South Carolina

SC has no estate tax for decedents dying on or after Jan 1, 2005

“South Carolina has no Estate Tax for decedents dying on or after January 1, 2005.”

Note: Statute backup: S.C. Code Title 12 Chapter 16 (pickup tied to the now-zero federal credit).

South Carolina top income tax rate is 6% for TY2025 (annual rate-reduction schedule)

“For taxable years beginning after 2021, a tax is imposed on the South Carolina taxable income of individuals, estates, and trusts at the rates provided in this subsection; 6% times the amount minus $577 (for the top bracket).”

Note: S.C. Code §12-6-510(B)(1) imposes the tax at graduated rates per the subsection. The 6% rate is the result of the annual reduction schedule enacted in Act 532 (2022): 7% (2021) to 6.5% (2022) to 6.4% (2023) to 6.2% (2024) to 6.0% (2025). Verbatim quote verified against scstatehouse.gov S.C. Code Title 12 Chapter 6.

South Carolina TY2026: 1.99% under $30,000; 5.21% at $30,000 and above, minus $966

“The tax rate for income less than $30,000 is 1.99%. The tax rate for income from $30,000 and above is 5.21%, minus $966.”

Note: H. 4216 does not impact 2025 income tax returns (per the same DOR page). Further rate cuts are trigger-based, capped at $200 million of revenue impact per step.

South Carolina allows a 44% deduction of net capital gain (IRC §1222-defined) from taxable income

“An individual is allowed a deduction from South Carolina taxable income for the net capital gain included in federal taxable income. The amount of the deduction is forty-four percent of the net capital gain as defined in section 1222 of the Internal Revenue Code.”

Note: The deduction is on the IRC §1222 post-netting net capital gain. ST losses erode the base equally (rule ties). Effective top rate on LT gains: 6% × (1 − 0.44) = 3.36%. Tables revised 6/17/2025 for mid-year rate cut to 6%; TF showed stale 6.2%. Base = federal taxable income; SC conformity year-locked at 12/31/2024.

IRC §1212(b): capital losses carry forward only for non-corporate taxpayers; no carryback

“In the case of a taxpayer other than a corporation, if there is a net capital loss for any taxable year: (1) the excess of the net short-term capital loss over the net long-term capital gain for such year shall be a short-term capital loss in the succeeding taxable year, and (2) the excess of the net long-term capital loss over the net short-term capital gain for such year shall be a long-term capital loss in the succeeding taxable year.”

Note: IRC §1212(b) limits non-corporate taxpayers to carrying losses forward only ('succeeding taxable year'). IRC §1212(a), which allows a 3-year carryback, applies only to corporations. For conformity states, the federal carryforward amount flows to the state return unchanged.

SC exempts SC-issued bonds; out-of-state muni bond interest is taxable per S.C. Code §12-6-1120

“The exclusion from gross income authorized by Internal Revenue Code Section 103 (Interest on State and Local Bonds) applies only to obligations of South Carolina and its political subdivisions.”

Note: §12-6-1120 explicitly limits the §103 exclusion to South Carolina bonds only. Out-of-state bonds receive no exclusion and are taxable.

SC exempts SC-issued bonds; out-of-state muni bond interest is taxable per S.C. Code §12-6-1120

“The exclusion from gross income authorized by Internal Revenue Code Section 103 (Interest on State and Local Bonds) applies only to obligations of South Carolina and its political subdivisions.”

Note: §12-6-1120 explicitly limits the §103 exclusion to South Carolina bonds only. Out-of-state bonds receive no exclusion and are taxable.

South Carolina conforms to IRC §1400Z-2 QOZ gain deferral and exclusion

“(A)(1)(a) Except as otherwise provided, "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended through December 31, 2024, and includes the effective date provisions contained in it.”

Note: Quote is SECTION 12-6-40. South Carolina uses FIXED-DATE (not rolling) IRC conformity: §12-6-40(A) adopts the IRC as amended through December 31, 2024 (2025 Act 63). IRC §1400Z-2 (2017 TCJA) predates that cutoff and is not among the sections South Carolina declines to adopt under §12-6-50, so QOZ deferral/exclusion flows through for TY2025. Note: SC does not yet conform to the OBBBA (July 2025) QOZ amendments, which postdate the 12/31/2024 cutoff.

South Carolina conforms to IRC §1202 QSBS gain exclusion

“(A)(1)(a) Except as otherwise provided, "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended through December 31, 2024, and includes the effective date provisions contained in it.”

Note: Quote is SECTION 12-6-40. South Carolina §12-6-40(A) adopts the IRC as amended through December 31, 2024 (2025 Act 63), a FIXED date. IRC §1202 predates that cutoff and is not in the §12-6-50 non-adoption list, so the QSBS exclusion flows through with no addback for TY2025. Note: the OBBBA (July 2025) §1202 enhancements postdate the cutoff and do not yet apply.

SC DOR FAQ (citing Revenue Ruling #16-2) explicitly lists FNMA and FHLMC interest as taxable for South Carolina purposes

“Interest income from the following obligations is taxable for state purposes: Federal Home Loan Mortgage Corporation (Freddie Mac), Federal National Mortgage Association (Fannie Mae), and Government National Mortgage Association (Ginnie Mae).”

Note: SC DOR FAQ cites SC Revenue Ruling #16-2 by name. FHLB appears separately as exempt (federal mandate under 12 U.S.C. §1433). FNMA, FHLMC, and GNMA have no federal bondholder exemption statute and are explicitly listed as taxable.

South Carolina top income tax rate is 6% for TY2025 (annual rate-reduction schedule)

“For taxable years beginning after 2021, a tax is imposed on the South Carolina taxable income of individuals, estates, and trusts at the rates provided in this subsection; 6% times the amount minus $577 (for the top bracket).”

Note: S.C. Code §12-6-510(B)(1) imposes the tax at graduated rates per the subsection. The 6% rate is the result of the annual reduction schedule enacted in Act 532 (2022): 7% (2021) to 6.5% (2022) to 6.4% (2023) to 6.2% (2024) to 6.0% (2025). Verbatim quote verified against scstatehouse.gov S.C. Code Title 12 Chapter 6.

U.S. Treasury interest exempt from South Carolina income tax: 31 U.S.C. §3124(a) prohibits state taxation of U.S. government obligations

“Stocks and obligations of the United States Government are exempt from taxation by a State or political subdivision of a State. The exemption applies to each form of taxation that would require the obligation, the interest on the obligation, or both, to be considered in computing a tax.”

Note: 31 U.S.C. §3124(a) preempts state income taxation of U.S. government obligations. Covers T-bills, T-notes, T-bonds, TIPS, and I-bonds. Most states allow a deduction or subtraction by statute cross-referencing this federal preemption.

FHLB and FFCB bond interest exempt from South Carolina income tax: federal enabling statutes mandate state tax exemption

“Any security issued under this chapter by a Federal home loan bank, including the stock thereof, shall be exempt from taxation, except taxes upon real estate, by any State, county, municipality, or local taxing authority.”

Note: 12 U.S.C. §1433 (FHLB) and 12 U.S.C. §2023 (FFCB/Farm Credit Act) both mandate state tax exemption for securities issued under their chapters. Contrasts with FNMA (12 U.S.C. §§1719(e), 1723a(c)) and FHLMC (12 U.S.C. §1455(a)) which have no bondholder exemption statute and whose interest is taxable by income-tax states.

Farm Credit Act: notes, bonds, debentures, and other obligations of Farm Credit Banks are instrumentalities of the United States exempt from all State, municipal, and local taxation

“The mortgages held by the Farm Credit Banks and the notes, bonds, debentures, and other obligations issued by the banks shall be considered and held to be instrumentalities of the United States and, as such, they and the income therefrom shall be exempt from all Federal, State, municipal, and local taxation, other than Federal income tax liability of the holder thereof under the Public Debt Act of 1941 (31 U.S.C. 3124).”

Note: 12 U.S.C. §2023 explicitly covers 'the income therefrom' (i.e., interest payments to bondholders), exempting it from all State and local taxation. The only carve-out is federal income tax on the holder. Parallel to 12 U.S.C. §1433 (FHLB Act), which exempts FHLB securities from state taxation. Together §1433 and §2023 mandate state and local tax exemption for both FHLB and FFCB bond interest. Shared across all jurisdictions: a single object reference satisfies buildCitationIndex() identity check.

IRC §1212(b): capital losses carry forward only for non-corporate taxpayers; no carryback

“In the case of a taxpayer other than a corporation, if there is a net capital loss for any taxable year: (1) the excess of the net short-term capital loss over the net long-term capital gain for such year shall be a short-term capital loss in the succeeding taxable year, and (2) the excess of the net long-term capital loss over the net short-term capital gain for such year shall be a long-term capital loss in the succeeding taxable year.”

Note: IRC §1212(b) limits non-corporate taxpayers to carrying losses forward only ('succeeding taxable year'). IRC §1212(a), which allows a 3-year carryback, applies only to corporations. For conformity states, the federal carryforward amount flows to the state return unchanged.

South Carolina income tax: one rate schedule for all individuals (same schedule all filing statuses; no MFJ doubles)

“For taxable years beginning after 2021, a tax is imposed on the South Carolina taxable income of individuals, estates, and trusts at the rates provided in this subsection, computed at the following rates.”

Note: S.C. Code §12-6-510 provides one graduated schedule for all filing statuses; no separate MFJ bracket table. Maximum marriage penalty on a joint return vs. two singles filing separately.

South Carolina conforms to the federal capital-loss base; treatment of an imported pre-residency section 1212 carryforward is a structural inference

“A resident individual's South Carolina gross income, adjusted gross income, and taxable income is computed as determined under the Internal Revenue Code with the modifications provided in Article 9 of this chapter and subject to allocation and apportionment as provided in Article 17 of this chapter.”

Note: S.C. Code §12-6-560 computes a resident individual's taxable income as determined under the Internal Revenue Code, so the federal Section 1212 capital-loss carryover flows through. No published guidance addresses a carryforward imported from a pre-residency year; that application remains a structural inference.