How South Carolina taxes retirement income
South Carolina does not tax Social Security benefits. Pensions and 401(k)/IRA withdrawals are partly taxed (there is an exclusion, then the rest is taxed). Social Security and railroad retirement benefits are fully exempt from SC Individual Income Tax. Pension/401(k)/IRA withdrawals are NOT fully exempt, they get a capped deduction, not a blanket exclusion: a general retirement-income deduction of up to $3,000/year before age 65 and up to $10,000/year at 65+, PLUS a separate age-65-and-older deduction of up to $15,000 against any SC income, but the two deductions combined cannot exceed $15,000 per taxpayer (so claiming the full $10,000 retirement deduction leaves only $5,000 of the age-65 deduction). Joint filers get up to $30,000 combined when both spouses are 65+. Retirement income above these caps IS taxed at ordinary SC rates. Military retirement pay, by contrast, is 100% exempt regardless of age.
Retirement income tax in South Carolina, at a glance
| Income type | Taxed by South Carolina? |
|---|---|
| Social Security | No |
| Pensions | Partially (exclusion applies) |
| 401(k) / IRA withdrawals | Yes |
| Estate / inheritance tax | None |
| Avg. property tax rate | 0.49% of home value |
Does South Carolina tax Social Security benefits?
No. South Carolina does not tax Social Security benefits.
Does South Carolina tax pensions and 401(k) or IRA withdrawals?
Partly. Social Security and railroad retirement benefits are fully exempt from SC Individual Income Tax. Pension/401(k)/IRA withdrawals are NOT fully exempt, they get a capped deduction, not a blanket exclusion: a general retirement-income deduction of up to $3,000/year before age 65 and up to $10,000/year at 65+, PLUS a separate age-65-and-older deduction of up to $15,000 against any SC income, but the two deductions combined cannot exceed $15,000 per taxpayer (so claiming the full $10,000 retirement deduction leaves only $5,000 of the age-65 deduction). Joint filers get up to $30,000 combined when both spouses are 65+. Retirement income above these caps IS taxed at ordinary SC rates. Military retirement pay, by contrast, is 100% exempt regardless of age.
For the mechanics of required withdrawals in retirement, see what is an RMD.
Sources
- South Carolina taxation of retirement income (Social Security, pensions, 401(k)/IRA): South Carolina Department of Revenue / Taxation.