South Carolina Taxes
What You Need To Know If You Plan To Retire
South Carolina Retirement Income Taxes: Retirement income is taxed. Social Security exempt. You can take this deduction for income received from any qualified retirement plan. If both spouses receive retirement income, each spouse is entitled to an individual deduction. At 65, the deduction is $15,000.
Sales Taxes
State Sales Tax: 6% (prescription drugs exempt); 25 counties impose an additional 1% local option sales tax; a number of counties impose a 2% sales tax. Seniors 85 and older pay 4%.
Gasoline Tax: 16.8 cents/gallon
Diesel Fuel Tax: 16.8 cents/gallon
Cigarette Tax: 7 cents/pack of 20
Personal Income Taxes
Tax Rate Range: Low - 3.0%; High - 7%; No tax on the first $2,630 of taxable income in tax year 2007.
Income Brackets: ** Lowest - $2,670; Highest - $13,350
Number of Brackets: 6
Personal Exemptions: * Single - $3,500; Married - $7,000; Dependents - $3,500
Standard Deduction: Single - $5,450; Married filing jointly - $10,900
Medical/Dental Deduction: Federal amount
Federal Income Tax Deduction: None
Retirement Income Taxes: Retirement income is taxed. Social Security exempt. You can take this deduction for income received from any qualified retirement plan. If both spouses receive retirement income, each spouse is entitled to an individual deduction. At 65, the deduction is $15,000. The $15,000 deduction must be offset by any other retirement deduction that is claimed. A surviving spouse may continue to tackle a retirement deduction on behalf of the deceased spouse. Some taxpayers age 65 and older may not have to file a tax return if they meet certain conditions.
Retired Military Pay: Retirees with 20 or more years of active duty can deduct up to $3,000 annually until age 65 and up to $10,000 per year after age 65. This deduction extends to the surviving spouse. Pension or retirement income received for time served in the National Guard or Reserve components is not taxable. Survivor benefits are taxed following federal tax rules.
Military Disability Retired Pay: Retirees who entered the military before Sept. 24, 1975, and members receiving disability retirements based on combat injuries or who could receive disability payments from the VA are covered by laws giving disability broad exemption from federal income tax. Most military retired pay based on service-related disabilities also is free from federal income tax, but there is no guarantee of total protection.
VA Disability Dependency and Indemnity Compensation: VA benefits are not taxable because they generally are for disabilities and are not subject to federal or state taxes.
Military SBP/SSBP/RCSBP/RSFPP: Generally subject to state taxes for those states with income tax. Check with state department of revenue office.
Property Taxes
Property tax is assessed and collected by local governments. Both real and personal property are subject to tax. The market value of a legal residence and up to 5 acres of surrounding land is assessed at 4%. For homeowners 65 and older, the state's homestead exemption allows the first $50,000 of their property's fair market value to be exempt from local property taxes. South Carolina imposes a casual excise tax of 5% on the fair market value of all motor vehicles, motorcycles, boats, motors and airplanes transferred between individuals.
Not found on the state's web site is a reassessment provision called "Point of Sale" introduced during the property tax reform of 2006 enacted by the General Assembly. According to this provision, when a property is purchased the assessed value of the property becomes the sale price. The South Carolina Association of Realtors and the state Chamber of Commerce are joining forces to lobby lawmakers for property-tax assessment modifications in 2009. Nick Kremydas, chief executive officer (CEO) of the state realtors' group, said the Point of Sale Act is having a "devastating effect" on South Carolina's economy. Property is being reassessed each time it is transferred based on the sales price, which creates inequities in the real estate market. For instance, in the residential market, neighboring properties have big differences in property tax obligations based only on the date of sale. As a result, longtime residents are wary of moving, while investors looking for property are scared away by the tax complications. Similarly, businesses looking to locate to south Carolina are getting cold feet and taking their business elsewhere once they learn of the property tax burden created by the point-of-sale provision. "It makes it harder to get buyers to the table," Kremydas said.
Inheritance and Estate Taxes
There is no inheritance tax and the estate tax is related to federal estate tax collection.
For further information, visit the South Carolina Department of Revenue site or 800-763-1295.