South Carolina State Income Tax 2023 – 2024

Understanding your state’s income tax system is crucial for financial planning. In South Carolina, taxes are a significant part of residents’ financial responsibilities. Legislators have approved a reduction in the state’s top income tax rate, dropping it from 7% to 6.5% starting in 2022.

Further reductions to 6.5% may occur if specific general fund growth criteria are met. The SCDOR adjusted the 2023 Withholding Tax Tables in November to account for this change. If your income is below the 2022-2023 standard deduction based on factors like filing status, age, and visual impairment, your tax liability can be $0. Let’s now explore the South Carolina State Income Tax system basics for 2022-2023.

South Carolina’s 2022-2023 income tax system has six brackets, with the highest rate at 7%. The state lacks inheritance or estate taxes, matching federal rules. It offers an 83.33% earned income tax credit mirroring the federal credit.

Filing requirements vary with age, filing status, and residency. Those under 65 must file if they filed a federal return or had state income tax withheld. Over 65 and married filing jointly taxpayers have different criteria. At the same time, nonresidents must file if they earned income or had tax withheld.

Does South Carolina Have State Income Tax?

Yes, South Carolina imposes state income tax on all resident income, ranging from 0% to 7%. The state credits income taxes paid to another state to avoid double taxation. South Carolina also levies a 6% sales tax. Deductions and credits, like those for retirement income, earned income, and nursing home costs, can reduce taxpayers’ overall tax liability.

South Carolina State Income Tax – How much will the income after tax in South Carolina with Filing Status

South Carolina State Income Tax Rates and Tax Brackets

Understanding the tax rates and brackets is crucial for accurate tax planning. South Carolina’s income tax system employs a progressive tax rate structure, meaning the tax rate increases as your income increases. Here are the tax rates and brackets for the 2022-2023 tax year.

South Carolina residents must file their state income tax returns by April 15th or the next business day if the due date falls on a weekend or holiday.

What is South Carolina’s Standard Deduction?

1. South Carolina’s Standard Deduction: South Carolina’s standard deduction closely resembles the federal standard, simplifying tax filing by offering a straightforward way to reduce taxable income without itemizing deductions.
   
2. Aligning with Federal Standards: South Carolina’s standard deduction aligns with the federal standard deduction, simplifying the tax filing process for residents. Taxpayers can choose between taking the standard or itemized deductions on their federal return.
   
3. Itemized Deductions: When itemizing on your federal return, South Carolina usually permits most deductions to transfer to your state return, but some, like state and local income tax deductions, may be added back.
   
4. State-Specific Deductions: South Carolina provides state-specific deductions, such as up to $3,000 for under-65 retirement income, up to $10,000 for those 65+, and a $3,000 write-off for volunteer emergency responders.

How to Calculate South Carolina State Income Tax

Here’s a breakdown of how to calculate it:

1. Determine Your Taxable Income: Begin by identifying your total income. This includes wages, salaries, business income, rental income, dividends, interest, and any other sources of income you may have.
   
2. Apply Federal Adjusted Gross Income (AGI): South Carolina uses your federal AGI as the starting point for state income tax calculations. This is the amount you reported on your federal tax return.
   
3. Apply Applicable Tax Rate: South Carolina employs a progressive tax rate structure with six income brackets and rates ranging from 0% to 7%. Calculate the tax due in each bracket based on your income within that range.
   
4. Deduct State-Approved Deductions: Subtract any applicable deductions from your calculated tax liability, such as the standard or itemized deductions. Ensure that you’re eligible for the deductions you claim.
   
5. Apply Tax Credits: If you qualify for any tax credits, subtract them from your remaining tax liability. These credits can include the earned income tax credit or other state-specific credits.
   
6. Calculate the Final Tax Amount: After accounting for deductions and credits, you’ll arrive at your final South Carolina state income tax liability.

Do I Have to Pay South Carolina State Income Tax?

Here’s a breakdown of the filing requirements:

1. Resident Taxpayers Under 65: If you’re a resident under 65, you must file a South Carolina state income tax return if you submitted a federal tax return or had South Carolina income tax withheld from any wages.
   
2. Resident Taxpayers 65 or Older: For residents aged 65 or older, the filing requirement depends on your filing status. If you’re married filing jointly (both spouses are 65 or older), you must file if your gross income exceeds the federal filing requirement plus $30,000 or if you had South Carolina income tax withheld from any wages.
   
3. All Other Filing Status: Residents with all other filing statuses must file if their gross (pre-tax) income exceeds the federal filing requirement amount for their status plus $15,000 or if they had any South Carolina income tax withheld from their wages.
   
4. Nonresidents of All Ages: Nonresidents must file if they had South Carolina income tax withheld from their wages or if they earned income from a South Carolina source.

Also Read: Pennsylvania State Income Tax Rates

How to Pay South Carolina State Income Tax

Paying South Carolina state income tax is a straightforward process, and there are several methods available to taxpayers:

• Electronic Filing (E-File): Utilize the state’s electronic filing system to file your tax return and make payments online. This method is secure, efficient, and offers the fastest processing times.
• Direct Debit: When filing electronically, you can authorize a direct debit from your bank account. This ensures timely payment without the need for writing and mailing a check.
• Credit or Debit Card: Pay using a credit or debit card through the state’s authorized payment processors. Note that a processing fee may apply.
• Cash Payments: Some authorized locations in South Carolina accept cash payments for taxes. Check with the Department of Revenue for details and locations.

Also, use Beem to get a quick and accurate estimate of your federal and state taxes and get the maximum refund.

Am I a resident for South Carolina income tax purposes?

Determining residency for South Carolina income tax purposes is crucial, as it affects your tax obligations. The state has specific rules that classify taxpayers as residents, part-year residents, or nonresidents, each with distinct tax implications.

Resident Status Rules 

To be a resident, you must either be domiciled in South Carolina or maintain an abode in the state while spending over 183 days there during the tax year. This status subjects you to income tax on all your earnings, regardless of their source.

Part-Year Resident Status Rules 

Part-year residents move in or out of South Carolina during the tax year. They are subject to state income tax on income earned while residing in the state.

Nonresident Status Rules

Nonresidents are only taxed on income earned from a South Carolina source. You’ll typically file as a nonresident if you work in the state but live elsewhere. Understanding these rules is essential for accurate tax reporting and compliance.

Also Read: Arkansas Self-employment Tax

Where is My South Carolina State Income Tax Refund

To track the status of your South Carolina state income tax refund, you can use the convenient online “Where does the South Carolina Department of Revenue provide My Refund?” tool. Here are the steps:

1. Visit the official South Carolina Department of Revenue website.
2. Locate their website’s “Where’s My Refund?” tool.
3. You’ll need essential information, including your Social Security Number and the amount you expect to receive as a refund.
4. Enter the required information accurately.
5. Click on the “Check Refund Status” or a similar button.
6. The tool will display the current status of your tax refund, whether it’s in process, approved, or already issued.
7. Remember that processing times can vary, so it’s a good practice to periodically check the tool for updates on your South Carolina state income tax refund status.

Why Did My South Carolina State Income Tax Increase

Several factors could lead to an increase in your South Carolina state income tax:

• Change in Income: If your annual income has increased compared to the previous tax year, you may be in a higher tax bracket, resulting in a higher tax liability.
• Reduced Deductions: A decrease in available deductions, such as the standard or itemized deductions, can lead to a higher taxable income and, consequently, a higher tax bill.
• Altered Tax Laws: Changes in South Carolina’s tax laws or regulations can impact your tax liability. Staying updated with tax law changes is essential to understand how they affect your situation.
• Investment Income: Gains from investments, such as stocks or real estate, can be subject to capital gains taxes, contributing to a higher overall tax burden.
• Changes in Credits: If you were previously eligible for certain tax credits and are no longer qualified, this can increase your tax liability.

South Carolina Sales Tax

South Carolina enforces a 6 percent state sales tax, with an additional 7 percent accommodations tax. Counties can levy extra local option sales taxes for specific projects. Citizens aged 85 or older receive a 1 percent sales tax exclusion, requiring valid identification. The state’s sales and use tax page details taxable and exempt products. These local taxes are collected by the South Carolina Department of Revenue in addition to the state’s 6 percent sales tax or 7 percent accommodations tax, adding complexity to the taxation structure.

5 Things to Know about South Carolina Income Tax

Here are five key points to know about South Carolina income tax:

• Free Tax Software: South Carolina collaborates with approved tax software providers, offering residents free tax preparation and filing tools.
• Abundance of Tax Credits: The state provides nearly 50 tax credits, applicable to various individual and business situations, capable of directly reducing tax liability or even resulting in refunds.
• Nursing Home Credit: One notable tax break is the credit available to individuals who pay for nursing facilities or in-home/community care for themselves or others.
• Dollar-for-Dollar Reduction: Tax credits in South Carolina work on a dollar-for-dollar basis, effectively reducing the amount of tax owed.
• Tax Resources: For more information and assistance, individuals can contact the South Carolina Department of Revenue’s Tax Helpline at (803) 898-5709 or visit the agency’s website.

FAQs

Q. Is South Carolina a high-tax state?

A. South Carolina’s overall tax burden is relatively moderate compared to many states.

Q. Is South Carolina a tax-friendly state?

A. South Carolina is considered tax-friendly, with low-income tax rates and exemptions for Social Security income.

Q. Is South Carolina a good place to live for taxes?

A. South Carolina can be a tax-friendly place to live, especially for retirees, due to its favorable income tax policies.

Q. How much of my paycheck goes to taxes in South Carolina?

A. The percentage of your paycheck that goes to taxes in South Carolina depends on your income. Still, the state has relatively low-income tax rates.

Q. Does South Carolina tax income earned in another state?

A. South Carolina taxes income earned in another state but provides a credit for taxes paid to another state.

Q. Does the state of South Carolina tax social security income?

A. South Carolina does not tax Social Security income.

Q. Can South Carolina state income tax go up?

A. South Carolina state income tax rates can change through legislative action.

Q. Do seniors have to pay state income tax in South Carolina?

A. Seniors in South Carolina do not have to pay state income tax on Social Security benefits or other retirement income.

Remember, you can learn all about filing tax returns on Beem. It’s an easy process.

Q. Does South Carolina have a state income tax for the military?

A. South Carolina provides special tax breaks for military personnel stationed in the state.

Q. What are South Carolina state income taxes for LLC?

A. South Carolina does not impose a state income tax on LLCs; LLC owners report business income on their personal income tax returns.