South Carolina rewrote its deduction structure for 2026, and the new arrangement produces a marginal rate that appears nowhere in the rate table.
Act 110 of 2026 replaced both the federal standard deduction and itemised deductions with a single South Carolina Income Adjusted Deduction — the SCIAD — of $15,000 for a single filer. And it phases out completely between $40,000 and $95,000 of federal AGI.
Across that band, each extra $1,000 of income is taxed at 5.21% and withdraws $273 of deduction that was also being taxed at 5.21%. The effective marginal rate is about 6.6%.
On $85,000, near the top of that band, a single filer pays $3,320 and takes home $65,307.
A note before you start. This is general education, not tax advice. Federal figures are tax year 2026, from IRS Revenue Procedure 2025-32 and the Social Security Administration; South Carolina's brackets, the SCIAD and its phase-out, the capital gain deduction and retirement rules come from this site's own sourced 50-state dataset, citing Act No. 110 of 2026 (R117, H. 4216), S.C. Code Sections 12-6-1140, 12-6-1150 and 12-6-1170, and the Department of Revenue's Form SC1040 instructions. Every dollar figure is computed by the same engine the site's calculators use, on a single filer with no dependents or pre-tax deferrals unless stated. Sales tax and property tax are discussed qualitatively.
1. What South Carolina takes
| Amount on $85,000 | |
|---|---|
| Gross salary | $85,000 |
| Federal income tax | −$9,870 |
| Social Security (6.2%) | −$5,270 |
| Medicare (1.45%) | −$1,233 |
| South Carolina income tax | −$3,320 |
| Take-home | $65,307 |
Across incomes, single filer:
| Salary | South Carolina tax | Effective SC rate | Take-home |
|---|---|---|---|
| $30,000 | $299 | 1.00% | $24,986 |
| $45,000 | $668 | 1.48% | $37,670 |
| $60,000 | $1,663 | 2.77% | $48,727 |
| $85,000 | $3,320 | 3.91% | $65,307 |
| $120,000 | $5,286 | 4.41% | $87,964 |
| $175,000 | $8,152 | 4.66% | $122,727 |
Look at the $45,000 and $60,000 rows. The salary rises by a third and the tax rises by 149%, from $668 to $1,663. The effective rate nearly doubles across $15,000 of income.
That is not a bracket. It is section 3.
And notice how cheap South Carolina is at the bottom. $299 at $30,000 is lower than all but a handful of states — Arizona's $356, New Jersey's $438, New Mexico's $351. South Carolina is one of the cheapest states in the country at $30,000 and squarely mid-table at $85,000.
Run your own salary against South Carolina's brackets2. Two brackets
| Taxable income above | Rate |
|---|---|
| $0 | 1.99% |
| $30,000 | 5.21% |
The thresholds are identical for every filing status — $30,000 whether you file single or jointly. South Carolina gives a married couple no wider brackets at all, which is the same arrangement Virginia and West Virginia use and is unusual among graduated states.
For a single filer on $85,000: the SCIAD is down to $2,727 by that income, leaving $82,273 taxable. $30,000 at 1.99% is $597, and $52,273 at 5.21% is $2,723 — $3,320.
The 1.99% opening rate is genuinely low, and it covers $30,000 of taxable income, which is a wide band. That is why South Carolina is so cheap at the bottom of the range.
The jump from 1.99% to 5.21% is 3.22 percentage points in one step — one of the largest single-step increases of any state schedule.
3. The SCIAD, and the 6.6% band
This is the most important thing on this page, and it is new enough that most published South Carolina guidance does not describe it at all.
Act 110 of 2026 amended Section 12-6-50 to specifically NOT ADOPT the federal standard deduction and the federal itemised deduction, replacing both with the SCIAD.
| Filing status | SCIAD | Phase-out begins | Gone above |
|---|---|---|---|
| Single / married filing separately | $15,000 | $40,000 | $95,000 |
| Head of household | $22,500 | $60,000 | $142,500 |
| Married filing jointly / surviving spouse | $30,000 | $80,000 | $190,000 |
The deduction is reduced by a fraction whose denominators are $55,000, $82,500 and $110,000 respectively — and the statute provides that "if the fraction calculated by this subitem is equal to or exceeds one, then the deduction is not allowed."
Why it produces a 6.6% marginal rate
Inside the phase-out band a single filer is in the 5.21% bracket. Each additional $1,000 of income does two things:
- $1,000 more income is taxed at 5.21% → $52.10
- $273 of SCIAD is withdrawn ($15,000 ÷ $55,000 × $1,000), so another $273 is taxed at 5.21% → $14.21
Total: $66.31 of tax on $1,000 of income. An effective marginal rate of 6.63%.
That is 1.42 points above South Carolina's own top bracket, and it applies from $40,000 to $95,000 — a band that covers most full-time salaries in the state.
And above $95,000 you get nothing at all
This is the part that deserves emphasis. Because South Carolina no longer adopts the federal standard or itemised deduction, a single filer at $95,000 of federal AGI gets no SCIAD and gets nothing in its place. Their entire income above zero is taxable.
Compare that with a state whose deduction phases out but whose federal-linked base remains. Maine's standard deduction disappears above $175,000 and its personal exemption survives; Wisconsin's phases out and its exemption survives. South Carolina's phase-out leaves a filer with no across-the-board subtraction whatsoever.
Two practical consequences:
A raise inside the band is worth less than the bracket says. Someone going from $50,000 to $65,000 keeps $66.31 less per $1,000 than 5.21% implies — about $213 across the whole raise.
A pre-tax deferral inside the band is worth more. $10,000 into a traditional 401(k) at $70,000 saves 6.63% rather than 5.21% — $663 rather than $521. That is the best-value state deferral available to a South Carolinian, and it is available to ordinary middle earners rather than to high ones.
A nonresident's SCIAD is prorated in the same proportion as South Carolina AGI is to federal AGI.
4. Filing jointly
| Salary | Single SC tax | Joint SC tax | Difference |
|---|---|---|---|
| $30,000 | $299 | $0 | $299 |
| $45,000 | $668 | $299 | $369 |
| $60,000 | $1,663 | $597 | $1,066 |
| $85,000 | $3,320 | $1,971 | $1,349 |
| $120,000 | $5,286 | $4,291 | $995 |
| $175,000 | $8,152 | $7,938 | $214 |
The joint benefit rises to $1,349 at $85,000 and then collapses to $214 by $175,000.
That shape is the two phase-outs passing each other. At $85,000 the single filer's SCIAD is nearly gone and the couple's is intact. By $175,000 the couple's is nearly gone too, and since the brackets never widened, there is almost nothing left to separate them.
South Carolina is one of very few states where filing jointly is worth substantially less at $175,000 than at $85,000. That is worth knowing before a promotion.
5. What the paycheck actually looks like
On $85,000 as a single filer:
| Pay schedule | Gross per cheque | Net per cheque |
|---|---|---|
| Weekly (52) | $1,634.62 | $1,255.91 |
| Biweekly (26) | $3,269.23 | $2,511.81 |
| Semi-monthly (24) | $3,541.67 | $2,721.13 |
| Monthly (12) | $7,083.33 | $5,442.26 |
Biweekly and semi-monthly are not the same thing. Biweekly is 26 cheques — every other Friday — so two months a year carry three paydays. Semi-monthly is 24, on fixed dates, so every month carries exactly two. The annual total is identical; the monthly cash flow is not, and a biweekly earner budgeting on "two cheques a month" is under-counting by $5,024 a year.
Form SC W-4 is South Carolina's withholding certificate, and the SCIAD change makes reviewing it unusually urgent. A certificate completed under the old structure — where South Carolina adopted the federal standard deduction — is producing withholding calibrated to a deduction that no longer exists in that form.
If you have not touched your SC W-4 since Act 110, that is the single most worthwhile thing on this page for you, and it matters most if your income sits inside the $40,000–$95,000 phase-out band.
Withholding is an estimate, not the tax. Over-withholding produces a refund; under-withholding a bill.
6. The 44% capital gain deduction, which survived
S.C. Code Section 12-6-1150 allows a deduction equal to 44 percent of net capital gain recognised, so only 56% of a long-term gain reaches the rate schedule.
That was a live question and it was checked rather than assumed, because Act 110 rewrote so much of the deduction landscape. Section 12-6-1150 is not among the sections the Act amended, and it remains in the codified chapter with no repeal noted.
The practical effect: a top-bracket long-term gain faces an effective South Carolina rate of about 2.92% — 56% of 5.21%.
| Realised long-term gain | At 5.21% on the whole gain | With the 44% deduction |
|---|---|---|
| $100,000 | $5,210 | $2,918 |
| $500,000 | $26,050 | $14,588 |
| $1,000,000 | $52,100 | $29,176 |
On a $1,000,000 gain the deduction is worth $22,924. For someone selling a business or a long-held coastal property, that is the largest single feature of South Carolina's tax code affecting them.
It reaches NET CAPITAL GAIN as federally defined — the excess of net long-term gain over net short-term loss. Short-term gains get nothing.
And it is low enough to matter in a relocation comparison. 2.92% on a large gain is competitive with states that have no income tax at all once you account for what those states charge elsewhere.
7. Retirement: military is NOT fully exempt
This section corrects something that is widely repeated and wrong.
Social Security is fully exempt. Benefits arrive through federal taxable income and are subtracted in arriving at South Carolina taxable income, with no income threshold, no age condition and no phase-out.
One interaction worth naming: because Social Security is excluded, it does not count toward the federal AGI figure that phases out the SCIAD in section 3 in the same way ordinary income does. For a working retiree that is a meaningful second-order benefit.
South Carolina does NOT fully exempt military retirement. All three pension types — private, public and military — run through the same general retirement income deduction under Section 12-6-1170(A), because the statutory definition covers them together.
And that deduction has two amounts at two ages, which collapsing is the standard error:
| Age | Deduction per taxpayer |
|---|---|
| Through 64 | $3,000 |
| 65 and over | $10,000 |
The original owner of a qualified retirement account may deduct up to $3,000 of retirement income per year through age 64, rising to up to $10,000 at 65 and thereafter.
| Source | South Carolina treatment |
|---|---|
| Social Security | Exempt in full |
| Private pension | $3,000 / $10,000, shared |
| Public pension | $3,000 / $10,000, shared |
| Military retirement | $3,000 / $10,000, shared — not exempt |
| 401(k), 403(b), traditional IRA | $3,000 / $10,000, shared |
| Retirement income, single, 65+ | South Carolina tax |
|---|---|
| $40,000 all Social Security | $0 |
| $40,000 all 401(k) withdrawals | About $299 |
| $70,000 — $30,000 SS + $40,000 401(k) | About $299 |
The amounts stay modest because the SCIAD is largely intact at those income levels and the 1.99% bracket covers a wide band.
But a military retiree in South Carolina should not plan on an exemption they do not have. Neighbouring North Carolina exempts military retirement outright; Georgia folds it into an age-gated exclusion of $35,000 or $65,000. South Carolina's $10,000 is considerably less generous than either.
8. No local income tax
No South Carolina county, municipality or school district levies a tax on personal income. Form SC1040 has no local income tax line and no locality-of-residence field.
A South Carolina take-home figure is complete as stated.
South Carolina local revenue comes from property tax, and South Carolina's property tax structure is unusual in a way that matters a great deal.
Owner-occupied primary residences are assessed at 4% of market value; other property — including second homes and rentals — at 6%. That is a fifty percent higher assessment ratio on a beach house or an investment property than on the same house occupied by its owner.
For a state with as much second-home and rental property as South Carolina, that distinction is the single most consequential fact about its property tax, and it catches out-of-state buyers repeatedly. A coastal property bought as a second home is taxed at a materially higher rate than the identical property next door occupied year-round.
Effective property tax rates on owner-occupied housing are among the lowest in the country as a result, which is the flip side of the same design.
Sales tax sits around the national middle, with a local option layer. South Carolina exempts groceries from the state sales tax, with local rates continuing to apply in some counties.
9. Where South Carolina ranks
At $85,000, South Carolina's $3,320 is twentieth of the 41 income-tax states — almost exactly the median. At $30,000 it is fourth-cheapest.
| Salary | SC rank |
|---|---|
| $30,000 | 4th cheapest |
| $45,000 | 4th cheapest |
| $85,000 | 20th |
| $175,000 | 33rd |
That progression is the SCIAD phase-out, and it is one of the steepest rank changes of any state across the income range.
Against its neighbours:
| Salary | SC | NC | GA | TN |
|---|---|---|---|---|
| $30,000 | $299 | $688 | $749 | $0 |
| $45,000 | $668 | $1,287 | $1,497 | $0 |
| $85,000 | $3,320 | $2,883 | $3,493 | $0 |
| $175,000 | $8,152 | $6,474 | $7,984 | $0 |
South Carolina is dramatically cheaper than North Carolina and Georgia below about $60,000 and more expensive than North Carolina above it. At $45,000 it takes half what North Carolina does; at $175,000 it takes $1,678 more.
Which Carolina is cheaper depends entirely on the salary you ask about, and any ranking that quotes a single figure will mislead you in one direction or the other.
10. What you can control
Pre-tax deferrals save 5.21% at state level above $30,000 of taxable income — and 6.63% inside the $40,000–$95,000 band, for the reason in section 3. A $10,000 traditional 401(k) contribution saves $2,200 federally plus $663 in South Carolina tax at $70,000 of salary.
HSA contributions through payroll cut federal tax, South Carolina tax and FICA. On $4,400 that is roughly $968 federal, $292 South Carolina and $337 FICA — about $1,597, or 36% of the amount contributed. Inside the phase-out band it is more.
Holding for long-term treatment is worth 44% of the gain — see section 6 — which is among the most generous state capital gains treatments in the country.
Review your SC W-4. Act 110 changed the deduction structure, and a certificate completed before it is calibrated to something that no longer exists.
And if you are buying a second home here, understand the 6% assessment ratio before running the numbers on it.
Frequently asked questions
What is South Carolina's income tax rate? Two brackets: 1.99% on the first $30,000 of taxable income and 5.21% above it. The thresholds are the same for every filing status.
What is take-home pay on $85,000 in South Carolina? $65,307 for a single filer, after $9,870 federal income tax, $6,503 FICA and $3,320 South Carolina income tax.
What is the SCIAD? The South Carolina Income Adjusted Deduction, new for 2026 under Act 110. It replaced both the federal standard deduction and itemised deductions — South Carolina no longer adopts either. It is $15,000 single, $22,500 head of household, $30,000 married filing jointly.
Why does my tax rise so fast between $45,000 and $60,000? Because the SCIAD is being withdrawn. Each $1,000 of income is taxed at 5.21% and removes $273 of deduction also taxed at 5.21% — an effective marginal rate of about 6.63%.
What happens to my deduction above $95,000? For a single filer it is gone entirely, and because South Carolina no longer adopts the federal standard or itemised deduction, nothing replaces it. Your whole income is taxable.
Does South Carolina tax capital gains? At a discount. Section 12-6-1150 allows a 44% deduction on net capital gain, so only 56% reaches the rate schedule — an effective rate of about 2.92% at the top bracket. It survived Act 110 unamended.
Does South Carolina exempt military retirement? No, contrary to what is widely repeated. Military retirement runs through the same general retirement income deduction as private and public pensions — $3,000 through age 64 and $10,000 from 65.
Is South Carolina cheaper than North Carolina? Below about $60,000, substantially. Above it, no. At $45,000 South Carolina takes half as much; at $175,000 it takes $1,678 more. The two cross over in the middle of the SCIAD phase-out.
What to do next
South Carolina's rate table is simple and its deduction is not. If your income is between $40,000 and $95,000, the phase-out is the number that actually governs your marginal rate.
- South Carolina take-home pay calculator — your salary with every deduction shown separately.
- Your Paycheck in the USA in 2026 — all fifty states on one salary.
- Take-Home Pay in North Carolina — cheaper above $60,000, more expensive below it.
- Marginal vs Effective Tax Rate — the distinction this article turns on.
- 50/30/20 budget calculator — built on take-home rather than salary.
Every figure on this site is sourced and dated. How we source every number.
Figures in this article are illustrations computed by this site's own tax engine for tax year 2026, on a single filer with no dependents or pre-tax deferrals unless stated. Federal figures come from IRS Revenue Procedure 2025-32 and the Social Security Administration; South Carolina's brackets, the SCIAD and its phase-out, the capital gain deduction and retirement rules from this site's sourced 50-state dataset, citing Act No. 110 of 2026 (H. 4216), S.C. Code Sections 12-6-1140, 12-6-1150 and 12-6-1170, and the South Carolina Department of Revenue. Sales tax and property tax, including the 4% and 6% assessment ratios, are discussed qualitatively rather than computed. This is general education and not tax advice; consult a licensed tax professional for your own situation.