South Carolina rewrote its income tax in 2026
If you are using a paycheck calculator that still shows South Carolina rates of 0, 3, and 6 percent, it is out of date and your numbers are wrong. On March 30, 2026, Governor McMaster signed H.4216 into law as Act 110, and it changed three things at once.
- Two brackets replaced three. The rate is now 1.99 percent on South Carolina taxable income under 30,000 dollars, and 5.21 percent minus 966 dollars on income of 30,000 dollars or more.
- The federal standard deduction no longer applies to your state return. South Carolina formally decoupled from it. Federal adjusted gross income is now the starting point.
- A new deduction, the SCIAD, replaced it: 15,000 dollars for single filers, 22,500 dollars for head of household, and 30,000 dollars for married filing jointly.
That last one is where the trap is, and almost nobody is talking about it.
The hidden marginal rate that catches middle earners
South Carolina's headline top rate is 5.21 percent. That number is technically true and practically misleading, because the SCIAD does not stay at 15,000 dollars. It shrinks as you earn more.
For a single filer, the deduction starts shrinking once your federal adjusted gross income passes 40,000 dollars, and it hits zero at 95,000 dollars. The statute reduces it by a fraction: the amount your income exceeds 40,000 dollars, divided by 55,000.
Work through what that means. Every extra dollar you earn in that band does two things: it gets taxed, and it shrinks your deduction by about 27 cents, which exposes another 27 cents to tax. So your taxable income actually rises by about 1.27 dollars for every 1 dollar you earn.
How the SCIAD shrinks, in dollars
Here is the deduction and the resulting state tax for a single filer at different incomes.
| Your income | SCIAD you keep | South Carolina tax |
|---|---|---|
| $30,000 | $15,000 | $298.50 |
| $40,000 | $15,000 | $497.50 |
| $50,000 | $12,280 | $999.21 |
| $60,000 | $9,550 | $1,662.45 |
| $75,000 | $5,460 | $2,657.03 |
| $85,000 | $2,730 | $3,320.27 |
| $95,000 | $0 | $3,983.50 |
Notice the shape. Between 40,000 and 95,000 dollars your tax bill grows much faster than your income does. That is the phase-out doing its work quietly in the background. Above 95,000 dollars the deduction is gone entirely and your marginal rate settles back to the plain 5.21 percent.
A worked example: 75,000 dollars in South Carolina
Take a single filer earning 75,000 dollars in 2026 with no 401(k) contributions.
| Line | Amount |
|---|---|
| Gross pay | $75,000.00 |
| Federal income tax | $7,670.00 |
| South Carolina tax (after $5,460 SCIAD) | $2,657.03 |
| Social Security (6.2%) | $4,650.00 |
| Medicare (1.45%) | $1,087.50 |
| Take-home pay | $58,935.47 |
That is about 2,267 dollars every two weeks, and an effective total tax rate of 21.4 percent across federal, state, and payroll taxes.
Is South Carolina actually cheaper than North Carolina?
People move across that border for tax reasons all the time. On ordinary wages at a typical salary, the answer may surprise you.
| State | State tax on $75,000 | Annual take-home |
|---|---|---|
| Florida | $0 | $61,592.50 |
| Texas | $0 | $61,592.50 |
| North Carolina (3.99% flat) | $2,483.78 | $59,108.73 |
| South Carolina (Act 110) | $2,657.03 | $58,935.47 |
At 75,000 dollars, South Carolina costs about 173 dollars a year more than North Carolina on wage income. Not a fortune, but the opposite of what most people assume, and it is entirely down to the SCIAD phase-out biting at this income level.
South Carolina does win elsewhere. Property taxes are among the lowest in the country, it does not tax Social Security, and it offers a capital gains exclusion that makes it genuinely attractive to investors and retirees. But on a straightforward paycheck, at a middle income, it is not the bargain it is often sold as. Compare for yourself with our Florida paycheck calculator or Texas paycheck calculator, both no-income-tax states.
What South Carolina does not tax
- No local or city income tax. Unlike Michigan or Pennsylvania, no South Carolina city takes a bite. Your state tax is the whole state story.
- No tax on Social Security benefits.
- Favorable retirement treatment, including a retirement income deduction and preferential handling of military retirement.
How to lower your South Carolina tax
Because of the phase-out, pre-tax contributions are unusually powerful for South Carolina earners in the 40,000 to 95,000 dollar band. A dollar into a traditional 401(k) reduces your federal adjusted gross income, which reduces your state taxable income and claws back part of your SCIAD at the same time. You are getting relief at that 6.63 percent effective rate, not the 5.21 percent headline.
The 2026 employee 401(k) limit is 24,500 dollars. Use our 401(k) calculator to see the effect, and the budget planner to check the contribution actually fits your month.