South Carolina Tax and CPA Services: State, County and City Taxes

South Carolina is changing its individual income tax for 2026. A law signed in March 2026 cuts the brackets from three to two, drops the top rate and replaces the federal standard deduction with a state one. Local rules matter too, from county sales taxes to city business license taxes. This page covers tax year 2025 returns (filed in 2026) and 2026 planning.

The 2026 income tax overhaul

Act 110 of 2026 applies to tax years beginning after 2025. For 2026, the Department of Revenue (SCDOR) says tax is 1.99% of taxable income from $0 to $29,999. At $30,000 or more, it is 5.21% of taxable income minus $966. The brackets adjust each year for inflation, and the top rate can fall from 2027 if state revenue forecasts meet the law's tests. The 2025 return still uses the earlier schedule, with a 6% top rate and a $4,930 dependent exemption.

The bigger change is the starting point. South Carolina no longer follows the federal deductions in Internal Revenue Code section 63(b) through (g), so 2026 returns begin with federal adjusted gross income, not taxable income. That list includes the standard and itemized deductions plus the federal senior, tip, overtime, car loan interest, QBI and non-itemizer charitable deductions.

In their place is the South Carolina Income Adjusted Deduction (SCIAD): $15,000 for single or married filing separately, $22,500 for head of household and $30,000 for married filing jointly, each reduced as federal AGI rises. Compare that with your federal deductions before adjusting your 2026 withholding or estimates. Our multi-state and local tax service can model the difference.

Retirement income and residency

South Carolina does not tax Social Security benefits or railroad retirement taxed federally. Other retirement income is taxable, but residents can deduct $3,000 if under 65 or $10,000 if 65 or older, and a combined cap of $15,000 per taxpayer applies when the age 65 deduction is also claimed (2025 rules). Military retirement income is fully deductible. Those moving to South Carolina should plan around these rules; see our page for seniors and retirees.

Residents file an SC1040. Part-year residents and nonresidents add Schedule NR. South Carolina taxes income earned here no matter where you live, so commuters from North Carolina or Georgia owe South Carolina tax on South Carolina wages and usually claim a credit at home. Nonresidents who sell South Carolina real estate face withholding on the net proceeds, and withholding also applies to rent paid to nonresident owners of five or more residential units or any commercial property.

Pass-through election and business licenses

South Carolina recognizes a pass-through election: partnerships, including LLCs taxed as partnerships, can elect annually on the SC1065 to pay active trade or business income tax at the entity level, an option available since 2021. Otherwise, the partnership withholds 5% (2026) on nonresident partners unless they sign an affidavit or join a composite return. Separately, an entity can be administratively dissolved by the Secretary of State for not filing a required return with SCDOR, and reinstatement needs a tax compliance certificate.

Cities and towns impose a business license tax on gross income. Under Act 176, municipalities must follow standardized practices, including a standard license year, due date, application and class schedule. Renewals can be filed through the statewide online portal, while new licenses come from the city or town. Plan for a separate license in each municipality where you operate.

Sales, accommodations and property taxes

The 2026 state sales and use tax rate is 6%. Counties can add local taxes, generally 1% each, for local option, capital projects, school district, education capital improvement or transportation purposes. Charleston County, for example, has a local option tax, a 0.5% transportation tax and an education capital improvement tax. SCDOR posts changes such as Aiken County's capital projects tax returning May 1, 2026. Lodging rented for under 90 consecutive days also carries a 2% accommodations tax (2026).

County auditors and assessors run property tax. The 4% legal residence ratio applies only to your primary home, and homeowners over 65, disabled or legally blind may qualify for a homestead exemption on the first $50,000 of value (2026). Business personal property is assessed at 10.5% of net depreciated value, and bills are due January 15. Second-home and rental owners should review local bills each year.

Payroll

Employers with South Carolina wages are withholding agents and file quarterly withholding returns. The Department of Employment and Workforce collects unemployment tax on the first $14,000 per employee in 2026, per its employer handbook. Employers with four or more employees, counting part-time workers and family members, generally need workers' compensation coverage through the Workers' Compensation Commission. See our state unemployment insurance and workers' compensation guides.

How we can help

We prepare SC1040 returns for residents, part-year residents and nonresidents, review retirement deductions, compare the SCIAD with your federal figures and file partnership and S corporation returns. For employers, we coordinate withholding, unemployment tax and local business license renewals, and we help out-of-state owners with South Carolina property and rental withholding.

Frequently asked questions

General information only, not tax, legal or accounting advice for your situation. Rules, limits and deadlines change; confirm the current rules with the official source or a qualified professional before you act. Reading this page does not create a professional relationship with CPA Tax Payroll and Accounting Corp.