Data Notice: The South Carolina: Tax Guide 2026 tax information in this article reflects projected 2026 rates and thresholds. State tax law is subject to legislative revision. Confirm current rates with South Carolina: Tax Guide 2026’s official tax authority before making filing decisions. [taxes-south-carolina-2026]

Taxes in South Carolina: State Tax Guide 2026

This article about taxes in south carolina: tax guide 2026 provides general tax education and is not a substitute for professional tax advice. Laws and regulations discussed here may have changed since publication. Work with a licensed tax advisor for decisions affecting your specific tax situation.

South Carolina is one of the most tax-friendly states for retirees in the Southeast. The state’s top income tax rate has been declining (heading toward a flat rate under recent reform legislation), and it offers generous deductions for retirement income, Social Security, and military pay. Property taxes are among the lowest in the nation for owner-occupied homes thanks to a favorable assessment ratio, and there is no estate or inheritance tax.

South Carolina Income Tax Rates (2026)

South Carolina has been transitioning from a multi-bracket system toward a lower, flatter structure. For 2026:

Tax Rate	Taxable Income Range
0.00%	$0 – ~$3,460
3.00%	~$3,461 – ~$17,330
~6.20%	Over ~$17,330

The top rate was 6.50% and has been declining under 2022 reform legislation that is gradually reducing it. The goal is to reach a flat rate structure in the coming years. The previous 5% and 6% middle brackets have been consolidated.

South Carolina’s standard deduction conforms to the federal amount: ~$15,000 for single and ~$30,000 for married filing jointly.

Sales Tax

Component	Rate
State base rate	6.00%
Average combined (state + local)	~7.46%
Maximum combined rate	~9.00%

Counties can add up to 3% in local option sales taxes (including capital project and school district taxes).

Exempt from sales tax: Most unprepared groceries are exempt from state sales tax but may be subject to local taxes. Prescription medications are exempt.

Sales tax cap: South Carolina caps the sales tax on any single item at ~$500, meaning the maximum tax is $500 regardless of how expensive the item is. This is a significant benefit for purchasers of vehicles, boats, and other high-value goods.

Property Tax

Metric	Amount
Average effective rate	~0.55%
National average	0.99%

South Carolina’s property taxes are among the lowest in the nation for homeowners thanks to the 4% assessment ratio for owner-occupied primary residences (compared to 6% for other residential and commercial property).

Homestead exemption: Homeowners 65+ (or totally disabled, or legally blind) are exempt from the first ~$50,000 of fair market value from all property taxes (including school operating taxes).

Act 388 (2006): Eliminated the school operating tax on owner-occupied homes entirely, replacing the revenue with an additional 1% sales tax. This dramatically reduced property tax bills for homeowners.

Example: A home with a fair market value of $300,000 assessed at 4% = $12,000 assessed value. At a typical millage rate of ~300 mills (without school operating), annual property tax is approximately ~$1,650.

Other Taxes

Estate and inheritance tax: South Carolina does not impose a state estate tax or inheritance tax.
Capital gains: Taxed as ordinary income, but South Carolina allows a 44% deduction on net capital gains, effectively reducing the rate on long-term gains.
Fuel tax: ~$0.28 per gallon (increased under the 2017 gas tax phase-in).
Cigarette tax: ~$0.57 per pack — among the lowest nationally.
Alcohol tax: Excise tax of ~$5.36 per gallon of spirits.
Accommodations tax: 2% state tax on short-term rentals and hotel rooms, plus local add-ons.
No local income taxes.

Tax Breaks and Credits

Social Security: Fully exempt from South Carolina income tax.
Retirement income deduction: Taxpayers under 65 can deduct up to ~$3,000 of qualified retirement income. Taxpayers 65+ can deduct up to ~$10,000. Those 65+ also receive an additional ~$15,000 deduction against any income.
Military retirement: Taxpayers under 65 can deduct up to ~$17,500 of military retirement income. Those 65+ use the general retirement deduction.
Capital gains deduction: 44% of net capital gains can be excluded from South Carolina taxable income.
Two-wage earner credit: Married couples where both spouses have earned income can claim a credit based on the lower-earning spouse’s income.
Child and dependent care credit: 7% of the federal credit amount.
SC EITC: ~41.67% of the federal Earned Income Tax Credit (nonrefundable).
Tuition tax credit: A credit for tuition paid for a child attending an eligible school, up to specific limits.

Key Takeaways

South Carolina’s income tax rate is declining toward a flatter, lower structure, currently topping out at ~6.20%
Owner-occupied homes benefit from a 4% assessment ratio and no school operating tax, keeping effective property tax rates around ~0.55%
The $500 sales tax cap on single items is a major benefit for vehicle and boat purchases
Retirees enjoy full Social Security exemption, generous retirement income deductions, and a senior homestead exemption
No state estate or inheritance tax

Next Steps

Compare South Carolina to other states at State Income Tax Comparison: All 50 States Ranked
Understand your federal obligation with the Federal Income Tax Guide 2026
Make sure you claim everything you can — Tax Deductions You’re Probably Missing
Ready to file? See How to File Your Taxes Step by Step

Tax information is for educational purposes only. Consult a licensed tax professional.