South Carolina retirement income tax (2026)

How South Carolina taxes retirement income

South Carolina taxes income in 2 brackets for a married couple filing jointly, from 1.99% to 5.21%; the top rate starts at $30,000 of taxable income^[1].

Before the rate applies, the simulator subtracts a standard deduction of $30,000 on a joint return ($15,000 single). It applies no personal exemption.

Social Security benefits are exempt from South Carolina income tax: none of the benefit enters the state base, as in 22 of the 24 states covered here that tax income.

From age 65, each person can exclude up to $15,000 a year of IRA, 401(k) and pension distributions, so a couple can exclude up to $30,000 when each spouse has that much. In the worked examples the couple’s distributions are split evenly between the spouses, so each spouse’s cap applies to half. This break can also offset any other income in the South Carolina base, wages and investment income included, and the simulator applies it that way: each spouse can use it against their own wages and half of the couple’s investment income as well.

Long-term capital gains and qualified dividends are taxed as ordinary income, at the same rates.

For single filers the simulator halves the joint deduction and exemption but keeps the joint bracket widths. Where South Carolina’s real single brackets are narrower, that understates a single filer’s tax.

Put together, the example couple below owes $0 in South Carolina, the lowest bill among the 24 states covered here that tax income, shared with 7 other states.

2026 brackets

Bracket thresholds are held at these values in every simulated year. The simulator does not index state amounts for inflation.

Worked example

A retired couple, both 67, filing jointly, with $48,000 of Social Security, $40,000 of IRA withdrawals and a $20,000 pension. The figures are computed when the page is built, by the same state-tax function the simulator runs.

The couple’s next $1,000 of IRA withdrawals would add $20 of South Carolina tax.

A single retiree, 67, with half those amounts ($24,000 of Social Security, $20,000 of IRA withdrawals, a $10,000 pension) owes $0, 0.00% of gross income.

Age matters here: if both spouses were 63, below the exclusion age of 65, the same income would owe $597, which is $597 more than at 67.

As IRA withdrawals rise

The same couple, with Social Security and the pension unchanged, taking more from their IRAs (a larger withdrawal, a required minimum distribution or a Roth conversion all count as distributions here):

Neighbouring states

The example couple’s state tax in South Carolina and in the neighbouring states covered here, same income and ages:

Against South Carolina, the couple would pay more in North Carolina (+$1,377); the same in Georgia. With $200,000 of IRA withdrawals instead of $40,000, they would owe $7,370 in South Carolina, against North Carolina ($7,761), Georgia ($2,994).

What this page leaves out

What the simulator does and does not handle for South Carolina, item by item^[1]:

• Tax years 2026 and later (H.4216 / Act 110): two-rate schedule, 1.99% below $30,000 and 5.21% above (statutory "5.21% × amount − $966", algebraically the same two-bracket marginal schedule modeled here).
• SC now starts from federal AGI (decoupled from the federal standard/itemized deduction) and subtracts the new SCIAD instead: $30,000 married filing jointly, $22,500 head of household (a separate amount in the simulator), $15,000 single/married filing separately (= 50% of married filing jointly, the default derivation).
• SCIAD's income-based phase-out (fully gone by ~$95k/$142.5k/$190k AGI for single/head of household/married filing jointly) is NOT modeled, which overstates the deduction at higher retiree incomes. Unchanged by the act: Social Security exempt.
• $15,000/person net deduction at 65+, against any SC income including wages and investment income (the $15,000 age deduction reduced by the $10,000 retirement-income deduction claimed; under-65 $3,000 ignored).
• The 44% net long-term capital gains deduction is still ignored, so gains are modeled as fully ordinary. The $30,000 bracket breakpoint is statutorily indexed (S.C. Code §12-6-520: cumulative chained-CPI adjustment each December 15, capped at 4% a year, $10 rounding) and is held at its 2026 value here.

In every state the simulator also leaves out credits, itemized deductions, deductions that phase out with income, local income taxes, surtaxes and any deduction for federal tax paid. It holds state amounts fixed and does not index them for inflation.

See it over a full plan

Related

• All 33 states compared
• State taxes in retirement: the exemptions that change the map
• The Social Security tax torpedo
• The RMD bomb: how pre-tax savings become forced income
• Roth ladder: how a Roth conversion ladder works
• Taxes in retirement: the topic guide
• Marginal-rate map (federal and state tax on the next dollar)