Does South Carolina Tax Retirement Income?

No. South Carolina does not tax Social Security benefits.

Social Security benefits are excluded from South Carolina taxable income.

The South Carolina answer is separate from the federal one. Depending on combined income, up to 85% of Social Security benefits can be taxable on the federal return regardless of what South Carolina does, so the state rule changes the state line only. Our guide to states that do not tax Social Security shows where South Carolina sits among the states that still tax benefits.

Partly. South Carolina taxes some pension income, subject to an exclusion or age rule.

Private and public pension income can qualify for the retirement-income deduction. Military retirement pay is separately exempt.

A taxpayer age 65 or older may claim up to a $10,000 retirement-income deduction. The separate age-65 deduction can reach $15,000, but it is reduced by the retirement deduction claimed, so the two are not simply a $25,000 stack.

Public and private pensions, annuities, and retirement-plan distributions do not always get the same treatment. The pension comparison lists which states exempt pensions broadly, partly, or only for certain plans.

Partly. South Carolina taxes some traditional 401(k) and IRA withdrawals, subject to an exclusion or age rule.

Traditional 401(k) and IRA withdrawals are generally taxable, subject to the same retirement and age-based deductions when eligible.

Two timing points matter in South Carolina. A Roth conversion is taxable in the year it is done, and South Carolina starts from federal adjusted gross income, so a large conversion can land in a year when the state exclusion does not cover it. Qualified Roth withdrawals later are generally not taxable at either level. Required minimum distributions follow the same South Carolina rules as any other traditional-account withdrawal.

Every state page on this site runs the same retiree profile so the states can be compared: $30,000 of Social Security, $40,000 withdrawn from a traditional 401(k), and a $20,000 private pension, $90,000 in total.

A 68-year-old with $30,000 of Social Security, $40,000 from a 401(k), and a $20,000 private pension starts with $60,000 of non-Social-Security retirement income. Assuming the full combined age-based deduction is $15,000, about $45,000 remains before the general deduction and other adjustments.

Social Security is exempt, so South Carolina starts with the $60,000 of 401(k) and pension income. The filer is 68, so the $10,000 retirement deduction applies, and the age 65 deduction adds another $5,000 to reach the $15,000 per-taxpayer cap, leaving $45,000. The new $15,000 South Carolina Income Adjusted Deduction brings taxable income to $30,000, and at exactly $30,000 the 2026 formula is 5.21% times $30,000 minus $966, roughly $600 of state tax. Contrast a $150,000 lump-sum IRA withdrawal in the same year: the deductions do not grow, taxable income becomes $180,000, and the tax is 5.21% of that minus $966, roughly $8,410. A married couple filing jointly where both spouses are 65 and each has retirement income in their own name can claim the $15,000 cap twice plus the $30,000 joint deduction, so $60,000 of joint retirement income can come off before the rate applies.

The same $90,000 profile looks different a state line away. The rows below come from the reviewed 51-state table; each state name links to its own guide.

• North Carolina: treats Social Security as exempt, pensions as taxed, and 401(k) and IRA withdrawals as taxed, with a top rate of 3.99% and bailey relief and service-conditioned military deduction.
• Georgia: treats Social Security as exempt, pensions as partially taxed, and 401(k) and IRA withdrawals as partially taxed, with a top rate of 4.99% and retirement exclusion up to $35,000 or $65,000.
• Florida: has no individual income tax at all.

South Carolina is often compared with Florida and North Carolina. Its advantage is not a zero income tax. It is a targeted retiree deduction layered on top of an exempt Social Security benefit.

Military retirement: Qualifying military retirement income is fully deductible from South Carolina taxable income. See the military retirement tax map for every state's treatment.

Estate and inheritance tax: South Carolina has no separate estate or inheritance tax.

Selling a home or investments in South Carolina: retirement-income rules do not cover capital gains. See South Carolina capital gains tax before selling appreciated property or a brokerage position in the year you move or retire.

• Confirm the exclusion you are claiming. A taxpayer age 65 or older may claim up to a $10,000 retirement-income deduction. The separate age-65 deduction can reach $15,000, but it is reduced by the retirement deduction claimed, so the two are not simply a $25,000 stack.
• Part-year residents. If you moved into or out of South Carolina during the year, retirement income is generally allocated to the period of residency, and the former state may still tax distributions received before the move. Document the move date, the new domicile, and where each distribution was received.
• Withholding and estimates. Pension and IRA custodians often withhold federal tax but not South Carolina tax. If South Carolina taxes any part of your retirement income, check whether quarterly estimated payments are needed to avoid an underpayment penalty.
• Federal side. The federal return has its own rules: up to 85% of Social Security can be taxable, the temporary $6,000 federal senior deduction is available for 2025 through 2028 subject to income limits, and Roth conversions are taxed in the conversion year. State exemptions do not change any of that.
• Large one-time distributions. Model the retirement and age-65 deductions as coordinated limits. Treating them as additive can overstate the South Carolina benefit by as much as $10,000.

Comparing states before a move? Use the retirement taxes by state table and the moving states tax guide, and read retirement tax planning for how distributions, conversions, and a move are sequenced together.