Does South Carolina Tax Social Security? What Retirees Pay in 2026

South Carolina doesn’t tax a dime of your Social Security check.

The Palmetto State exempts every dollar of Social Security benefits from its income tax, and it doesn’t matter what your income is or how old you are.

Other retirement money doesn’t get off quite that easy.

Pensions, 401(k) withdrawals and traditional individual retirement account (IRA) distributions still count as taxable income in South Carolina.

The state offers deductions generous enough to wipe out a big chunk of that bill, though.

A retiree pulling $40,000 from a 401(k) and drawing $28,000 in Social Security pays South Carolina tax on only part of that 401(k) money, and none of the Social Security.

Note: This is general information, not financial or tax advice. Tax rules, deduction amounts and income thresholds are subject to change, so confirm the current details with a professional.

How South Carolina Taxes Social Security

South Carolina’s Social Security exemption comes straight from state law.

The South Carolina Department of Revenue confirms Social Security benefits taxed for federal purposes are exempt from the state’s individual income tax.

There’s no income cap.

A retiree collecting $15,000 a year in benefits and another collecting $45,000 both report the same South Carolina tax on that money: Zero.

The federal government is a separate question.

Uncle Sam can still tax up to 85% of your benefits once your combined income, your adjusted gross income plus half your Social Security plus any tax-free interest, crosses $25,000 as a single filer or $32,000 filing jointly.

South Carolina simply doesn’t add its own tax on top.

What Counts as Other Retirement Income

South Carolina uses your federal adjusted gross income (AGI) as the starting point for its own return.

That’s a change from years past, when the state built its own separate deduction math instead of leaning on the federal number.

That means anything the Internal Revenue Service (IRS) taxes on the federal side, a pension, a 401(k) withdrawal, a traditional IRA distribution or an annuity payout, counts as South Carolina income too.

Roth IRA withdrawals are the exception.

Meet the Roth rules, and that money stays tax-free at both the federal and state level, so it never touches your South Carolina return at all.

South Carolina taxes everything else first, then trims it with deductions built for retirees.

Retirement Income Deduction

South Carolina lets you subtract a set amount of retirement income before the state ever taxes it.

Under 65, you can deduct up to $3,000 of qualifying retirement income a year.

Once you turn 65, that deduction more than triples to $10,000.

Say a 68-year-old retiree pulls $18,000 from a traditional IRA in 2026.

The retirement income deduction knocks $10,000 off that amount, so South Carolina only taxes the remaining $8,000.

Pensions, 401(k)s, 403(b)s and traditional IRAs all qualify for this deduction.

Age 65 Deduction

A second break kicks in the year you turn 65, and this deduction isn’t limited to retirement accounts.

South Carolina lets residents 65 and older deduct up to $15,000 against any income on their return.

The catch?

You have to subtract whatever you already claimed through the retirement income deduction from that $15,000, so the two don’t simply stack on top of each other.

Claim the full $10,000 retirement deduction, and only $5,000 of the age 65 deduction remains.

A married couple who are both 65 or older can combine both deductions for up to $30,000 off their joint return.

The state doesn’t tax any of that $30,000.

Military Retirement Pay

Veterans get a clean deal in South Carolina's tax code.

South Carolina exempts all military retirement pay from its income tax, and age never enters the picture.

A 45-year-old who retired from the Army after 20 years and a 78-year-old who retired from the Navy decades ago both owe South Carolina nothing on that pension.

Surviving spouses receiving a deceased veteran's retirement pay can claim the same exemption.

Retirement pay for service in the reserves or the National Guard qualifies too.

South Carolina's New 2026 Tax Rates

Gov. Henry McMaster signed a major overhaul of South Carolina's income tax on March 30, 2026, a bill known as H. 4216.

The old system ran six brackets topping out at 6.2%.

H. 4216 collapses that down to two rates: 1.99% on income under $30,000, and 5.21% (minus $966) on income at or above $30,000.

That's a simpler bill.

The same law also replaces the federal standard deduction with a new South Carolina Income Adjusted Deduction, worth $15,000 for single filers and $30,000 for married couples filing jointly.

Retirees stack that deduction on top of the retirement income deduction and the age 65 deduction, so a lot of income never reaches a taxable line at all.

H. 4216 also caps South Carolina's Earned Income Tax Credit at $200, though that change lands mostly on working filers, not retirees living on Social Security and retirement accounts.

How South Carolina Stacks Up

Eight states still tax Social Security benefits in 2026: Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah and Vermont.

South Carolina isn't among them.

The other 42 states, plus Washington, D.C., leave Social Security alone the same way South Carolina does.

Neighboring North Carolina handles 401(k) withdrawals differently than South Carolina does, so the retirement math can shift the moment you cross the state line.

A handful of states go further and tax nothing at all.

Seven states won't touch a penny of retirement income, though most of those trade the break for a higher sales or property tax somewhere else.

Homestead Exemption for Seniors

Income tax isn't the only bill South Carolina eases for older residents.

Homeowners 65 and older, along with residents who are totally disabled or legally blind, can wipe out property tax on the first $50,000 of their home's fair market value through the Homestead Exemption.

That's a sizable cut on a typical property tax bill.

You apply through your county auditor's office, not the state, and it isn't automatic the year you turn 65.

File the paperwork, or the county keeps billing you at the full rate.

FAQ

Quick answers to what South Carolina retirees ask most about state taxes on Social Security and retirement income.

Does South Carolina tax Social Security benefits?

No. South Carolina fully exempts Social Security benefits from its individual income tax, with no income limit and no age requirement.

Does South Carolina tax pensions and 401(k) withdrawals?

Yes, but retirees can deduct up to $3,000 a year of that income before age 65 and up to $10,000 a year after, which shrinks the taxable amount.

Is military retirement pay taxed in South Carolina?

No. South Carolina exempts all military retirement pay from state income tax, regardless of the retiree's age.

What is South Carolina's income tax rate in 2026?

South Carolina taxes income under $30,000 at 1.99% and income at or above $30,000 at 5.21%, minus $966, under the tax law signed in March 2026.

Does South Carolina have a property tax break for retirees?

Yes. Homeowners 65 and older can exempt the first $50,000 of their home's fair market value from property tax through the Homestead Exemption.