Taxes in Hilton Head Island
South Carolina is genuinely neither a no-income-tax state nor a flat-tax state: Act 110, signed March 30, 2026, restructured the state's income tax into two real brackets (1.99% on the first $30,000 of taxable income, 5.21% above), alongside a 6% state sales tax (with no Beaufort County local-option add-on as of March 2026) and Hilton Head Island's own real, additional accommodations and hospitality tax layers.
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Learn moreAct 110's real, two-bracket restructuring -- verified independently, not assumed
South Carolina Act 110 (H.4216), signed by Governor McMaster on March 30, 2026, replaced the prior three-bracket 0%/3%/6% graduated schedule with two brackets for tax years beginning after 2025: 1.99% on the first $30,000 of South Carolina taxable income, and 5.21% on income above that threshold. This is a genuinely different profile from true no-income-tax states (Texas, Tennessee, Florida, covered elsewhere in this project) and from single-flat-rate states (Arizona's 2.5%, Colorado's 4.4%) -- South Carolina residents do pay a real, graduated state income tax. The law also replaced federal-itemized-deduction conformity with a new state-specific SCIAD deduction and capped the nonrefundable state Earned Income Tax Credit at $200. A further mechanism allows the top rate to fall in future years if the state Board of Economic Advisors certifies 5%+ year-over-year revenue growth, capped at a $200 million revenue impact per reduction -- a real, current path to further cuts, not yet realized as of this research pass.
A real, correctly-understood retiree tax advantage -- not simply a $25,000 stack
South Carolina exempts Social Security in full from state income tax, and separately offers a $3,000 (under 65) or $10,000 (65+) qualifying-retirement-income deduction, plus a $15,000 age-65-and-older general-income deduction that applies to ANY income, not just retirement income. The honest, verified mechanic: the $15,000 general deduction is REDUCED by any retirement-income deduction actually claimed -- so the two deductions do not simply stack to $25,000. The genuine combined ceiling for a filer 65 or older is $15,000 total. This is disclosed explicitly here because some secondary sources frame it ambiguously; see the retiring topic page for the fuller retiree-specific picture.
Beaufort County's 6% sales tax -- and why some sources cite higher figures
Beaufort County's combined sales tax rate dropped from 7% to 6% effective March 1, 2026, when the county's Green Space Tax expired; there is no additional Beaufort County local-option sales tax layered on top of South Carolina's 6% state rate. Some aggregator sources cited confusingly higher figures (9.00%, 6.63%) for Hilton Head Island specifically -- these appear to conflate the general sales tax with the town's separate Accommodations Tax (3%, on lodging under 90 days) and Hospitality Tax (2%, on prepared food and beverage), neither of which applies to everyday retail purchases. Confirm 6% as the rate for general purchases.
Real, additional local tax layers specific to a resort economy
The Town of Hilton Head Island levies a 3% Accommodations Tax (plus a Beach Preservation Fee) on short-term lodging under 90 days -- combined with state accommodations tax, short-term rental operators collect roughly 10% total -- and a separate 2% Hospitality Tax on prepared food and beverage sales. These are real, resort-specific tax layers that most non-tourism-economy towns in this project don't carry, funding the town's tourism-infrastructure and beach-management costs directly from visitor spending rather than resident property or income tax alone.
Property tax deserves its own full page
South Carolina's 4% (owner-occupied) vs. 6% (second home/rental) property tax assessment ratio, and Hilton Head's real, disclosed within-island effective-rate spread by zip code, are covered in full on the property-taxes topic page rather than repeated here.
Key takeaways
- South Carolina's Act 110 (signed March 30, 2026) restructured state income tax into two real brackets: 1.99% on the first $30,000 of taxable income, 5.21% above -- not a no-tax or flat-tax state.
- Social Security is fully exempt from SC state income tax; retirees get real but non-additive deductions -- a $10,000 (65+) retirement-income deduction plus a $15,000 general age-65 deduction that is REDUCED by any retirement deduction claimed, for an honest combined ceiling of $15,000, not $25,000.
- Beaufort County's sales tax is 6% (reduced from 7% on March 1, 2026, with no county local-option add-on) -- higher figures cited by some aggregators (9%, 6.63%) appear to conflate this with the town's separate lodging/hospitality taxes.
- The Town of Hilton Head Island levies a real, additional 3% Accommodations Tax (plus Beach Preservation Fee) on short-term lodging and a 2% Hospitality Tax on prepared food/beverage -- resort-specific tax layers most towns in this project don't carry.
- Property tax's real 4%-vs-6% assessment-ratio structure and within-island effective-rate spread are covered in full on the property-taxes topic page.
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