South Carolina Withholding Tax for Employers: Returns, Deposits and the 2026 Tables

Who has to withhold

The SCDOR's test is short: every employer with an employee earning wages in South Carolina is a withholding agent if it is also required to file a federal withholding return. The rule that decides most edge cases is that wages are taxed in the state where they are earned.

• A nonresident who works in South Carolina: withhold South Carolina tax.
• A South Carolina resident working in another state: generally withhold South Carolina tax, unless the other state withholds its own income tax.
• A remote employee who lives and works outside South Carolina: generally not taxable to South Carolina, though you may need to withhold for the state where the employee is physically located.
• A military spouse domiciled elsewhere may be exempt from South Carolina tax on personal service income; SCDOR points to Revenue Ruling 24-5.

Register for a withholding account through MyDORWAY before the first payroll. The account is separate from your unemployment insurance account with the SC Department of Employment and Workforce, which is a different tax and a different agency.

The SC W-4

South Carolina has its own withholding certificate, and the federal W-4 does not substitute for it. An employee completes the SC W-4 when starting a job, changing their South Carolina withholding, or claiming exemption. If a new hire gives you none, withhold as if they claimed zero allowances. Employees claiming exemption must give you a new SC W-4 every year; if one has not arrived by 15 February, withhold as single with zero allowances. Send the SCDOR a copy of any SC W-4 claiming 10 or more allowances, or one you suspect is false.

Deposits

Under S.C. Code 12-8-1520, a resident withholding agent that makes federal deposits pays South Carolina withholding by the federal deposit due date, so a monthly federal depositor is a monthly South Carolina depositor and a semiweekly federal depositor deposits South Carolina tax semiweekly. A nonresident agent, or a resident agent that does not deposit federally, pays by the 15th of the following month once withholding for a month reaches $500, and otherwise by the last day of the month after the quarter ends. Tax is withheld when wages are paid, not when they are earned.

Returns and year end

• A return is required for every quarter the account is open, including quarters with no payroll.
• The WH-1606 is required for any year the account was open, even if the business closed during it. To close the account, use the Close a Tax Account option in MyDORWAY or check the box on the final return with the date of the last payroll.
• W-2s showing South Carolina wages or withholding go to the SCDOR by the last day of January with the annual reconciliation. Upload through MyDORWAY if you file 10 or more forms or file electronically with the Social Security Administration; fewer than 10 can go on paper with the WH-1612. 1099s are sent only if they show South Carolina withholding.
• Withholding $15,000 or more in a quarter, or making 24 or more payments a year, requires electronic filing and payment.

Where the 2026 tables stand

The 2026 withholding formula linked from SCDOR's withholding page when we checked on 25 October 2026 is the WH-1603F revised 4 November 2025. It annualizes wages, subtracts $5,000 per allowance and a standard deduction of 10% of wages up to $7,500 for employees claiming at least one allowance, and applies brackets of 0%, 3% and 6%. That structure predates H.4216, which was signed on 30 March 2026 and replaced the individual rates for tax year 2026 with 1.99% of taxable income under $30,000 and 5.21% of taxable income minus $966 above it.

Section 6 of H.4216 directs the SCDOR, with the Revenue and Fiscal Affairs Office, to adjust the withholding tables to reflect the new rates. SCDOR Information Letter 26-23 repeats that direction but does not include revised tables, and we did not find a revised 2026 formula on the withholding page. Until SCDOR publishes one, payroll providers are working from the posted version. Withholding is a prepayment: each employee's actual 2026 liability is computed on their SC1040, and any difference between what was withheld and what is owed is settled there. Employees who want to adjust can file a new SC W-4.

Other payments that carry withholding

Wages are not the only payments subject to South Carolina withholding. The ones a small business is most likely to meet:

• Nonresident contractors: withhold 2% of each payment when the South Carolina portion of the contract exceeds, or can reasonably be expected to exceed, $10,000 (S.C. Code 12-8-550). No withholding is needed if the contractor gives you an I-312, I-41 or I-309 showing registration with the Secretary of State or the SCDOR; keep it in your files. The 2% is deposited with your regular withholding.
• Rent or royalties of $1,200 or more a year paid to certain nonresidents (S.C. Code 12-8-540), at the maximum individual rate for individuals and 5% for corporations. Residential rent is covered only where the nonresident owns five or more units.
• Compensation reported on a 1099 where the payee's taxpayer identification number is missing or incorrect, at the maximum individual rate (S.C. Code 12-8-595).

Personal liability

Withheld tax is held in trust for the State of South Carolina and becomes a lien on the agent's property once recorded (S.C. Code 12-8-2030). A withholding agent that fails to withhold or pay is personally and individually liable for the amount (S.C. Code 12-8-2010). In a cash squeeze, withholding is the last bill to stretch.

What we do, and what your payroll provider does

Haigler CPA Group does not process payroll. Your payroll provider runs pay, deposits and the quarterly returns. We reconcile what the provider filed against your books, check that the WH-1606 ties to the W-2s and to the federal returns, set up owner compensation for S corporations, and respond to SCDOR withholding notices when the numbers do not match.