South Carolina taxes none of your Social Security and hands retirees two separate deductions that can shield a large chunk of the rest. One deduction targets retirement income directly; a second, at 65, applies against any income at all. Whatever falls through both is taxed at a top rate falling toward 6 percent. So the size of your South Carolina tax bill depends on how those deductions stack. This guide walks through how South Carolina retirement income tax treats each kind of income, how the two deductions interact, and how it factors into paying for care.
The short version: no tax on Social Security, a retirement-income deduction, and a separate age-65 deduction on top.
South Carolina Retirement Income Tax at a Glance
South Carolina gives retirees three things: a Social Security exemption and two deductions that can overlap. Sort them out and the picture clears up.
Social Security is exempt. South Carolina does not tax Social Security or Railroad Retirement benefits. Not a dollar of either is touched by the state.
The Retirement Income Deduction. Each taxpayer can deduct up to $3,000 of qualifying retirement income under 65, rising to up to $10,000 at 65, applied to pension, IRA, and 401(k) income.
The age-65 deduction. Separately, taxpayers 65 and older get a deduction of up to $15,000 against any South Carolina income ($30,000 for a couple where both are 65+). That $15,000 is reduced by any retirement or military-retirement deduction claimed, except for surviving spouses.
The South Carolina Department of Revenue administers these rules and lays out the deductions retirees can claim.
South Carolina Retirement Income Tax: How It Works
Two deductions sit on top of the Social Security exemption, and the trick is seeing how they relate.
The Retirement Income Deduction is the one tied to your retirement money. It applies to qualifying pension, IRA, and 401(k) income. Under 65, you can deduct up to $3,000 per taxpayer; at 65, that rises to up to $10,000 per taxpayer. It comes off your retirement income before the state taxes what is left.
The age-65 deduction is broader. At 65, you get up to $15,000 deducted against any South Carolina income, not just retirement income, so it can offset wages, investment income, or anything else taxable. A married couple where both spouses are 65 or older can claim up to $30,000.
Here is the catch that trips people up. The two do not simply add. The $15,000 age deduction is reduced by any retirement-income or military-retirement deduction you claimed. So if a 65-year-old claims the full $10,000 Retirement Income Deduction, the $15,000 age deduction shrinks to $5,000. The exception is surviving spouses, who are not subject to that reduction.
So the question that decides your South Carolina tax bill is how these deductions net out against your particular income mix.
How the Two Deductions Stack
Work through a single taxpayer at 65 to see the interaction.
- Start with the $15,000 age-65 deduction, available against any income.
- Claim the Retirement Income Deduction, up to $10,000 on your pension, IRA, or 401(k) income.
- The age deduction is reduced by what you claimed, so if you take the full $10,000 retirement deduction, your age deduction drops to $5,000.
- Your total combined shelter lands around $15,000, not $25,000, because the reduction prevents double-counting.
For a surviving spouse, the reduction does not apply, so the two deductions can be claimed without that offset. That is a meaningful difference for widows and widowers, who keep the full value of both.
What South Carolina Retirement Income Tax Costs You
South Carolina's income tax is graduated, and the top rate has been coming down. The top rate is 6.2 percent for 2024, scheduled to fall to 6 percent. So once your retirement income clears the Social Security exemption and the deductions, the remainder is taxed on the graduated scale topping out near 6 percent.
What this means in practice:
- If your taxable retirement income sits at or below your combined deductions, South Carolina taxes little or none of it.
- If it runs higher, only the excess is taxed, up to the 6.2 percent top rate.
Here is a hypothetical to show the mechanic. The figures below are illustrative only, not a real case and not a prediction of your own result.
Say a single retiree who is 67 draws $30,000 from a pension and 401(k), with Social Security separately exempt. They claim the full $10,000 Retirement Income Deduction, which reduces the $15,000 age deduction to $5,000, for $15,000 in combined deductions. That leaves $15,000 of taxable retirement income. Taxed on the graduated scale toward the 6.2 percent top rate, the state tax is a few hundred dollars, well under the figure you would get by ignoring the deductions.
The lesson: South Carolina's two deductions can offset a meaningful share of retirement income, but they overlap rather than stacking in full.
At a Glance: Every Income Type
| Income type | Taxed by South Carolina? | Notes |
|---|---|---|
| Social Security and Railroad Retirement benefits | No | Fully exempt at any age |
| Pensions (public and private) | Partial | Eligible for the Retirement Income Deduction; taxable above deductions |
| IRA and 401(k) withdrawals | Partial | Eligible for the same Retirement Income Deduction; taxable above deductions |
| Senior / age-based exclusion | Yes | $15,000 age-65 deduction against any income, reduced by retirement/military deduction (except surviving spouses) |
Why This Matters for Care
State tax is not an abstraction when you are pricing assisted living or in-home help. It is money that leaves your budget before the care bill arrives. In South Carolina, the deductions soften it, but you have to net them correctly.
Because the age deduction is reduced by the retirement deduction, the combined shelter is smaller than the two headline numbers suggest. Counting on the full $25,000 when the real figure is closer to $15,000 can throw off a care budget. Use the netted number, then apply the top rate near 6 percent to whatever remains.
That belongs in an honest funding plan. Figure your real combined deduction, tax the remainder, and build that after-tax figure into your care budget. Our guide to building a senior care funding plan walks through how to map income, taxes, and care costs together, and the broader guide to paying for senior care covers Medicaid, VA benefits, and private-pay options once you know what your after-tax income actually is. Our guide to retirement accounts for care covers how to time those withdrawals when care costs enter the picture.
Trying to figure out what your income really covers? Talk with Brevy's care navigator to map your after-tax retirement income against real care costs.
Frequently Asked Questions
No. South Carolina does not tax Social Security or Railroad Retirement benefits at all. The federal government may still tax part of your benefit depending on your total income, but the state does not.
The Retirement Income Deduction is up to $3,000 per taxpayer under 65 and up to $10,000 per taxpayer at 65, applied to pension, IRA, and 401(k) income. At 65 you may also claim the separate $15,000 age deduction.
At 65, you can deduct up to $15,000 against any South Carolina income, or $30,000 for a couple where both are 65 or older. It is reduced by any retirement or military-retirement deduction you claim, except for surviving spouses, who keep the full amount.
Not fully. The $15,000 age deduction is reduced by the Retirement Income Deduction you claim, so claiming the full $10,000 retirement deduction cuts the age deduction to $5,000. Surviving spouses are exempt from that reduction.
The top rate is 6.2 percent for 2024, scheduled to fall to 6 percent. It applies on the graduated scale to retirement income that remains after the Social Security exemption and the deductions.
Learn More
- How to Pay for Senior Care in South Carolina
- South Carolina Senior Property Tax Relief
- How Each State Taxes Retirement Income
- How to Pay for Senior Care
- Building a Senior Care Funding Plan
- Retirement Accounts for Care
Find personalized help mapping your South Carolina retirement income against care costs at brevy.com.
The information on Brevy.com is for educational purposes only and is not a substitute for professional legal, financial, or medical advice. Rules vary by state and program and change frequently. Always verify with the relevant agency or a qualified professional. Brevy is not a law firm, financial advisor, or healthcare provider.