South Carolina does not tax Social Security benefits

South Carolina is one of 38 states that does not impose a state income tax on Social Security benefits. If you receive Social Security retirement, survivor, or disability payments, South Carolina will not tax that money at the state level, regardless of how much you earn from other sources or how large your benefit is.

The federal government may still tax your Social Security benefits depending on your total income, but that is a separate matter from state taxation. This guide covers only South Carolina state tax rules.

Key Takeaways

  • South Carolina does not tax Social Security retirement, survivor, or disability benefits under state law.
  • The federal government may still tax your benefits if your combined income exceeds certain thresholds, which is separate from state taxation.
  • Other retirement income you receive — such as pensions, 401(k) withdrawals, or IRA distributions — may be taxed by South Carolina depending on the source.
  • You do not need to report Social Security income on your South Carolina state tax return.

What counts as Social Security income for tax purposes

Social Security benefits that are not taxed by South Carolina include monthly retirement payments, spousal benefits, survivor benefits paid to family members after a worker's death, and Supplemental Security Income (SSI) for disabled or blind individuals. Lump-sum payments for back benefits are also excluded from South Carolina taxation.

The exemption applies only to the actual Social Security benefit amount. If you earn wages, interest, dividends, or income from other sources, South Carolina may tax those separately. The fact that you receive Social Security does not shield your other income from state tax.

Other retirement income that South Carolina does tax

While Social Security is exempt, South Carolina taxes most other forms of retirement income. This includes distributions from traditional IRAs, 401(k) plans, 403(b) plans, and similar retirement accounts. Pension payments from private employers or government jobs are also taxable under South Carolina law, with limited exceptions for military pensions and some government employee pensions.

If you are under age 59½ and withdraw from a retirement account, you may owe both federal and South Carolina state income tax on the withdrawal, plus a federal early withdrawal penalty. The state does not add its own early withdrawal penalty, but the federal penalty applies regardless.

How to report your income on your South Carolina tax return

When you file your South Carolina state income tax return, you do not include Social Security benefits in your taxable income. You report only the income that is subject to state tax — wages, pensions, retirement account distributions, interest, dividends, and other earned or unearned income.

If you file a federal return, you may need to report Social Security benefits there, even though you do not report them to South Carolina. The federal threshold for including Social Security in taxable income depends on your combined income (wages plus half your Social Security benefits plus tax-exempt interest). Many people with only Social Security income do not owe federal tax, but the calculation is different from the state rule.

Federal taxation of Social Security benefits

The federal government taxes Social Security benefits based on your "combined income," which is your adjusted gross income plus nontaxable interest plus half your Social Security benefits. If your combined income exceeds $25,000 as a single filer or $32,000 as a married couple filing jointly, up to 50 percent of your benefits may be subject to federal income tax. If your combined income exceeds $34,000 (single) or $44,000 (married filing jointly), up to 85 percent of your benefits may be taxed.

These thresholds have not changed since 1984 and do not adjust for inflation. Many people with moderate income will owe federal tax on their benefits even though South Carolina does not tax them. You can request that the Social Security Administration withhold federal income tax from your benefits to avoid a large tax bill at the end of the year.

Frequently Asked Questions

Do I have to file a South Carolina tax return if I only receive Social Security?

No. If Social Security is your only income, you are not required to file a South Carolina state return. However, if you have other income — such as wages, pensions, or retirement account distributions — you may be required to file depending on the amount.

Will I owe federal tax on my Social Security benefits?

It depends on your total income. If your combined income (wages plus half your Social Security plus tax-exempt interest) exceeds $25,000 as a single filer, some of your benefits may be subject to federal tax. You can request withholding from your benefits to cover the federal tax.

What if I move to another state — will my Social Security still be tax-free?

Social Security is tax-free in 38 states, but not all of them. If you move to a state that does tax Social Security, your benefits would become taxable under that state's rules. Check the tax laws of any state you plan to move to.

Are my spouse's Social Security benefits also tax-free in South Carolina?

Yes. Spousal benefits, survivor benefits, and all other Social Security payments are exempt from South Carolina state income tax, regardless of who receives them.