicemembers Civil Relief Act, a military spouse’s earned income is taxed only in the spouse’s state of legal domicile, not where they live because of military orders. A spouse domiciled in Ohio who works in South Carolina solely because of a duty assignment does not owe South Carolina tax on that income.²²

Since the 2023 tax year, the Veterans Auto and Education Improvement Act lets military couples pick their tax domicile from three options: the servicemember’s home state, the spouse’s home state, or the permanent duty station state. A nonresident spouse is only taxed in South Carolina on personal service income if the couple affirmatively elects either the servicemember’s South Carolina domicile or a South Carolina duty station.²²

1
South Carolina Department of Revenue. Information About H. 4216
2
South Carolina Department of Revenue. SCDOR Statement on Income Tax Conformity, April 15 Filing Deadline Extended for SC Returns
3
South Carolina Legislature. South Carolina Code 12-6-30 – Definitions
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South Carolina Department of Revenue. 2025 Individual Income Tax Return SC1040
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South Carolina Legislature. South Carolina Code of Laws Title 12 Chapter 6
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South Carolina Department of Revenue. SC Information Letter 26-4 Revised
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South Carolina Legislature. South Carolina Code 12-6-1120 – Gross Income, Computation, Modifications
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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 12-6-1130 – Taxable Income, Computation, Modifications
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South Carolina Legislature. South Carolina Code 12-6-1170 – Retirement Income Deduction
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South Carolina Department of Revenue. SC Revenue Ruling 21-13 – Age 65 and Older Deduction for Any Type Income
12
South Carolina Department of Revenue. Take Advantage of These Family Tax Credits and Deductions
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South Carolina Legislature. South Carolina Code 12-6-3330 – Two Wage Earner Credit for Married Individuals Filing Joint Return
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South Carolina Legislature. South Carolina Code 12-6-3380 – Tax Credit for Child and Dependent Care Expenses
15
South Carolina Legislature. South Carolina Code of Laws Title 12 Chapter 6 – Section 12-6-3385
16
South Carolina Department of Revenue. 2026 Individual Declaration of Estimated Tax SC1040ES
17
South Carolina Department of Revenue. SC4868 Request for Extension of Time to File South Carolina Individual Income Tax Return
18
South Carolina Department of Revenue. File and Pay Options – MyDORWAY
19
South Carolina Department of Revenue. Refunds
20
South Carolina Legislature. South Carolina Code of Laws Title 12 Chapter 54 – Section 12-54-43
21
South Carolina Legislature. South Carolina Code 12-54-25 – Interest Due on Late Tax Payments
22
South Carolina Department of Revenue. SC Revenue Ruling 24-5