South Carolina Retirement Taxes: Income, Property, Vehicle and Sales Tax

Summary

South Carolina's tax picture for retirees changed in 2026. The individual income tax was restructured for tax year 2026 by H. 4216 (Act 110), while the property tax rules that matter most to homeowners, the 4 percent assessment ratio and the homestead exemption for owners 65 and older, are long-standing and depend on filing an application. This guide sets out each piece with the year it applies to.

Figures below are current as of 30 September 2026 and come mostly from South Carolina Department of Revenue (SCDOR) pages, the legislature's bill and Code of Laws pages, and the SCDOR property tax policy manual. SCDOR's own deduction guidance dates from before H. 4216, and SCDOR said it would publish further guidance during 2026, so confirm current forms with SCDOR or your County Auditor before acting. This is general information, not tax advice.

Key takeaways

• 2026 tax year (H. 4216, Act 110): SC income tax is 1.99 percent on the first $30,000 of taxable income and 5.21 percent above it (5.21 percent of the amount minus $966), replacing the 2025 0, 3 and 6 percent brackets; further cuts depend on revenue tests, not a fixed schedule.
• Social Security is exempt from SC income tax. The retirement deduction (up to $3,000 before 65, up to $10,000 from 65) and the age 65 deduction (up to $15,000, reduced by the retirement deduction claimed) are in Code Section 12-6-1170, which H. 4216 did not amend. The new SCIAD ($15,000 single, $22,500 head of household, $30,000 joint) phases out at higher incomes.
• Owner-occupied primary residences are assessed at 4 percent if you apply; second homes are 6 percent; owner-occupied 4 percent homes are exempt from school operating millage.
• Homestead exemption for owners 65 and older: first $50,000 of fair market value exempt under the Code, raised temporarily to $75,000 for tax year 2026 only per SCDOR; one year of SC residency and a county application (before July 16) are required.
• Personal vehicles are assessed at 6 percent for property tax; the state sales tax is 6 percent plus local option taxes; SCDOR says there is no SC estate tax for deaths on or after January 1, 2005.

The individual income tax: rates for 2025 and 2026

For tax year 2025, the Code of Laws sets 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 $16,040, with brackets indexed under Section 12-6-520 (S.C. Code Section 12-6-510(B), as published on the legislature's website). SCDOR's moving guide describes a top rate of 6.0 percent for 2025. SCDOR's H. 4216 page adds that 2025 returns are due October 15, 2026 after an automatic filing extension, and that H. 4216 does not affect them.

H. 4216 was signed on March 30, 2026 and is recorded by the legislature as Act No. 110 (ratified March 25, 2026). It applies to tax years beginning after 2025, so the first returns under it are due April 15, 2027. The tax is 1.99 percent of South Carolina taxable income from $0 to $30,000, and for income of $30,000 or more it is 5.21 percent of the amount minus $966, which is the same as 1.99 percent on the first $30,000 and 5.21 percent on the rest. The Governor's office describes this as replacing the three-bracket system and lowering the top rate from 6.0 percent (bill text on scstatehouse.gov; SCDOR; Governor's office).

The same Act changes how taxable income is computed. South Carolina no longer adopts the federal standard or itemized deduction, and federal adjusted gross income is the starting point. In their place the Act creates the South Carolina Income Adjusted Deduction (SCIAD): $15,000 for single or married-filing-separately filers, $22,500 for head of household, and $30,000 for married filing jointly or a surviving spouse. The SCIAD phases out as income rises. In the bill text it is reduced by the fraction of federal AGI above $40,000 over $55,000 for the $15,000 amount, above $60,000 over $82,500 for the $22,500 amount, and above $80,000 over $110,000 for the $30,000 amount, and it is not allowed once the fraction reaches one. Those formulas imply the deduction is fully phased out at federal AGI of $95,000 (single), $142,500 (head of household) and $190,000 (joint). The Governor's office states that the bill preserves existing South Carolina-specific deductions. The Act also caps the earned income tax credit at $200.

The Act sets a path for further rate cuts, but none is scheduled. Beginning with tax year 2027, the top rate must decrease if individual income tax revenue (net of amounts credited to the Trust Fund for Tax Relief) is projected to grow by at least 5 percent in the fiscal year that begins during the tax year. The cut is sized to reduce revenue by $200 million or by 25 percent of the recurring surplus, whichever is greater, and is limited to the projected increase if that is smaller. Reductions continue until the top rate equals 1.99 percent, after which the 1.99 percent rate itself steps down toward zero and applies to all taxable income. The forecast in effect on February 15 is the final one used (bill text). SCDOR's summary describes the $200 million figure as a limit on the reduction, which differs from the bill's wording, so this guide follows the bill. As of September 30, 2026, the 2026 rates above are the ones in law.

Social Security

Social Security benefits and railroad retirement benefits that are taxed for federal purposes are exempt from South Carolina individual income tax (SCDOR tax tip for retirees, November 12, 2024; the amount is entered as a subtraction on the state return). The Code of Laws supports this by specifically not adopting Internal Revenue Code Section 86, which taxes Social Security benefits (S.C. Code Section 12-6-50(4)). H. 4216 amends Sections 12-6-510, 12-6-50, 12-6-1140, 12-6-4910, 12-6-1720 and 12-6-3632, and its title does not list any change to the Social Security treatment. Federal tax on Social Security is unaffected, since the exemption applies only to the state return.

By comparison, North Carolina's Department of Revenue allows a deduction on the state return for Social Security and railroad retirement benefits that were taxed federally. For the full state comparison see the NC versus SC taxes guide and the North Carolina retirement taxes guide.

Retirement income deduction and the age 65 deduction

Two separate deductions matter for retirees, and they interact. Both are in S.C. Code Section 12-6-1170, which is on the legislature's website and quoted in SCDOR Revenue Ruling 21-13. Subsection (A) allows an original owner of a qualified retirement account to deduct up to $3,000 of retirement income a year, and from the year the taxpayer reaches age 65, up to $10,000. Retirement income means otherwise taxable income, not subject to an early-distribution penalty, from qualified plans including those defined in Internal Revenue Code Sections 401, 403, 408 and 457 and from all public employee retirement plans of federal, state and local governments, including military retirement. A surviving spouse applies the deduction to income attributable to the deceased spouse in the same way it applied to the decedent, and may also claim a deduction for the survivor's own retirement income.

Subsection (B) is the age 65 deduction. Beginning with the tax year in which a resident reaches 65, the taxpayer may deduct up to $15,000 from South Carolina taxable income, reduced by any amount deducted under subsection (A) (amounts deducted as a surviving spouse do not reduce it). For joint filers the maximum is $15,000 when one spouse has reached 65 and $30,000 when both have. SCDOR's ruling says this deduction can reduce any South Carolina taxable income, including wages, investment income, rental income and business income as well as retirement income. The two are therefore not a simple $25,000 stack: a person who deducts the full $10,000 of retirement income has $5,000 left under the age 65 deduction. Military retirement income is separately deductible in full under Section 12-6-1171, and that amount also reduces the age 65 deduction unless claimed as a surviving spouse.

Did H. 4216 change these amounts? The enacted text does not. Section 12-6-1170 is not among the Code sections the Act amends. The Act's own filing-threshold section (Section 4) still refers to the deduction a taxpayer qualifies for under Section 12-6-1170(B), computed without regard to a reduction for the retirement income deduction, which shows the age 65 deduction continues to exist alongside the new SCIAD. The Governor's office says the bill preserves existing South Carolina-specific deductions, and the Act adds the SCIAD as a separate item in the list of deductions in Section 12-6-1140. SCDOR said form guidance would follow later in 2026, so check its current instructions for how the lines are laid out. Eligibility is per individual taxpayer and depends on residency and the year of the 65th birthday.

Property tax basics: value, ratio and millage

A South Carolina property tax bill is the appraised value multiplied by the assessment ratio multiplied by the millage rate (Revenue and Fiscal Affairs Office property tax FAQ). Real property other than agricultural-use property is appraised at fair market value. One mill is one-thousandth of a dollar, so on $100,000 of assessed value a mill is worth $100. Millage is set by each taxing jurisdiction, including the county, school district and municipality, so two houses of equal value can be billed differently. Under S.C. Code Section 6-1-320, a local government may raise general operating millage above the prior year's rate only by the increase in population and inflation, counting a negative component as zero.

The Revenue and Fiscal Affairs Office lists the constitutional ratios: owner-occupied real property 4 percent; private agricultural real property 4 percent; commercial and rental real property 6 percent; personal property vehicles 6 percent; other personal property, business personal property, manufacturing and utility property 10.5 percent. SCDOR's policy manual adds that a second or vacation home is assessed at 6 percent.

Real property is reappraised countywide once every fifth year, with the new values implemented in the fifth year, and a county may postpone implementation by ordinance for up to one property tax year (S.C. Code Section 12-43-217). An increase in fair market value attributable to the countywide program is limited to 15 percent within a five-year period (Section 12-37-3140(B)). SCDOR's manual says the cap does not apply in the year an assessable transfer of interest is first taxed or to new improvements and additions, so a purchase or major renovation can reset value outside the cycle. When reassessed values are implemented, the Code provides a rollback millage calculation intended to offset increases in assessed value (Section 12-37-251(E)). The 15 percent cap is therefore not a guarantee against a higher bill.

The 4 percent assessment ratio and the school operating exemption

The Code taxes a legal residence, and up to five contiguous acres, at 4 percent of fair market value when it is owned in whole or in part and occupied by the owner (S.C. Code Section 12-43-220(c)). The owner must apply before the first penalty date for property taxes in the first tax year the ratio is claimed, and must certify the home is the legal residence. SCDOR's policy manual adds that the owner and household may not claim legal residence in another state or the 4 percent ratio on another residence. A residence rented for more than 72 days in a calendar year does not qualify, and an owner found ineligible is assessed at 6 percent. SCDOR's exemptions page tells owners to contact the county assessor to apply for the 4 percent rate.

Owner-occupied homes receiving the 4 percent ratio are also exempt from all property taxes imposed for school operating purposes, excluding millage imposed to repay general obligation debt (S.C. Code Section 12-37-220(B)(47), effective for tax years after 2006). The Revenue and Fiscal Affairs Office attributes the exemption of value beyond the first tier to Act 388, and the Code's history for Section 12-37-220 cites 2006 Act No. 388. SCDOR's manual says no separate application is needed for the school operating exemption, but the 4 percent ratio must be applied for, and that neither exemption is available on a second or vacation home. The state reimburses local jurisdictions for part of the lost revenue under tiers described by the Revenue and Fiscal Affairs Office.

For retirees the practical points are that the 4 percent ratio is not automatic and that a second home taxed at 6 percent does not receive the school operating exemption. A retiree who keeps a South Carolina vacation home while living permanently elsewhere should expect the higher ratio on it.

The age 65 homestead exemption

The Code exempts the first $50,000 of the fair market value of a person's dwelling place from county, municipal, school and special assessment real estate taxes when the person has been a South Carolina resident for at least one year and has reached 65 (or is totally and permanently disabled or legally blind) on or before December 31 preceding the tax year, and holds fee simple title or a life estate (S.C. Code Section 12-37-250). The statute contains no income test. SCDOR's exemptions page states the same $50,000 figure for owners over 65, disabled or legally blind.

For tax year 2026 only, SCDOR states that the General Assembly temporarily increased the homestead exemption from $50,000 to $75,000 through the fiscal year 2026-2027 state budget, for qualified recipients. The $50,000 figure is the amount in the Code and on the SCDOR page for other years, so check the current year's amount with your County Auditor.

The exemption is not automatic. The application goes to the county auditor and, where applicable, the municipality, on forms they provide. Under the statute, an application made before July 16 of the tax year is honored for that year, and failure to apply waives the exemption for the year. SCDOR's manual says a person who applies and could have qualified in the prior year may be allowed the prior year as well. Once granted, the exemption continues in later years while ownership and qualifications stay the same (Section 12-37-255, as described in the manual), and Greenville County's auditor says re-application is needed only after the owner's death or a move. When a home is jointly owned by spouses, either spouse meeting the age test qualifies the home. A surviving spouse who acquires title within nine months of the qualifying spouse's death can keep the exemption while the home remains the permanent home and the spouse does not remarry (statute; Lexington and Greenville county pages). The manual adds that the exemption does not cover fees charged by the taxing entity, such as a solid waste fee or a road user fee.

Because the exemption is a flat amount of value, its dollar effect depends on millage. Since value beyond the exempt amount is already free of school operating millage for a 4 percent home, the homestead exemption mainly saves tax on the other millage applied to the first $50,000 (or $75,000 for 2026). As arithmetic only, using an assumed 100 mills of non-school-operating millage: $50,000 times 4 percent is $2,000 of assessed value, and $2,000 times 0.100 is $200. The assumed millage is not a quoted figure, and actual millage varies by county, municipality and district.

Vehicle property tax

South Carolina taxes motor vehicles as personal property. SCDOR's policy manual says personal motor vehicles, including pickup trucks and motorcycles, are assessed at 6 percent, although certain heavy pickups may be assessed at 10.5 percent, and boats and airplanes are generally assessed at 10.5 percent. Vehicles are valued using nationally recognized guides, with the value not to exceed 95 percent of the prior year's value. The tax is assessed value times the millage of the local jurisdiction, so it varies by county and city. Vehicle and boat taxes are collected in advance: the county property taxes must be paid before the vehicle is registered or the tag renewed. Retirees who move into the state should expect this recurring tax.

Sales tax and estate tax

SCDOR states a statewide sales tax of 6 percent, and its moving guide says counties may add local sales taxes and that residents age 85 or older get a 1 percent sales tax discount. SCDOR's local sales tax page lists the local taxes counties may impose: a 1 percent Capital Projects Tax, an Education Capital Improvement Tax of 1 percent, a School District Tax of 1 percent, a Local Option Sales and Use Tax, a Transportation Tax of up to 1 percent (Charleston County's is 0.5 percent), a Tourism Development Tax imposed by Myrtle Beach, and others. Which apply depends on the county. As examples from that page, the combined rate is 7 percent in Lexington County and 8 percent in Aiken and Williamsburg counties following 2026 changes. Sales of unprepared food are exempt from some of these local taxes, for example the Education Capital Improvement Tax, and the exemption rules differ by tax, so confirm the rate and exemptions for the county.

SCDOR states that South Carolina has no estate tax for decedents dying on or after January 1, 2005, and its moving guide adds that the state has no gift tax. Federal estate tax rules are separate and are not covered here.

Putting the pieces together

For a retiree with Social Security, a pension or IRA distributions and a permanent-residence home, South Carolina's design is layered relief: Social Security is exempt from the state income tax, the retirement and age 65 deductions reduce other income, the SCIAD reduces income for lower- and middle-income filers, the 4 percent ratio and school operating exemption lower the property tax base, and the homestead exemption trims it further at 65. The costs to plan for are the vehicle property tax, local sales taxes, insurance on the coast, and the higher assessment ratio on any second home. To see how this compares with North Carolina, whose flat rate is 3.99 percent for tax years after 2025 according to the North Carolina Department of Revenue, use the NC versus SC taxes guide. For an orientation to the state, see the South Carolina overview.

Related guides

• North Carolina vs. South Carolina Taxes for Retirees: A Side-by-Side Comparison
• North Carolina Retirement Taxes: Income, Property, Sales and Estate
• Property Tax Relief for Seniors: North Carolina vs South Carolina