The tax system in South Carolina closely mimics the federal tax system, making it easy for residents to understand. As a South Carolina resident, you may owe state income taxes if you earned income throughout the year. If you own property, you’re responsible for paying property taxes to the local government.
Sales tax is also imposed on purchases made in the state and on certain services you pay for. There are some tax exemptions available and businesses can earn corporate tax credits to lower their tax liability. Review the information in this guide so you can learn more about South Carolina tax regulations.
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South Carolina Income Tax
If you owe federal income tax and some or all of your taxable income was earned in South Carolina, you must also file a state income tax return. The tax rate you’re subject to is dependent on how much income you earned throughout the year. The state has six income tax brackets, which are as follows:
|Amount of Taxable Income Earned||Tax Rate|
|$0 to $3,030||0%|
|$3,030 to $6,060||3%|
|$6,060 to $9,090||4%|
|$9,090 to $12,120||5%|
|$12,120 to $15,160||6%|
Your state income tax return must be filed by April 15 every year.
South Carolina Sales Tax
When you purchase goods or certain services in South Carolina, you’re charged a sales tax. The statewide sales tax rate is 6% but some counties may impose their own additional tax rate. If voters in the county approve an additional county tax rate, the sales tax rate in that county can raise by as much as 3%. Therefore, the highest sales tax in the state is 9%.
The sales tax applies to most retail sales that take place in the state. While many services aren’t taxable in South Carolina, communications, electricity, and laundry services are subject to sales tax. The leasing of hotel or motel rooms is also subject to taxes.
Individuals who are 85 or older and purchasing personal items may be eligible for a 1% sales tax exemption. These residents must show proof of age at the time of sale to qualify for the exemption.
South Carolina Property Tax
If you own property in South Carolina, you’re responsible for paying property taxes on it every year. The amount you owe is dependent on your property’s assessed value and the current tax rate in your county. The taxes you pay are used to fund local schools and the state’s education system.
In addition to your residence, there are other properties subject to this tax, including airlines and business personal property, such as office furniture and equipment. Railcar companies are also subject to property taxes in South Carolina, as well as utility companies. A 5% excise tax is imposed on motor vehicles in the state.
South Carolina Estate Tax
There is no estate tax in South Carolina for individuals who passed away on or after January 1, 2005. However, if you are the recipient of an inheritance from an individual who lived in a different state, you may owe inheritance taxes to that state. It’s important to review the tax regulations in the decedent’s state to ensure you don’t owe taxes on the inheritance and ownership transfer.
Other Taxes in South Carolina
South Carolina offers several types of tax credits. However, most of these credits can only be earned by corporations, businesses, companies, and partnerships. In some cases, these credits are used to offset tax liability for:
- Corporate income taxes;
- Individual income taxes;
- Bank taxes;
- Corporate license fees;
- Insurance premium taxes;
- Savings and loan tax.
When businesses use these credits, their tax liability can only be reduced to zero. Tax refunds are not available through these corporate credits.
South Carolina has a variety of additional taxes imposed by the Department of Revenue (DOR), including a:
- Cigarette tax: South Carolina has one of the lowest cigarette taxes in the country and charges 57 cents per pack of 20 cigarettes.
- Alcohol tax: South Carolina imposes a $5.42 tax on every gallon of liquor, $1.08 on every gallon of wine, and 77 cents on every gallon of beer. These are in addition to the state and county tax rates already imposed on these goods.
- Capital gains tax: Short-term capital gains are taxed as regular income but long-term capital gains are eligible for a 44% income tax exemption. This only applies to the net capital gain, which is what was gained after over a year minus any short-term losses.
- Fuel tax: South Carolina collects 22.75 cents per gallon of gas sold but this tax rate is expected to slowly rise each year until it reaches a maximum of 28 cents per gallon in July 2022.
By reviewing the tax system in South Carolina, including the individual income tax brackets and property taxes, it’s easier to understand how the state’s tax regulations apply to your situation. This will ensure you file your taxes correctly and on time with the state.
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