South Carolina retirement taxes at a glance (2026)
| State income tax | Graduated, top rate 5.21%Starting tax year 2026 (H. 4216), South Carolina taxes income under $30,000 at 1.99% and income of $30,000 and above at 5.21% minus $966. The 2025 top rate was 6.0%. |
|---|---|
| Social Security | Not taxedSouth Carolina does not tax Social Security benefits. |
| Pensions | Partly taxedA retirement income deduction covers up to $3,000 of qualified retirement income before age 65 and up to $10,000 from age 65. A separate age-65 deduction of up to $15,000 against any income is reduced by the retirement deduction claimed, so the combined total is about $15,000 per person. Exclusion: up to $10,000 (age 65+). |
| 401(k) and IRA withdrawals | Partly taxedIRA and 401(k) withdrawals qualify for the same retirement income deduction ($3,000 under 65, $10,000 at 65+) and age-65 deduction. |
| Government pensions | Partly taxedState and other government pensions use the same retirement income and age-65 deductions as private pensions. |
| Military retirement pay | Not taxedMilitary retirement pay is fully deductible in South Carolina. |
| Estate tax | No |
| Inheritance tax | No |
| Property tax help for seniors | Homeowners age 65+ get a homestead exemption on the first $50,000 of the fair market value of their home. |
Recent changes and good to know
- H. 4216 (Act 110) was signed March 30, 2026 and applies from tax year 2026: two rates (1.99% and 5.21%) and a new SC Income Adjusted Deduction ($15,000 single, $22,500 head of household, $30,000 joint) replace the federal standard deduction.
- The top rate can fall further in later years if the Board of Economic Advisors projects revenue growth of 5% or more.
- Secondary sources report that retiree deductions did not change under H. 4216; SCDOR's H. 4216 page does not address them directly.
- Pending bills (S. 207 to raise the age-65 deduction, H. 5364 to exempt state retirement income after 2026) were not confirmed as enacted.
How to lower your retirement taxes in South Carolina
- Mix your income sources. Roth IRA withdrawals are tax-free at the federal level and generally in South Carolina too, so a Roth conversion before retirement can cut state tax later. Try the Roth conversion calculator.
- Watch federal Medicare costs. Large IRA withdrawals can raise your Medicare premiums. Check the 2026 IRMAA brackets.
- Think about your heirs. See what your IRA will really cost your family with the Family Tax Rate calculator.
- Comparing states? These have no state income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, Wyoming.
Frequently asked questions
Does South Carolina tax retirement income?
Partly: South Carolina does not tax Social Security or military retirement, and it shelters about $15,000 per person of other income at age 65+, but pension, IRA, and 401(k) income above that is taxed.
Does South Carolina tax Social Security?
South Carolina does not tax Social Security benefits.
Does South Carolina tax pensions?
A retirement income deduction covers up to $3,000 of qualified retirement income before age 65 and up to $10,000 from age 65. A separate age-65 deduction of up to $15,000 against any income is reduced by the retirement deduction claimed, so the combined total is about $15,000 per person.
Does South Carolina tax 401(k) and IRA withdrawals?
IRA and 401(k) withdrawals qualify for the same retirement income deduction ($3,000 under 65, $10,000 at 65+) and age-65 deduction.
Does South Carolina tax military retirement pay?
Military retirement pay is fully deductible in South Carolina.
Sources (last verified 2026)
- Information about H. 4216 — South Carolina Department of Revenue (2026)
- 2025-2026 Bill 4216: Income tax — South Carolina Legislature (2026)
- South Carolina Retirement Income Tax: Seniors (2026) — Brevy Care (2026)
- Does South Carolina Tax Retirement Income? 2026 — Taxstra (2026)
Educational content only, not tax, legal or investment advice. Plans and tax laws change; confirm details with your employer's plan documents or your state revenue department. Smart Financial Lifestyle is not affiliated with any employer named on this site.