How retirement income is taxed in South Carolina
South Carolina taxes retirement income at progressive rates up to 6.2%. Here's what that means for your retirement plan and how to manage it.
Retirement tax landscape
Social Security is fully exempt. Pensions get a $10,000/$20,000 exclusion for those 65+. Retirees 65+ get a $10,000/$20,000 combined retirement income exclusion.
Understanding how South Carolina treats each type of retirement income is essential for planning your withdrawals, conversions, and Social Security timing. The interaction between state and federal taxes determines your true after-tax income each year.
What's taxed and what's not
Fully exempt from state income tax.
Partially exempt with deductions or exclusions.
Partially exempt or exempt with age requirements.
Qualified distributions are fully exempt at both the state and federal level.
Tax brackets
South Carolina runs three progressive brackets, with rates from 0% to 6.2%. The schedule below switches by filing status; standard deduction is shown beneath each.
| Taxable income | Rate |
|---|---|
| Up to $3,560 | 0% |
| $3,560 – $17,830 | 3% |
| Above $17,830 | 6.2% |
| Taxable income | Rate |
|---|---|
| Up to $3,560 | 0% |
| $3,560 – $17,830 | 3% |
| Above $17,830 | 6.2% |
| Taxable income | Rate |
|---|---|
| Up to $3,560 | 0% |
| $3,560 – $17,830 | 3% |
| Above $17,830 | 6.2% |
South Carolina's 0% bracket on the first $3,560 plus the standard deduction provides meaningful relief. The top rate of 6.2% applies above $17,830 of taxable income.
Strategies to reduce your tax burden
The $10,000/$20,000 retirement exclusion for 65+ is the key planning lever. Roth conversions before 65 avoid state tax on converted amounts. The SS exemption is a strong advantage for retirees. Federal tax planning (withdrawal sequencing and SS timing) drives the primary savings opportunity.
Roth conversions before retirement. Converting traditional IRA balances to Roth during lower-income years means paying South Carolina tax now at lower rates, then taking tax-free Roth withdrawals later. See the full Roth conversion playbook.
Withdrawal sequencing. The order you draw from different accounts each year matters. Drawing from taxable brokerage accounts before tapping tax-deferred accounts can keep your South Carolina ordinary income lower. Read more in our drawdown sequencing playbook.
Social Security timing. Optimizing when you claim Social Security affects both your federal and state tax picture. See when to start Social Security.
Modeling your retirement taxes
The interaction between South Carolina's tax rules and federal taxes is too complex to estimate by hand. A year-by-year projection shows your actual tax burden for every year of retirement.
Drawdown Arc's projection engine includes South Carolina's full bracket structure, standard deduction, and retirement income exemptions. Set your state to South Carolina and enter your account balances, pension, and Social Security timing: the projection shows your South Carolina state tax alongside federal tax for every year.
State tax modeling is a Pro feature. The free calculator shows your full federal tax projection: upgrade to Pro to add South Carolina (or any of the 50 states + DC) to your model.