Taxes in South Carolina

Summary Tax Info

South Carolina has one of the lowest per capita tax rates in the country. The Palmetto State's tax structure remains competitive and attractive to people and businesses considering the state as their new home. Listed below are summaries of the major state and local government taxes. As with all tax laws things change. Please be sure to contact your local tax advisor prior to making a purchase or sale of real estte.
 

State Income Tax

 

South Carolina´s income tax structure follows federal income tax laws. The starting point for calculating the state tax liability is 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.
To recognize the growing retiree population, South Carolina does not tax Social Security benefits. 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.

  • Disability retirement income for a permanent and total disabled person is not includible in SC income.
  • You do not pay a tax in South Carolina on real estate you sell in another state;
  • South Carolina has adopted the federal provision allowing for up to a $500,000 (if married filing jointly, otherwise the provision is $250,000) capital gain exclusion when you sell your primary residence;
  • A two wage earner credit allows married couples to take a maximum tax credit of $210 annually if both work;
  • A credit is allowed for income taxes paid to another state on income that is taxable in both states;
  • You 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 in a nursing home 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.
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Personal Property Tax

South Carolina levies a tangible personal property tax on automobiles, airplanes and boats. The tax rate is the same as the millage rate for real estate and depends on the district in which you live.

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 and collect the full sales tax on vehicle purchases.

 

Real Estate Tax

 

The county tax assessor places an appraised value on your real estate (based on comparable sales, condition of the property, etc.). Currently, this County-wide appraisal is performed every 5 years. This appraised value is then multiplied by 4% for residents (where the property is your primary residence), or 6% for non-residents and corporations, to obtain what is known as the assessed value. The assessed value is then multiplied times the mileage rate for your district.

 

For example, a home, appraised by the County at $300,000, is multiplied by 4% (for residents) gives an tax-assessed value of $12,000. The assessed value of $12,000 is then multiplied by the mileage rate of 193.1 which means a tax of $2,317.20. If you´re over 65, the Homestead Exemption permits you to deduct $50,000 from the appraised value before you multiply by 4% and the mileage rate.
 

Hilton Head Transfer Fee

 

A Real Estate Transfer Fee of 0.25% (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. The transfer fee is paid by the purchaser at closing and is based on the contract sale price.
 

Sales and Use Tax

 

Beaufort County´s sales and use tax rate is 5 percent. Prescriptions, dental prosthetics and hearing aids are exempt from the sales tax. The Town of Hilton imposes a 1% prepared food & beverage tax on the Island only Therefore if you purchase on Hilton Head you will pay 6%, but if you purchase in Bluffton you pay 5%. A maximum sales tax of $300 is imposed on the purchase of motor vehicles, boats, motorcycles and airplanes. Of course, you are liable for the personal property tax on your car each year of ownership.
 


For more information on South Carolina taxes, please consult the South Carolina Department of Revenue at (843) 737-4661 or your local tax advisor.