South Carolina Taxes-A Summary for New Residents

Lower taxes and a lower cost of living are a refreshing change from many other states. Moving to a new area is an exciting and adventurous time in someones life. In addition to learning the new surroundings there are other things people should know of their new area. Taxes, for example, and how they are structured in South Carolina is something everyone should be aware of.

Income Tax

South Carolina's income tax structure is based on the federal income tax laws. South Carolina accepts the adjustments,exemptions and deductions allowed on your federal return with few modifications. Your federal taxable income is the starting point in determining our state income tax liability.

When you are comparing your own states to South Carolina, looking at the tax rates only will not serve you well. Examining the tax basis, exemptions, deductions and credits is a more efficient way to compare. Different states tax differently. For example, some tax Social Security others tax pensions. The best advice is to call the state revenue department of each state and ask for copies of their most recent income tax forms. Use these forms to determine how much income tax you will pay in those states.

The federal personal exemption is $2,350.00 for each dependent and the standard deduction is $6,200.00 for a married couple filing jointly. The personal exemption and standard deduction or itemized deductions subtracted from your income leaves you with federal taxable income which is where you begin determining how much South Carolina income tax you will pay.

In addition to the exemptions and deductions allowed on the federal return, South Carolina also allows the following benefits:

• Beginning with the first year you receive retirement income, you may elect to make a $3,000.00 deduction annually for life; or you may choose to wait until you turn 65, at which time you can begin taking a $10,000 deduction annually for life. If you are already 65 when you first receive retirement income, the $10,000 deduction is automatic
• Money received from Social Security is not taxable in South Carolina.
• Income received from National Guard or armed forces reserve pay is tax exempt.
• Disability income for a permanent total disability is deductible
• There is not intangibles tax in South Carolina. Intangibles tax is collected in many states that do not have a general person income tax. The intangibles tax is imposed on bank accounts, interest, dividends, stocks, bonds and other assets.
• You do not pay a capital gains tax in this state on property you sell in another state. Federal rules governing capital gains also apply to South Carolina, including the one time gain of $125,000 allowed for the sale of your home if you are over 55.
• A two-wage earner credit allows married couples to take a maximum tax credit of $210 if both spouse's work.
• A credit is allowed for income taxes paid to another state on income which is taxable in both states.
• You get an additional state income tax credit for child care or elderly care expenses.

South Carolina's individual income tax rates graduate from 2% to a top rate of 7% on taxable income exceeding $10,000. The individual income tax brackets are adjusted annually to help offset the effects of inflation.

I hope this helps you when considering purchasing real estate on Hilton Head Island or Bluffton. If I can be of any further help feel free to contact me for a no-obligation consultation on property values on Hilton Head Island and Bluffton.