Income tax for individuals
South Carolina Tax Credits for Individuals After H.4216
Of South Carolina's main individual credits, H.4216 changed only one: from 2026 the state earned income tax credit is capped at $200. The two wage earner credit, the child and dependent care credit, the refundable tuition credit and the credit for taxes paid to another state all continue under their existing statutes. Most are nonrefundable, so they can reduce South Carolina tax to zero but not below it.
- The SC EITC stays at 125% of the federal credit but cannot exceed $200, and only full-year residents get it.
- The two wage earner credit is worth up to $350 for married couples who both earn South Carolina income.
- The child and dependent care credit is 7% of federally qualifying expenses.
- The tuition credit, 50% of tuition up to $1,500, is refundable.
- Lower rates in 2026 mean less tax to absorb nonrefundable credits.
Who this applies to
- Working families claiming the federal earned income credit or the child and dependent care credit
- Married couples filing jointly where both spouses work
- Families paying in-state tuition for a South Carolina college student
- Residents who also pay income tax to another state
Who this may not apply to
- Business credits for jobs, investment and research, covered in our business credits guide
- Married individuals filing separately, who cannot claim the child and dependent care credit
What H.4216 changed and what it left alone
H.4216 (Act No. 110 of 2026) amended a short list of income tax sections: the rates, the federal conformity starting point, the new SCIAD, filing thresholds, the nonresident deduction proration and the earned income tax credit in Section 12-6-3632. The code history on scstatehouse.gov shows Act 110 against those sections only. Sections 12-6-3330 (two wage earner), 12-6-3380 (child and dependent care), 12-6-3385 (tuition) and 12-6-3400 (taxes paid to another state) carry no Act 110 amendment, so they apply in 2026 as they did before.
| Credit | How much | Refundable? | H.4216 effect |
|---|---|---|---|
| Earned income tax credit (Section 12-6-3632) | 125% of the federal EITC, up to $200; full-year residents only | No | Amended: $200 cap added from 2026 |
| Two wage earner credit (Section 12-6-3330) | 0.7% of the lower-earning spouse's South Carolina qualified earned income, counting no more than $50,000; up to $350 | No | None |
| Child and dependent care credit (Section 12-6-3380) | 7% of expenses that qualify for the federal credit; $210 for one qualifying person, $420 for two or more on the 2025 return | No | None |
| Tuition tax credit (Section 12-6-3385, Form I-319) | 50% of qualifying tuition, up to $1,500 per student | Yes | None |
| Credit for taxes paid to another state (Section 12-6-3400) | Lesser of the other state's tax or South Carolina tax on the double-taxed share of income | No | None |
| Nursing home credit (SC1040TC code 102) | 20% of qualifying nursing home expenses, up to $300, with no carryforward | No | None |
Earned income tax credit
Section 12-6-3632 has given full-year residents a nonrefundable credit equal to 125% of the federal earned income credit since its phase-in was completed in 2023. H.4216 added the words but not to exceed two hundred dollars, and SCDOR Information Letter #26-20 confirms the cap applies from tax year 2026. A family with a federal EITC of $2,000 would have been allowed up to $2,500 against South Carolina tax before; from 2026 the credit is $200. Part-year residents and nonresidents cannot claim it at all.
Two wage earner credit
Married couples filing a joint South Carolina return can claim this credit if both spouses have South Carolina earned income. The credit is 0.7% times the smaller of $50,000 or the South Carolina qualified earned income of the spouse who earns less. Qualified earned income is wages or self-employment income taxable in South Carolina, less certain adjustments such as deductible retirement contributions. The SCDOR instructions give an example: if the lower-earning spouse has $16,000 of qualified earned income, the credit is $112. The maximum is $350.
Child and dependent care credit
Section 12-6-3380 borrows the federal child and dependent care credit rules but replaces the federal percentage with a flat 7% that does not shrink as income rises. Only expenses tied to income taxed by South Carolina count. On the 2025 return that produced a maximum of $210 for one qualifying person and $420 for two or more. Married individuals filing separately cannot claim it. Part-year residents and nonresidents prorate it through Schedule NR, and a nonresident whose home state does not give South Carolina residents a similar credit gets none.
Tuition tax credit
The tuition credit is refundable, so it can produce a refund even with no tax due. Form I-319 for 2025 sets it at 50% of tuition paid, after subtracting scholarships and grants, up to $1,500. The student must meet a long list of conditions, including:
- graduating from a South Carolina high school or qualifying home school program and enrolling within 12 months
- paying in-state tuition in a degree program or a certificate program of at least one year
- completing at least 30 credit hours in the year, or 15 if attending only one semester
- not receiving a LIFE or Palmetto Fellows scholarship, and having no student loan default or disqualifying conviction
The credit may be claimed for up to four consecutive years and is split among the people who paid the tuition. Section 12-6-3385 caps the total credits allowed statewide each year, so claims can be reduced if the cap is reached.
Credit for taxes paid to another state
Residents and part-year residents who file in another state and owe tax there on income South Carolina also taxes can claim this credit on the SC1040TC. Withholding alone does not qualify; you must have a real liability on the other state's return and attach a copy. The credit is the lesser of the other state's tax on that income or the South Carolina tax on the same share of income. Because South Carolina's top rate drops to 5.21% in 2026, the credit may now be limited by the South Carolina side more often for people working in higher-tax states.
Smaller credits worth checking
- Solar, small hydropower and geothermal: 25% of purchase and installation costs, limited each year to the lesser of $3,500 per facility or 50% of tax; an excess over $3,500 can carry forward up to ten years (Section 12-6-3587, Form TC-38).
- Premarital preparation course: $25 per spouse, $50 per couple, for couples who married during the year and completed the course (Section 12-6-3381).
- Exceptional SC scholarship contributions, residential retrofit and historic residential rehabilitation credits, each with its own SCDOR form.
Haigler CPA Group checks each credit when we prepare South Carolina returns. Call (843) 214-0631 for a free consultation.
Want this worked out for your situation?
The rules above are general. Bring your numbers to a free consultation, in person on James Island or by video, and we will tell you how they apply to you.
Personal Tax — 1040 preparation, tax-saving strategy, and multi-state or expatriate filings.
Sources
- SC Code Title 12, Chapter 6 — Sections 12-6-3330, 12-6-3380, 12-6-3400, 12-6-3632
- SC General Assembly — H.4216 (Act No. 110 of 2026), ratified text
- SCDOR — Information Letter #26-20, Individual Income Tax Reform
- SCDOR — 2025 SC1040 Individual Income Tax Instructions
- SCDOR — 2025 SC1040TC, Tax Credits
- SCDOR — 2025 I-319, Tuition Tax Credit
South Carolina publishes new guidance and local governments change their rates, so check the source pages for anything that has moved since the date above. The information on this site is general in nature and is not tax, legal, or accounting advice for your situation. Tax law changes and the right answer depends on facts we would need to review with you. Please speak with a qualified professional before acting on anything you read here.
Questions people ask about this
Is the South Carolina EITC refundable?
No. It reduces South Carolina tax but cannot create a refund, and from 2026 it is capped at $200. It is available only to full-year residents.
Do both spouses need to work in South Carolina for the two wage earner credit?
Both spouses need earned income that is taxable in South Carolina, and you must file a joint South Carolina return. A resident who works in another state still has South Carolina-taxable earned income, because residents are taxed on wages wherever earned.
Can I claim the tuition credit for a child at an out-of-state college?
No. The student must pay in-state tuition at an eligible South Carolina institution and meet the other Form I-319 requirements.
Does a credit I cannot use this year carry forward?
It depends on the credit. The nursing home credit has no carryforward, and the EITC, two wage earner and child care statutes provide none. The solar credit lets an amount over the $3,500 per-facility limit carry forward for up to ten years.
Keep reading
- SC income tax in 2026For tax year 2026, South Carolina taxes income under $30,000 at 1.99% and income of $30,000 or more at 5.21% minus $966. The state return now starts from federal adjusted gross income, ignores the federal standard and itemized deductions, and gives its own South Carolina Income Adjusted Deduction (SCIAD) instead. The state's own subtractions, such as the retirement, age 65, military retirement and 44% capital gains deductions, were not amended by the act.
- The SC Income Adjusted DeductionThe South Carolina Income Adjusted Deduction (SCIAD) replaces the federal standard and itemized deductions on South Carolina returns from tax year 2026. It is $15,000 for single or married filing separately, $22,500 for head of household and $30,000 for married filing jointly or surviving spouse, and it phases out as federal AGI rises, disappearing at $95,000, $142,500 and $190,000 respectively.
- Filing a part-year SC returnIn the year you move into or out of South Carolina, Section 12-6-1710 gives you a choice. You can report all of your income for the year as if you were a resident and claim a credit for tax paid to the other state, or you can file as a nonresident using Schedule NR, which taxes everything you earned while a resident plus South Carolina-source income from the rest of the year. Which costs less depends on the other state's tax and on when your income arrived.
- The SC 529 plan deductionSouth Carolina lets you deduct contributions to its own Section 529 college savings plan, Future Scholar, up to the plan's maximum account limits, with no separate state dollar cap. Contributions made during 2026 or by April 15, 2027 can be deducted on the 2026 return. H.4216 did not change this deduction, so it still sits on top of the new SC Income Adjusted Deduction.
- SC 44% capital gains deductionSouth Carolina lets individuals, estates and trusts deduct 44% of their net capital gain, which is net long-term gain (assets held more than one year) minus net short-term loss. At the 2026 top rate of 5.21%, that taxes the remaining 56% of a long-term gain at an effective rate of about 2.9%. H.4216 did not amend Section 12-6-1150, but the full gain still counts in federal AGI for the new SCIAD phase-out.
- SC estimated tax in 2026South Carolina expects estimated payments from anyone who will owe $100 or more after withholding, but the 2026 SC1040ES worksheet was printed before H.4216 and still uses the old rates and starting point. For 2026, estimate from federal AGI using the new SCIAD and the 1.99% and 5.21% rates. You avoid an underpayment penalty if your withholding and timely estimates cover at least 90% of your 2026 tax or 100% of your 2025 tax, rising to 110% if your 2025 AGI was over $150,000.
- South Carolina tax guideHow South Carolina taxes income, businesses and property, and what the Charleston area adds on top, with the state or local source beside every rule.
Talk to a tax expert
Tell us what you are dealing with and we will tell you how we would handle it.