Does South Carolina tax retirement income?

Does South Carolina tax Social Security?

South Carolina does not tax Social Security benefits.

Social Security and Railroad Retirement benefits taxed federally are exempt, with no age or income limit.

Your federal return is a separate question — see how much of your benefit the IRS taxes with the taxable Social Security calculator.

Are pensions taxed in South Carolina?

At 65+, up to $10,000 per person of retirement income is deducted, and an age deduction brings the total to $15,000 against any income.

The retirement income deduction is up to $3,000 a year before 65 and up to $10,000 a year from the year you turn 65, per person, for the original owner of the plan (inherited accounts don’t qualify; surviving spouses have a separate deduction). It covers plans under IRC sections 401, 403, 408 (IRAs) and 457 and all public employee retirement plans. Separately, each person 65+ gets a $15,000 deduction against any income, reduced by the retirement deduction claimed — so the combined total is $15,000 per person 65+ ($30,000 if both spouses are 65+).

Public vs. private pensions: Treated the same.

Are IRA and 401(k) withdrawals taxed in South Carolina?

IRA, 401(k), 403(b) and 457 withdrawals qualify for the same $3,000 / $10,000 deduction (original owner only), plus the rest of the $15,000 age deduction at 65+.

The remainder is taxable.

Required minimum distributions (RMDs) are IRA and 401(k) withdrawals, so the same rules apply. Estimate your RMD.

Is military retirement pay taxed in South Carolina?

All military retirement pay is exempt at any age, including Reserve and Guard retirement and surviving spouses’ benefits.

What is South Carolina’s income tax rate?

2 brackets, topping out at 5.21%.

New for 2026: 1.99% on taxable income under $30,000 and 5.21% (minus $966) at $30,000 and above — a 5.21% top rate, down from 6% in 2025. The bracket is indexed. From 2027 the top rate falls only if revenue growth forecasts meet a 5% trigger.

At $30,000 and above, the whole formula is 5.21% of taxable income minus $966, so the 5.21% rate effectively applies only above $30,000.

Standard deduction and exemptions

From 2026 South Carolina no longer uses the federal standard or itemized deduction. Instead, the South Carolina Income Adjusted Deduction is $15,000 single or separate, $22,500 head of household and $30,000 joint, shrinking as federal AGI rises and gone at $95,000 single, $142,500 head of household or $190,000 joint. The dependent exemption was $4,930 for 2025.

What tax breaks do seniors get in South Carolina?

The $15,000 age-65 deduction per person. South Carolina does not allow the federal $6,000 senior deduction for 2026. The homestead exemption for people 65+, disabled or blind covers $75,000 of a home’s fair market value — the $50,000 in law plus a temporary $25,000 through June 30, 2027.

What changed for 2026?

Act 110 of 2026: new 1.99% / 5.21% brackets, the new income-adjusted deduction, decoupling from the federal standard, itemized, senior, tips, overtime, car-loan and QBI deductions, an EITC cap of $200, and trigger-based cuts from 2027. Unchanged: the retirement, age-65, military and Social Security breaks.

2026 rates come from Act 110 of 2026 (signed March 30, 2026).