State retirement tax · South Carolina
Retirement tax rules for South Carolina residents (2026 guide)
South Carolina rebuilt its income tax for 2026: 1.99% on income under $30,000 and 5.21% above it (H.4216, signed March 30, 2026). Retirees 65+ also get a $15,000 deduction each, Social Security and military retirement are exempt, and the first $50,000 of a 65+ homeowner's home value escapes property tax.
By Mindaugas Laucius · Last reviewed October 21, 2026
Rate on retirement income
2.05%*
Taxes Social Security?
No
Approx. tax on $90k retirement income
$1,845
Pension carve-outs
Yes
Quick figures: a single filer with $90,000 of income, $30,000 of it Social Security.
The 2026 rate structure
Under H.4216, taxable income below $30,000 is taxed at 1.99%; at $30,000 and above, the tax is 5.21% of taxable income minus $966, which makes the two rates meet smoothly at $30,000. The top rate can fall further in later years if state revenue grows enough.
Retirement deductions
Social Security is not taxed. Military retirement pay has been fully exempt since 2022, at any age. At 65+, each taxpayer can deduct $15,000 from any kind of income — the separate $10,000 retirement-income deduction counts toward it, not on top.
Property taxes for 65+
The homestead exemption removes all taxes on the first $50,000 of fair market value of your legal residence once you're 65 (or disabled or blind) and have lived in South Carolina for a full calendar year. Your legal residence is also assessed at 4% of value rather than the 6% used for other property.
Worked examples
Applying the 2026 formula
- Suppose $40,000 of your income is South Carolina taxable income.
- 5.21% × $40,000 − $966 = $2,084 − $966 = $1,118.
About $1,118, an average rate of 2.8%.
What the 65+ deduction is worth
- $15,000 deduction × 5.21% top rate = $781.50.
Up to $781.50 a year per person, or $1,563 for a 65+ couple.
A $300,000 home, owner 65+
- $300,000 − $50,000 homestead exemption = $250,000 subject to property tax, assessed at the 4% residential ratio.
One-sixth of the home's value is fully exempt.
Recent and pending changes
- 2026: H.4216 replaced the three-bracket system with 1.99% / 5.21% (5.21% of taxable income minus $966 at $30,000 and above).
- 2022: military retirement pay fully exempt.
Run your own numbers — pick South Carolina in the calculator’s Taxes tab for a year-by-year estimate. Or compare all 50 states and DC.
Thinking about a move? The free state-to-state retirement tax comparison puts South Carolina next to any other state on your own income.
South Carolina questions
Can I take both the $10,000 retirement deduction and the $15,000 senior deduction?
Not on top of each other. At 65+, the $10,000 retirement deduction counts toward the $15,000 total.
Does South Carolina tax Social Security?
No, benefits are fully exempt.
How do I get the homestead exemption?
Apply with your county auditor once you're 65 and have been a South Carolina resident for a full calendar year.