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Navigating the complexities of state taxes is essential for individuals and businesses alike, especially in a dynamic economic landscape.
Understanding South Carolina's tax structure is crucial if you want to boost your bank account and stay compliant with state regulations.
Each component plays a significant role in shaping the state's fiscal landscape, from income and property taxes to sales and fuel levies.
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Income tax rates in South Carolina range from 0% up to 6.4%. For both single fillers and those married and filing jointly, the income tax rate is 0% if you’re earning up to $3,460, 3% if you’re earning between $3,461 to $17,330, and 6.4% if you’re earning $17,331 or more.
As of January 1, 2024, South Carolina reduced its top individual income tax rate from 6.5% to 6.4%. The state aims to reduce this rate further to 6%, subject to tax revenue.
South Carolina ranks 6th for lowest overall property taxes compared to all 50 states. You’ll save a bundle on property taxes yearly compared to most other states.
The effective property tax rate is 0.57%, the median home value or list price is $383,900, and the average annual property tax is $2,175.93.
Capital gains taxes
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South Carolina taxes capital gains as income (with a 44% deduction available on long-term gains), and the rate reaches 6.4%.
Capital gains tax rates align with the state's income tax rates, which means your capital gains are taxed at the same rate as your ordinary income.
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South Carolina does not have an estate or inheritance tax, meaning that estates are not subject to state-level taxation upon inheritance or death, making South Carolina an attractive state for retirees and those concerned about estate planning.
This favorable tax environment contributes to the state's appeal as a retirement destination and underscores the importance of comprehensive estate planning strategies.
Fuel taxes
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South Carolina levies a 28 cents per gallon tax on gasoline and diesel fuel. These rates are lower than those of bordering North Carolina (40 cents per gallon for gasoline and diesel fuel) and Georgia (31 cents per gallon for gas and 35 cents for diesel fuel).
South Carolina’s rates are slightly below the average fuel taxes in the U.S., which are 29 cents per gallon for gasoline and 31 cents per gallon for diesel fuel.
Social Security taxes
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South Carolina is one of 40 U.S. states that does not have a Social Security tax. This means that Social Security benefits are not subject to state income tax, providing additional financial relief for retirees and individuals receiving Social Security benefits.
South Carolina's state sales tax rate is 6%. Localities can add as much as 3%, and the average combined rate is 7.499%. It's worth noting that groceries and prescription drugs are tax-exempt, while women's feminine products and diapers are taxable.
How to file taxes in South Carolina
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You can file your taxes online with the South Carolina Department of Revenue. The online filing system offers convenience and efficiency, allowing taxpayers to submit their returns electronically and receive refunds faster.
The South Carolina Department of Revenue also provides resources and assistance for taxpayers to navigate the filing process and address any questions or concerns they may have.
Those who earned $79,000 or less in 2023 may qualify to file their federal and state returns with the department’s free tax filing software.
Do you get what you pay for in South Carolina?
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South Carolina ranks 45th for overall government services compared to all 50 states. With an overall score of 41.13 (out of 100), education scored 36, health scored 46, safety scored 47, economy scored 34, and infrastructure & pollution scored 15.
While South Carolina offers relatively favorable tax rates compared to other states, taxpayers should consider the quality and accessibility of government services when evaluating the overall value of their tax contributions.
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As taxpayers in South Carolina, it's vital to grasp the nuances of the state's tax system to make informed financial decisions.
Each aspect has implications for your bottom line, from income tax rates and property levies to sales tax policies.
By understanding these eight key factors and their impact on your financial fitness, you can confidently navigate the tax landscape and optimize your tax planning strategies.
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