Income Taxes in South Carolina
South Carolina's income tax underwent a real, very recent structural overhaul: Act 110 (H.4216), signed March 30, 2026, replaced the old three-bracket 0%/3%/6% schedule with two brackets -- 1.99% on the first $30,000 of SC taxable income, 5.21% above -- for tax years beginning after 2025, with a statutory mechanism aimed at further reductions starting 2027.
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Learn moreThe new two-bracket structure, precisely
For tax years beginning after 2025, South Carolina taxes the first $30,000 of SC taxable income at 1.99% and everything above that at 5.21% -- replacing the prior three-bracket 0%/3%/6% schedule. Act 110 also replaced federal itemized/standard deductions with a new state-specific SCIAD deduction and capped the nonrefundable state Earned Income Tax Credit at $200.
A real mechanism aims to reduce the top rate further -- but the timeline is not yet fixed
Beginning with tax year 2027, if individual income tax revenue grows at least 5% in the prior fiscal year, the top 5.21% rate is automatically reduced further, with the statute directing continued reductions toward 1.99% and, over a longer horizon, toward eventual elimination of the tax. Treat 5.21% as a 2026 starting point that is genuinely likely to move, not a settled multi-year figure the way a true flat-tax state's rate typically is.
Social Security is fully exempt at any age; the 65+ deductions are real but capped, not additive
Social Security retirement income is fully exempt from South Carolina income tax regardless of age. Separately, residents 65+ can claim a $15,000 general age-65 deduction against any SC income, plus a distinct retirement-income deduction (up to $10,000 of qualifying pension/401(k)/IRA/annuity income at 65+, $3,000 below 65) -- but these two provisions are coordinated, not additive: any amount claimed under the retirement-income deduction reduces the $15,000 age-65 deduction dollar-for-dollar. A 65+ filer claiming the full $10,000 retirement deduction has only $5,000 of age-65 deduction remaining, for a combined maximum benefit of $15,000 total -- not $25,000, a distinction several retirement-planning sources describe ambiguously as if the two simply stack. See the retiring topic for the full planning implications.
Confirm your own filing situation directly given how recently this changed
Because Act 110 applies to tax years beginning after 2025 and the revenue-triggered reduction mechanism has not yet run its first cycle as of this research pass, this record recommends confirming your specific bracket, SCIAD deduction amount, and any 65+ deduction coordination directly with a tax professional or the SC Dept. of Revenue rather than relying on a secondary source's summary of a law this new.
Key takeaways
- Act 110 (signed March 30, 2026) replaced South Carolina's three-bracket 0%/3%/6% income tax with two brackets for tax years after 2025: 1.99% on the first $30,000 of taxable income, 5.21% above.
- A statutory mechanism can reduce the top rate further starting tax year 2027 if revenue growth targets are met -- the 5.21% top rate is a 2026 starting point, not a fixed multi-year figure.
- Social Security income is fully exempt from South Carolina income tax at any age.
- The $15,000 age-65 deduction and $10,000 retirement-income deduction are coordinated, not additive -- combined maximum benefit is $15,000, not $25,000.
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