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South Carolina Tax Advantages

If you’re considering a move to South Carolina or have been a resident for only a short time, you may have questions about South Carolina’s tax structure. This online brochure explains the major state and local taxes of which you should be aware, including income, property, sales and use, motor fuel and a few other taxes.

 

Income Tax in South Carolina

South Carolina has a simplified income tax structure which follows the federal income tax laws. South Carolina accepts the adjustments, exemptions and deductions allowed on your federal tax return with few modifications. Your federal taxable income is the starting point in determining your state income tax liability.

Tax Rates
 
Individual income tax rates range from 3% to a top rate of 7% on taxable income. For tax year 2007, there is no tax on the first $2,630 of taxable income. Tax brackets are adjusted annually for inflation. Individuals, estates or trusts can use an optional income tax rate to compute the tax on active trade or business income received from a pass-through business in lieu of the standard income tax rate.

Deductions 

  • You do not pay a tax in this state on property sold in another state. Federal rules governing the exclusion of gain realized on the sale of a personal residence also apply in South Carolina.
  • A deduction of 44% is allowed on net long-term capital gains. The South Carolina holding period is the same as the federal period.
  • Beginning with the first year you receive qualified retirement income and until you reach age 65, you can take a deduction of up to $3,000. You can take this deduction for income received from any qualified retirement plan, such as IRAs, government pensions, Keogh plans and private sector pensions. If both spouses receive retirement income, each spouse is entitled to an individual deduction.
  • All residents at age 65 are eligible for a deduction of up to $15,000 from income, regardless of the source. The $15,000 deduction must be offset by any other retirement deduction that is claimed. A surviving spouse may continue to take a retirement deduction on behalf of the deceased spouse. 
    Income received from National Guard or armed forces reserve pay for the customary 39 days of annual training and weekend drill is exempt from tax.
  • Disability income from a permanent and total disability is deductible. 
  •  South Carolina does not tax Social Security benefits or railroad retirement.  
  • Interest you receive from federal obligations is deductible.  
  • A deduction is allowed for each child under age 6. The deduction is 100% of the federal personal exemption, which is adjusted each year for inflation.
  • A deduction is allowed for a special needs adopted child.  

Credits

  • Listed below are some of the individual income tax credits which may lower your South Carolina tax liability:
  • A refundable tuition tax credit equal to 25% for tuition paid to South Carolina public and private colleges. The maximum credit is $850 per year for four-year schools and $350 per year for two-year schools. 
  • A two-wage earner credit allows married couples to take a maximum credit of $210 if both spouses work.
  • You are allowed a maximum credit of $300 for payments made for nursing home care or intermediate nursing care provided in the home for yourself or another individual.
  • A credit is allowed for income taxes paid to another state on income which is taxable in both states.
  • A child and dependent care credit allows you to claim 7% of your federal allowable expenses for the care.
  • You may take a credit equal to 25% of the costs incurred in the installation of a solar energy heating or cooling system.

Additions to Income
 
Certain items of income must be added back to your federal taxable income for South Carolina purposes.

  • Any out-of-state losses and interest income from obligations other than those in South Carolina, if these items were subtracted on your federal income tax return, must be added back to your taxable income on the state return.
  • The deduction on your federal return for state income tax paid must be added back to your taxable income on your state income tax return, but it is offset by your state refund amount if you claimed it as income on your federal return.

Part-Year Residents 
 
If you moved to South Carolina during the year, you are a part-year resident. As a part-year resident, you may consider yourself a full-year resident or a nonresident. If you choose to file as a full-year resident, claim all your income as though you were a resident for the entire year and take a credit for any taxes paid in another state. If you choose to file as a nonresident, report only the income you earned in South Carolina. Your deductions and exemptions will be prorated by the same percentage as your South Carolina income compares to your total income.
 
You may choose the method which benefits you the most. You may need to complete your return both ways to determine which option is best for you.
 
Estimated Tax
 
Estimated tax is the method used to pay tax on income that is not subject to withholding. This includes income from self-employment, interest, dividends, alimony, rent, capital gains and prizes. You also may have to pay estimated tax if there was not enough tax withheld from your salary, pension or other income.

Estimated tax is paid in quarterly installments on April 15, June 15, September 15 and January 15.

 

Estate Tax in South Carolina

South Carolina does not impose an Estate Tax or a Gift Tax.

 

Property Taxes in South Carolina

Counties, cities and school districts are authorized to impose ad valorem taxes on real and personal property. Local governments assess and collect most property taxes. Property tax dollars support public schools and the services provided by local governments.

Residential Property
 
The market value of a legal residence and up to five acres of surrounding land is assessed at 4% of fair market value. The millage rate of the local government is then applied to the assessed value resulting in the tax liability. The millage rate is set by local governments and varies widely throughout the state.

The fair market value of owner-occupied residential property receiving the 4% assessment rate is exempt from all property taxes imposed for school operating purposes.

For example, based on a $100,000 owner-occupied residence assessed at 4% with a millage rate of 200 mills, the property taxes would be $800. Millage rates vary from county to county and you would need to check with officials in the county you wish to reside to estimate your property tax liability.

If you have established a one-year residency and you are age 65 or older, legally blind or permanently and totally disabled, you are eligible for a homestead exemption of $50,000 from the value of your home. Based on the example given earlier, the same $100,000 owner-occupied residence receiving a homestead exemption and assessed at 4% with a millage rate of 200 mills would have a property tax liability of $400.

The assessment ratio on a second home or vacation home is 6%. Property tax relief does not apply to a second home.
 
To find out more about the tax on real estate, call the assessor in the county where you live or plan to relocate. Jocasee Real Estate's properties are mostly in Oconee and Pickens Counties.

 

 

For More Information about SC Taxes

South Carolina has a tax website available: www.sctax.org

This information was adapted from the following publication from sctax.org: Moving to South Carolina.

Oconee County:

Assessor's Office
415 South Pine Street
Walhalla, SC 29691
(864) 638-4150
Fax: (864) 638-4156

Office Hours
8:30 AM to 5:00 PM
Monday - Friday864-638-4150/4151

Pickens County:

Pickens County Assessor's Office
222 McDaniel Ave B-8
Pickens, SC 29671

Office Hours
Monday - Friday
8:00am - 5:00pm
(864)-898-5872

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