Income tax for individuals
Does South Carolina Tax Social Security? The 2026 Answer
No. South Carolina computes gross income without Internal Revenue Code Section 86, the federal rule that makes part of Social Security taxable, so Social Security and Tier 1 railroad retirement benefits are not taxed by the state. H.4216 did not change that. What is new for 2026 is that the taxable part of your benefits is still counted in federal AGI, which South Carolina now uses to phase out its new SCIAD.
- Section 12-6-1120(4) and Section 12-6-50(4) keep Social Security and Tier 1 railroad retirement out of South Carolina income.
- H.4216 (Act No. 110 of 2026) did not amend either section.
- Social Security is not retirement income for the $3,000 or $10,000 retirement deduction, because it is not taxed to begin with.
- Federally taxable Social Security is part of federal AGI, which drives the SCIAD phase-out from 2026.
- The federal senior deduction does not apply on the South Carolina return.
Who this applies to
- South Carolina residents receiving Social Security retirement, survivor or disability (SSDI) benefits
- Retirees receiving Tier 1 railroad retirement benefits
- Retirees relocating to the Charleston area from states that tax benefits
Who this may not apply to
- Pensions, IRA and 401(k) distributions, which follow the retirement deduction rules instead
- Federal taxation of benefits, which still applies on your 1040
The rule, and where it sits in the law
Two provisions of the South Carolina Income Tax Act keep Social Security off the state return. Section 12-6-50(4) lists Internal Revenue Code Section 86, which covers the taxation of Social Security and certain railroad retirement benefits, among the federal provisions South Carolina does not adopt. Section 12-6-1120(4) then says South Carolina gross income is determined without applying Section 86 (Social Security and Tier 1 railroad retirement benefits). SCDOR's 2025 instructions carry this out as a subtraction for Social Security from Title 2 of the Social Security Act, or railroad retirement, that was taxed on the federal return.
Title 2 benefits include retirement, survivor and disability (SSDI) benefits, so all three are covered. SCDOR's retiree guidance describes Social Security and railroad retirement benefits taxed federally as exempt from South Carolina income tax.
Did H.4216 change anything?
Not the exemption. Act No. 110 of 2026 amended Sections 12-6-510, 12-6-50 (to add Section 63(b) through (g), the standard and itemized deductions), 12-6-1140, 12-6-4910, 12-6-1720 and 12-6-3632. It did not touch the Section 86 language in Section 12-6-50(4) or Section 12-6-1120(4). SCDOR's information letter on the reform lists no change to the treatment of Social Security.
What did change is the starting point. The 2026 South Carolina calculation begins with federal adjusted gross income rather than federal taxable income. Federal AGI includes whatever portion of your benefits is taxable federally, so South Carolina will still need to take it back out. SCDOR had not published the 2026 SC1040 or its instructions as of 25 October 2026, so the 2026 line for that subtraction is not yet known.
How Social Security can still affect your South Carolina tax
From 2026, the South Carolina Income Adjusted Deduction (SCIAD) phases out based on federal AGI: above $40,000 for single filers, $60,000 for heads of household and $80,000 for married couples filing jointly. Section 12-6-1140(15) measures the phase-out on federal AGI without excluding Social Security, so federally taxable benefits count toward the phase-out even though South Carolina never taxes them.
| Couple A | Couple B | |
|---|---|---|
| Federally taxable Social Security in federal AGI | $0 | $30,000 |
| Other income (pension, IRA, interest) | $70,000 | $70,000 |
| Federal AGI | $70,000 | $100,000 |
| SCIAD under Section 12-6-1140(15) | $30,000 | $24,550 |
| Social Security taxed by South Carolina | $0 | $0 |
The difference is $5,450 of deduction, worth about $284 of South Carolina tax at the 5.21% rate. It comes entirely from benefits the state does not tax. Couples near the phase-out start may find that the timing of IRA withdrawals, which also raise federal AGI and can make more of their benefits federally taxable, matters more in 2026 than it did before.
Social Security and the retirement deductions
Because Social Security is not taxed in South Carolina, it is not retirement income for the state's retirement income deduction. SC Revenue Ruling #22-11 says so directly: income not included in South Carolina taxable income, such as Social Security, is not otherwise taxable income and cannot use the $3,000 or $10,000 deduction. That leaves the full retirement deduction available for pension and IRA income. The age 65 and older deduction of up to $15,000 per person is also unaffected, because it applies to any South Carolina taxable income.
The federal senior deduction is a federal item only
P.L. 119-21 created a federal deduction for taxpayers 65 and older for 2025 through 2028, in addition to the existing additional standard deduction for seniors. It is sometimes described loosely as ending tax on Social Security; the IRS describes it as a deduction available to qualifying seniors whether or not they itemize. For South Carolina, SCDOR lists the senior deduction among the federal deductions the state no longer uses from 2026. Since South Carolina already excludes Social Security entirely, the state's own senior benefit is the age 65 deduction.
How benefits become federally taxable
The amount subtracted on the South Carolina return depends on how much of your benefits is taxable federally. The IRS test adds half of your benefits to your modified AGI and compares the total to a base amount for your filing status; on a joint return both spouses' income and benefits are combined. Form SSA-1099 (or RRB-1099) shows the benefits paid, and IRS Publication 915 has the worksheet. You can ask for federal withholding from benefits on Form W-4V. There is no South Carolina tax on the benefits to withhold.
Do you need to file a South Carolina return?
South Carolina's filing requirement is measured on South Carolina gross income, which excludes Social Security. For 2026, a single filer 65 or older must file if South Carolina gross income is over $30,000 and a joint couple both 65 or older if it is over $60,000. A retiree whose only income is Social Security will generally have no South Carolina gross income to report, though filing can still make sense to recover any South Carolina tax withheld from other income.
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Sources
- SC Code of Laws, Title 12, Chapter 6 (Income Tax Act)
- SC General Assembly — H.4216 (Act No. 110 of 2026), ratified text
- SCDOR — Information Letter #26-20, Individual Income Tax Reform (31 Aug 2026)
- SCDOR — 2025 SC1040 Individual Income Tax Instructions
- SCDOR — SC Revenue Ruling #22-11, Age 65, General and Military Retirement Deductions
- SCDOR — Retirees: lower your Individual Income Tax bill with these five tips
- IRS — Topic no. 423, Social Security and equivalent railroad retirement benefits
- IRS — Tax deductions for working Americans and seniors (P.L. 119-21)
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
Does South Carolina tax Social Security disability (SSDI) benefits?
No. SSDI is a Title 2 Social Security benefit, and South Carolina determines gross income without the federal rule that makes Social Security taxable. The part of SSDI that is taxable on your federal return is subtracted on the South Carolina return.
Does the new federal senior deduction lower my South Carolina tax?
No. SCDOR lists the federal senior deduction among the federal deductions South Carolina stopped using in 2026. South Carolina's own benefit for people 65 and older is the age 65 deduction of up to $15,000 per person.
Is railroad retirement taxed in South Carolina?
Tier 1 railroad retirement benefits are excluded alongside Social Security under Section 12-6-1120(4), and SCDOR's instructions subtract railroad retirement that was taxed on the federal return. Pension income from other sources follows the retirement deduction rules.
Why does my Social Security matter for South Carolina if it is not taxed?
From 2026 the state deduction called the SCIAD is reduced as federal AGI rises, and federal AGI includes the federally taxable part of your benefits. The benefits are still subtracted, but they can shrink the SCIAD.
Keep reading
- SC retirement and age 65 deductionsSouth Carolina lets the original owner of a qualified retirement plan deduct up to $3,000 of taxable retirement income a year, rising to $10,000 from the year they turn 65. Separately, residents 65 and older get a deduction of up to $15,000 each against any kind of income, reduced by the retirement deduction they claim. H.4216 did not amend Section 12-6-1170, which holds both deductions.
- 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.
- Moving to SC: a tax checklistThe tax side of a move to South Carolina comes down to a handful of steps: pin down the date you became domiciled here, get South Carolina tax withheld or paid from that date, apply for the reduced property tax ratio on your new home, and plan your first return as a part-year resident. From 2026 the state return also works differently from the federal one, starting from federal AGI with South Carolina's own deduction and two tax rates.
- 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 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.
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