South Carolina is one of the states that collects income tax from residents. With the current median household income of South Carolina resting at $50,570, income tax is an important addition to any resident's budget. In addition to income tax, South Carolina also collects sales and use taxes, general excise taxes, and more.
Residents in South Carolina should be well aware of the taxes that they need to pay before moving into the state. This will include not only state-level taxes but taxes issued on a local level, too. Business owners are responsible for collecting sales and use taxes, and paying income taxes.
Here's everything you need to know about taxes in the state of South Carolina.
Overview of South Carolina State Taxes
Before we get into the nitty-gritty of South Carolina’s list of state tax codes and regulations, let’s first dive into the quick facts you should know as a Palmetto State resident.
South Carolina Taxes: Quick Facts
Income tax: 0% - 7%
Sales tax: 6%
Property tax: 4%
South Carolina Personal Income Tax
South Carolina charges a progressive income tax on its residents, ranging from 0% at the lowest bracket to 7% at the highest bracket. These state income taxes are paid in addition to federal income taxes.
Annual 2019 Tax Burden ($75,000/yr income)
Total Estimated Tax Burden
Remaining Income = $62,250
South Carolina tax brackets and South Carolina income tax rates are as follows:
Annual Income Range
$0 to $2,970
$2,971 to $5,940
$5,941 to $8,910
$8,911 to $11,880
$11,881 to $14,860
These limits are for individuals. They are doubled for married couples who are filing together, but the same if a married couple chooses to file separately.
Tax returns in South Carolina are due on April 15th and are generally filed at the same time as federal income tax returns. Like federal income tax returns, the amount of income claimed can be deducted from through qualified deductions, and there may be credits available for those who are paying state taxes. Taxpayers may want to plan ahead for some of these tax credits.
State income taxes need to be paid by the due date or fines and levies could be raised against an individual's real property and bank accounts. It's possible for a lien to be placed against a home for state income taxes, and state income tax can be garnished from paychecks or from tax returns.
Both businesses and individuals must pay South Carolina income tax. South Carolina's corporate income tax rate is a flat rate of 5.0%, and there are a number of corporate income tax incentives, making South Carolina a favorable place to do business in.
Income tax rates can change from year to year, so it's important for taxpayers to check with the state tax department before they make any payments. An accounting firm can also help get your documents in order to make sure that you're prepared for the current and upcoming year.
If you aren't able to pay your South Carolina income taxes, you should still send in your income tax return. From there, you can request a payment plan or speak with the state tax department for more information. When income taxes aren't paid, tax refunds can be held back, wages can be garnished, and bank accounts can be levied. There is a fee of $45 for establishing a payment plan, and there are certain requirements that have to be met.
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South Carolina has a base sales tax rate of 6%. Most purchases are going to incur this 6% sales tax charge, but there are some exceptions to this. Residents of South Carolina who are 85 years of age or older will get a 1% deduction on this sales tax.
The state sales tax rate is 6%, but the effective sales tax rate can be higher because localities are allowed to charge higher rates for their sales taxes. Sales taxes can go into municipal projects and other necessary infrastructure modifications, so some localities may have a higher rate based on upcoming projects. This local sales tax rate is charged on top of the base sales tax.
Sales taxes are collected by the South Carolina Department of Revenue, but most people aren't going to pay their sales taxes directly. Instead, sales taxes are charged at point-of-sale whenever someone buys something. Businesses will need to report the amount of sales taxes they collected and send these sales taxes in to the Department of Revenue.
Sales taxes may change; they may be increased if the state needs additional funding. Both sales taxes and property taxes are very important for the state's budget, and much of the state's infrastructure is funded through these faxes.
Online retailers will also need to charge sales tax as long as they have a presence in South Carolina. When buying from local businesses online, you will usually see a sales tax included in the price. A "presence" in South Carolina includes a warehouse, office, distribution center, or headquarters. Most major eCommerce centers, such as Amazon, will need to collect South Carolina sales tax.
South Carolina Excise Tax
Excise taxes are often levied against specific types of commerce and products within a state. These excise taxes are meant to support the additional costs of the industry. Alcohol and tobacco are taxed at greater rates to discourage their use and to pay for health services. Transportation and gasoline are taxed to fix bridges and roadways.
There are a number of additional excise and use taxes in South Carolina. Some of the most common include:
Liquor taxes. A Liquor By the Drink tax is applied to anyone who sells alcohol for consumption on the premises. This 5% tax is added to other taxes, including state taxes and local taxes. Bars, restaurants, and other places that serve liquor will need to collect these taxes whenever alcohol is sold, and will then submit these taxes to the state monthly. Liquor and drink taxes can be paid online directly to the government of South Carolina.
You can expect to pay the following tax rates on your favorite alcoholic beverages:
Beer: $0.77 per gallon + 6% South Carolina sales tax
Wine: $0.90 per gallon + 6% South Carolina sales tax
Liquor: $2.72 per gallon + 6% South Carolina sales tax
Tobacco taxes. South Carolina charges a tax on cigarettes at $0.57 per pack of 20 cigarettes and 5% for other tobacco products. This is on top of the general sales tax. Tobacco products generally have very high tax rates, and this does not include the federal tax rates for tobacco products. Tobacco taxes generally go into educational campaigns regarding tobacco and its adverse health impact, and health-related projects.
Gasoline taxes. South Carolina's gas tax is 20.75 cents per gallon, which is one of the lowest alcohol tax rates in the country. This tax is intended to help pay for additional roadwork and bridges. Gasoline taxes are used to calculate the amount that someone uses the roads, roughly, and compensate for this. The more gasoline someone purchases, the more gas tax they will pay, and the more they will pay towards road improvements. This doesn't include the federal gas tax, which is 18.4 cents per gallon, and is levied at the same time.
Like other forms of South Carolina tax rate, these taxes are taken at point-of-sale by merchants. From there, the merchants reconcile their sales and report how much tax they brought in. Tax is paid to the state and county departments as needed, and a South Carolina tax calculator can be used to calculate tax payments on-the-fly. South Carolina has some unique tax laws, which are largely favorable to those who are 65 and older. But even beyond that, South Carolina's individual and corporate tax laws are about average compared to other states.
When traveling in South Carolina or relocating to South Carolina, keep in mind that you will need to pay sales tax on most purchases within the state, and that you will need to pay the South Carolina state income tax at the end of the year.
South Carolina Property Tax
Property taxes are used for things such as community initiatives. In South Carolina, over half of the property taxes collected are used to support the school system. Property taxes also support things such as fire departments and police stations. Property taxes are based on the type of property that is being taxed, and is applicable to both residential and commercial properties.
Primary residences in South Carolina are taxed at a rate of 4% their value. Agricultural property is taxed at 4% its use value. And personal property is taxed at 10.5% of income tax depreciated value. Property taxes are paid directly to South Carolina Department of Revenue.
Homeowners may disagree with the value of their homes, as an assessment is made by the property tax bureau regarding the fair market value of their property. A homeowner is allowed to appeal this determination if they feel that they are paying too much for property tax. Because property tax is linked to a property, not paying property taxes can lead to some dire consequences.
If property taxes aren't paid on time, a lien can be filed against the property. If property taxes still aren't paid, then the property itself can be liquidated in a tax sale.
Additionally, a casual excise tax is charged at 5% of the market value of motor vehicles. This income tax is applied not only to cars and trucks, but also to boats, motorcycles, and planes. This excise tax is charged whenever these vehicles trade hands. For planes and boats, the maximum limit on this excise tax is $500; no more than that will need to be paid.
Since real estate taxes and motor vehicle taxes are based on the fair market value of the property, a property owner may feel as though they are paying too much in taxes. There can be mistakes when assessing the value of a property. A South Carolina resident can provide evidence of a lower valuation of their property, or can request that their property be assessed again.
South Carolina does not have any type of inheritance tax, making it an ideal place for families that have a focus on multi-generational wealth. It also does not collect estate taxes in most instances, though this does depend on the size of the estate.
Inheritance taxes are taxes that are paid when someone inherits a large amount of wealth at once. These inheritance taxes usually only kick in after a certain amount of funds have been disbursed, and can be avoided through intelligent estate management. Through trust funds and other entities, inheritance tax can also be avoided, but this is not necessary in South Carolina.
In South Carolina, money can be passed tax-free to beneficiaries as long as they are under $11,400,000. However, it's possible that you will need to pay an estate tax if you are passing more than $11,400,000 to beneficiaries. There is one exception: when retirement accounts are inherited. When retirement accounts are inherited, the retirement account may be taxed when the assets are cashed out.
South Carolina State Tax Credits
South Carolina has over 50 different tax credits for individuals and businesses, making it one of the states with the most robust assortment of tax credits. Tax credits are generally used to encourage responsible, community-focused behavior, and economic behavior, within the state, such as energy-efficient property improvements, and local purchasing.
Common state income tax credits include:
The South Carolina Earned Income Credit. For those who also claimed an EIC on federal tax returns, generally controlled by the amount of income made that year.
Agricultural Income Tax Credits. Agricultural businesses may qualify for a tax credit as long as they purchased at least 15% South Carolina agricultural products within the year.
Child and Dependent Care Credits. This credit allows you to take 7% of your federal credit for having adult and child dependents. This is capped as $210 for a single child and $420 for more children.
Tuition Tax Credits. Full-time students engaged in higher education may be able to get a tax credit in South Carolina.
Classroom Teacher Expenses Credits. Teachers who spent money on their classroom supplies may also be able to get a tax credit in South Carolina.
South Carolina State Tax Exemptions and Deductions
State income taxes can be reduced through deductions and credits. Deductions reduce the amount of income that you pay taxes on. Credits directly reduce the amount of taxes that you pay, or even turn into a refund.
For a federal tax return, there is the option to also itemize your deductions. For your South Carolina return, you can instead use the standard deduction, as well as several other deductions, such as a deduction for refunds that you received from the state.
Likewise, there are standard deductions and personal exemptions that can be taken.
$12,000 is the standard deduction for those married and filing separately,
$18,000 is the deduction for those filing as head of household, and
$24,000 is for married couples that are filing together.
An additional exemption of $4,110 is added for dependents that are included on the tax return, and on top of that, another $4,110 exemption is added for children younger than 6.
Property Tax Exemptions
There are some property tax exemptions that can make it more affordable in South Carolina to own a home. The homestead exemption deducts $50,000 from the property's assessed value and is available to residents who are 65 years old or older.
South Carolina's Tax Free Weekend
Every August, South Carolina holds a tax holiday. The tax holiday starts on the first Friday in August and lasts three days, ending on Sunday. During the tax holiday, back-to-school supplies are exempt from both state and local taxes. This is intended to give teachers and parents a boost as they purchase products for their children going back to school, as well as helping college students who are returning for their next semester.
The sales tax holiday has existed since 2000, and includes: school supplies, bed and bath supplies, clothing and accessories, and computers and technology. It's a good time for big ticket sales such as laptops and desktop PCs. It's estimated that consumers have saved up to $3 million in taxes since the beginning of this tax free weekend. There are other states that also have a similar tax free weekend to encourage back-to-school spending.
Some things don't count for this exemption, such as cosmetics, furniture, and jewelry, and items can't be placed on a layaway or payment plan while still retaining the tax exemption. While laptops and personal computers can be included in the exemption, cellphones and smartphones cannot be included. You can check with the state for more information.
During the tax free weekend, retailers in South Carolina are not allowed to collect sales tax for these tax free items, as the state itself is not charging sales tax. If you're charged sales tax for an item that you believe should be exempt, you can contact the state. Even online sales for these tax free items should not be subject to state sales tax.
Retirement Tax Benefits
South Carolina is known to be particularly friendly to retirees. This is because South Carolina doesn't tax social security benefits. This can cut substantially into a retiree's social security income.
There is a $15,000 deduction available for retirees who are taking any other type of retirement income, which means that retirees are able to take their social security benefits as well as an additional $15,000 annually in income before paying state income taxes. Withdrawals from retirement accounts may still be taxed, and both public and private pension income may also be taxed.
These retirement benefits draw retirees into the state, as their dollar can go much farther. When combined with the particularly low property taxes, South Carolina becomes a popular location for retirees to settle. There are also long-term care and nursing home tax credits available, which can further alleviate the costs of not only growing older in South Carolina, but also having loved ones and family members growing older in South Carolina.
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