North Carolina vs. South Carolina Taxes for Retirees: A Side-by-Side Comparison

Summary

Both Carolinas leave Social Security out of state income tax, and neither levies a state estate tax on deaths today. The differences that matter sit elsewhere. North Carolina taxes income at one flat rate (3.99 percent for tax year 2026) with no age-based retirement deduction. South Carolina moved to a two-rate structure from tax year 2026 (1.99 percent on the first $30,000 of taxable income and 5.21 percent above) and keeps separate retirement-income and age-65 deductions. For property tax, North Carolina's relief for older owners is income-tested, while South Carolina's 65-and-older homestead exemption has no income test but has to be applied for.

This page compares the rules side by side using the figures set out, with tax years and sources, in the two state guides: North Carolina retirement taxes and South Carolina retirement taxes. Rates and thresholds change by year, so confirm current figures with each state's Department of Revenue and your county before acting. This is general information, not tax advice, and it does not pick a winner: which state costs less depends on the household's income mix, home value, and where in the state it lives.

Key takeaways

• Social Security is not taxed by either state's income tax. North Carolina deducts it on Form D-400 Schedule S, and South Carolina does not adopt the federal tax on it.
• North Carolina's rate is 3.99 percent for tax years after 2025, with lower rates of 3.49 percent for 2027 and 2.99 percent for 2028 projected by the state budget office but dependent on revenue triggers. South Carolina's 2026 structure is 1.99 percent on the first $30,000 of taxable income and 5.21 percent above, with no scheduled further cut.
• South Carolina allows a retirement-income deduction of up to $3,000 before age 65 and up to $10,000 from the year a taxpayer reaches 65, plus an age-65 deduction of up to $15,000 that is reduced by the retirement deduction claimed. North Carolina has no additional standard deduction at 65 and its main retirement exception, the Bailey exclusion, covers certain government retirees with five or more years of creditable service as of August 12, 1989.
• North Carolina's homestead exclusion removes the greater of $25,000 or 50 percent of appraised value for owners 65 and older with income at or below $38,800 for the 2026 tax year. South Carolina's exemption covers the first $50,000 of value with no income test in the statute, and SCDOR states it is temporarily $75,000 for tax year 2026 only.
• Sales tax totals run from 6.75 to 8.25 percent across the North Carolina counties listed on NCDOR's page (Mecklenburg rose to 8.25 percent on July 1, 2026), while South Carolina's state rate is 6 percent plus local taxes that vary by county.

Income tax structure: flat rate versus two rates

North Carolina taxes individual income at one flat rate. The Department of Revenue's rate schedules page states 4.50 percent for tax year 2024, 4.25 percent for 2025 and 3.99 percent for taxable years after 2025, so 3.99 percent applies to 2026 income. The same page says further changes may apply from tax year 2027 under rate-reduction triggers. The state budget office's page says the consensus revenue forecast of May 15, 2026 projects collections above the triggers, which would lower the rate by statute to 3.49 percent for tax year 2027 and 2.99 percent for 2028, and it describes a different, slower schedule announced by General Assembly leadership on May 12, 2026 as a proposal. Treat anything after 3.99 percent as a planning assumption.

South Carolina's 2025 tax year used graduated rates of 0 percent on the first $3,200 of taxable income, 3 percent from $3,200 to $16,040 and 6 percent above that. H. 4216 (Act 110), signed March 30, 2026, applies from tax year 2026: 1.99 percent on taxable income up to $30,000 and 5.21 percent on the rest. No further cut is scheduled. Beginning with tax year 2027 the top rate must fall if projected income tax revenue grows by at least 5 percent, and the cut is sized by a formula in the bill.

Both states start from federal adjusted gross income, but the deductions differ. North Carolina's standard deduction for tax year 2025 is $12,750 for single filers, $25,500 for married filing jointly and $19,125 for head of household, with no extra amount at 65 or older. Confirm the amounts for the tax year you file. South Carolina no longer adopts the federal standard or itemized deduction under H. 4216; in their place is the South Carolina Income Adjusted Deduction of $15,000 for single filers, $22,500 for head of household and $30,000 for joint filers, which phases out as federal adjusted gross income rises above $40,000, $60,000 and $80,000 respectively.

A rate comparison alone is not a total-tax comparison. The size of the standard deduction or SCIAD, the retirement deductions below, and the household's taxable income all change the result, so this page does not compute a head-to-head dollar figure.

Social Security and other retirement income

Neither state taxes Social Security. North Carolina starts from federal adjusted gross income and lets benefits that were taxed federally be deducted on Form D-400 Schedule S. South Carolina exempts Social Security and railroad retirement benefits taxed federally, and its Code of Laws does not adopt the federal section that taxes them. Federal tax on benefits is unaffected in either state.

For pensions, IRAs and 401(k) withdrawals the two states diverge. North Carolina taxes most of it at the flat rate after the standard deduction. The Bailey exclusion removes from state tax certain benefits paid to retirees of the state and its local governments and to federal retirees, including military, if the retiree had five or more years of creditable service as of August 12, 1989; it does not cover former teachers and employees of other states. Separately, North Carolina allows a deduction for U.S. government uniformed-service retirement pay for members who served at least 20 years or were medically retired.

South Carolina's S.C. Code Section 12-6-1170 allows an original owner of a qualified retirement account to deduct up to $3,000 of retirement income a year before 65 and up to $10,000 from the year the taxpayer reaches 65, and a separate age-65 deduction of up to $15,000 against any income, including wages, reduced by any retirement deduction claimed. For joint filers the age-65 deduction is $15,000 when one spouse has reached 65 and $30,000 when both have. Military retirement income is separately deductible in full and also reduces the age-65 deduction. H. 4216 does not amend Section 12-6-1170; check SCDOR's current forms and instructions.

The practical reading is that South Carolina offers more age-linked relief on pension, IRA and wage income, while North Carolina's targeted relief is the Bailey exclusion for long-tenured government retirees and the military retirement deduction.

Property tax: ratios, cycles and relief for older owners

Both states tax property locally, so combined rates depend on the exact address. North Carolina counties must reappraise real property on an eight-year cycle under G.S. 105-286, and a county can adopt a more frequent cycle; Mecklenburg County, for example, has revalued every four years since 2019, with the next revaluation in 2027. South Carolina reappraises countywide every fifth year, limits an increase in a parcel's value attributable to the countywide program to 15 percent within five years, and does not apply the cap to transfers or new improvements.

South Carolina's constitutional assessment ratios matter for retirees: 4 percent for an owner-occupied legal residence and up to five contiguous acres, 6 percent for commercial and rental property and for a second or vacation home, and 6 percent for vehicles. The 4 percent ratio is not automatic; the owner applies to the county. Homes at the 4 percent ratio are also exempt from property tax imposed for school operations, excluding millage for school debt, and a second home does not receive that exemption.

North Carolina's Elderly or Disabled Homestead Exclusion in G.S. 105-277.1 removes the greater of $25,000 or 50 percent of appraised value from a permanent residence owned and occupied by a resident who is 65 or older (or totally and permanently disabled) and whose income for the preceding year is at or below the limit, which NCDOR's 2026 application states is $38,800 for the 2026 tax year. Income counts from every source other than certain family gifts and inheritances, and applications are accepted through June 1. A household above the limit receives nothing from it. The circuit-breaker program in G.S. 105-277.1B instead limits tax to 4 percent of income at or below $38,800 and 5 percent of income up to $58,200, defers the rest as a lien with interest, and cannot be combined with the exclusion.

South Carolina's homestead exemption in Section 12-37-250 exempts the first $50,000 of the fair market value of the dwelling place from county, municipal, school and special-assessment real estate taxes for owners who are at least 65 (or disabled or legally blind), have been South Carolina residents for at least one year, and hold title. The statute has no income test. SCDOR states that the General Assembly temporarily raised the exemption to $75,000 for tax year 2026 only through the fiscal year 2026-2027 budget. It is not automatic: an application made before July 16 of the tax year is honored for that year.

As arithmetic only, using an assumed 100 mills of non-school-operating millage on a South Carolina home at the 4 percent ratio: $50,000 times 4 percent is $2,000 of assessed value, and $2,000 times 0.100 is $200 a year. The assumed millage is not a quoted figure, and actual millage varies by county, municipality and district.

Vehicles, sales tax and estate tax

Both states tax registered vehicles as property. In North Carolina the Division of Motor Vehicles collects the vehicle property tax together with the registration fee, sending a combined notice about 60 days before the registration expires. South Carolina assesses personal motor vehicles at 6 percent, although certain heavy pickups may be 10.5 percent, and boats and airplanes are generally 10.5 percent; county property taxes must be paid before a vehicle is registered or its tag renewed. A retiree moving from a state without a vehicle property tax should budget for it in either Carolina.

North Carolina's state sales tax rate is 4.75 percent, and NCDOR's page as of September 30, 2026 lists county totals from 6.75 percent in counties such as Brunswick and Henderson to 7 percent in Buncombe, Moore and New Hanover, 7.25 percent in Wake, 7.5 percent in Durham and Orange, and 8.25 percent in Mecklenburg after an additional 1 percent local rate took effect on July 1, 2026. Qualifying food for home consumption is taxed at a 2 percent local rate only. South Carolina's state rate is 6 percent, residents 85 or older get a 1 percent discount, and counties add local taxes that vary by county; SCDOR's page gives combined examples of 7 percent in Lexington County and 8 percent in Aiken and Williamsburg counties.

North Carolina repealed its estate tax effective January 1, 2013 and its inheritance tax effective January 1, 1999. SCDOR states that South Carolina has no estate tax for decedents dying on or after January 1, 2005 and no gift tax. Federal estate tax rules are separate and are not covered here.

How the differences play out for different retirees

A household living mainly on Social Security owes little or no state income tax in either state, so property tax, vehicle tax, sales tax, insurance and housing costs will drive the comparison. A household with large IRA or pension income should model both states, because North Carolina applies one rate to nearly all of it after the standard deduction while South Carolina offers a lower first tier and deductions from age 65. A former state, local or federal employee with the required service by August 12, 1989 should confirm eligibility for the North Carolina Bailey exclusion, which can remove qualifying benefits from state tax.

For homeowners the deciding questions are where the home is and whether it will be the legal primary residence. South Carolina's 4 percent ratio, school operating exemption and homestead exemption all require an application and a primary-residence use, so a second home does not qualify. North Carolina's exclusion depends on staying under an income limit that counts Social Security and retirement income, so a household may qualify in one year and not the next.

A tax-only comparison also leaves out costs that can outweigh it, particularly coastal wind and flood insurance, homeowners association fees in retirement communities, and healthcare access. Use this page to narrow the tax side of the decision, then compare specific towns and communities in North Carolina and South Carolina.

Related guides

• North Carolina Retirement Taxes: Income, Property, Sales and Estate
• South Carolina Retirement Taxes: Income, Property, Vehicle and Sales Tax
• Property Tax Relief for Seniors: North Carolina vs South Carolina