Summary of Tax Info for New Residents
South Carolina has one of the lowest per capita tax rates in the country. South
Carolina’s lawmakers, political leaders and local government officials
continuously work as a team to ensure that the Palmetto State's tax structure
remains competitive and attractive to people and businesses considering the
state as their new home. Listed below are the major state and local government
taxes that affect our residents.
Income Tax
South Carolina’s
income tax structure follows federal income tax laws, all owing the same
adjustments, exemptions and deductions with only a few modifications. In
fact, the starting point for calculating your state tax liability is your
federal taxable income. Income tax rates start at 2.5 percent of taxable income,
graduating to a maximum of 7 percent on taxable income exceeding $12,000. The
individual income tax brackets are adjusted annually to help offset the affects
of inflation.
When comparing
South Carolina’s tax rates with other states, it's important to look at each
state's total tax package, not just the tax rates. For example, some states may
tax Social Security benefits. South Carolina does not. South Carolina also
allows special exemptions for retirees and senior adults. Beginning the first
year you receive retirement income, and until you reach age 65, you can take an
annual deduction up to $3,000. You can take this deduction for income received
from any qualified retirement plan, including IRAs, government pension plans,
Keough plans and private sector pensions. At 65, the deduction on retirement
income increases to $10,000 and retirees may claim an additional $5,000
deduction on other income. The total deduction may not exceed $15,000.
If you are
separating from active duty in the Armed Forces but wish to continue your
military career at the local level, National Guard and Reserve annual training
and weekend drill pay (up to a total of 39 days) is not taxed in South Carolina.
In addition to these deductions and those normally allowed on the federal
return, the state allows the following tax benefits:
Disability
retirement income for a permanent and total disability person is deductible.
There is no intangibles tax in South Carolina. Intangibles tax is collected in
many states that do not have a general personal income tax and is imposed on
bank accounts, interest, dividends, stocks, bonds and other assets.
You do not pay a
tax in this state on property you sell in another state. South Carolina has
adopted the federal provision allowing up to $500,000 (if married filing
jointly, otherwise the provision is $250,000) off the gain from the sale of your
home to be excluded from tax. A two wage earner credit allows married couples to
take a maximum tax credit of $210 annually if both work.
Social Security
income that is taxed on your federal income tax return is deductible for South
Carolina purposes. A credit is allowed for income taxes paid to another state on
income that is taxable in both states.
You can receive an
additional state income tax credit for childcare or elderly care expenses.
South Carolina
allows a credit of up to $300 annually for nursing care inhome or in a licensed
institution.
Parents may claim
an additional deduction equal to the amount of the federal personal exemption
($2,900 for tax year 2001, but adjusted annually) for each child under the age
of 6.
Parents, guardians
or students can receive a partial income tax credit on tuition fees paid to a
South Carolina college or university. The credit cannot exceed $850. (Contact
the Department of Revenue for details.)
Personal Property Tax
South Carolina does not have an intangible
personal tax on bank accounts, stocks, etc. However, there is a tangible
personal property tax on automobiles, airplanes and boats. The tax is the same
for real estate and depends on which district you live in. Hilton Head Island
divided into six districts.
For example, a
$10,000 boat times 10.5% gives
an assessed value of $1050 times mileage of 181.5 means a tax of $190.58 on the
boat. (.1815 x $1,050). The registration fee of automobiles is $12.00 annually.
Many states, rather than collect personal property taxes on cars, boats, etc.,
impose a higher registration fee, comparable to South Carolina’s property tax.
Real Estate Tax
The appraised value (based primarily on
comparable sales) of the property is multiplied by 4% (residents) or 6%
(nonresidents & corporations) to arrived at the assessed value. The assessed
value is multiplied by the millage rate for the district. For example: a
$150,000 home multiplied by 4 % (resident) gives an assessed value of $4,000.
$6,000 multiplied by a millage rate of 230.2 means a tax of $1381.20.
*Note: Individuals over 65 can typically
deduct $20,000 from the appraised value before you multiply by 4% and the
millage rate.
Hilton Head Transfer Fee
A Real Estate Transfer Fee of .25% (one
quarter of one percent) is charged for each real estate transaction closed on
Hilton Head Island. These funds are used by the town for the purchase of land
for parks and undeveloped open space.
Sales and Use Tax
Beaufort County’s sales and use tax rate is
6 percent. Prescriptions, dental prosthetics and hearing aids are exempt from
the sales tax. A maximum sales tax of $300 is imposed on the purchase of motor
vehicles, boats, motorcycles and airplanes.
Estate Tax
Estates left by a deceased individual are
subject to tax in South Carolina. The first $600,000 of the estate is exempt
from the tax and if an estate is below that value, you do not have to file a
return. Estates are taxed at the amount claimed as a state credit on the federal
estate return. Estates which are left to the deceased person’s spouse are not
subject to tax.
Gift Tax
There is no gift tax in South Carolina.
For more information on
South Carolina taxes, please
call the Tax Commission at (843) 737-4661.
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