Taxes: A Summary for Residents
(Source: sctax.org and carolinaliving.com)

Property Tax
South Carolina counties, cities and school districts impose ad valorem (property) taxes on real and personal property. Local governments assess and collect property taxes. The market value of a legal residence and up to five acres of surrounding land is assessed at 4 percent. The tax liability on the property is determined when local government applies its millage rate to the assessed value. County millage rates vary, but the state average is 255 mills (.255). South Carolina also has a newly adjusted homestead exemption of $50,000 on the fair market value of a home for residents who are age 65 or older, totally and permanently disabled, or legally blind.
Property tax relief exempts the first $100,000 of home value from property taxes for school operations. The maximum benefit of this exemption ranges from $200 to more than $800 depending on the tax district where the home is located.

Personal property tax is collected annually on cars, trucks, motorcycles, recreational vehicles, boats and airplanes. Personal property is assessed at 10.5 percent of market value. If you own a $10,000 car, based on the average millage rate, your annual property tax would be $268. The registration fee for passenger cars is $24 every two years ($20 for residents age 65 or older; $22 for 64-year-olds) and can be paid when you pay your county property tax. Many states, rather than collect personal property taxes on cars, boats, etc., impose a higher registration fee that is comparable to South Carolina's property tax.

Estate Tax
South Carolina taxable income of estates and trusts is taxed either to the fiduciary or to the beneficiaries in the same manner as for federal income tax purposes. Certain taxable income such as real estate gains and rentals from property located in South Carolina and income flowing through from a business located in South Carolina and distributable to nonresident beneficiaries is subject to withholding at a seven percent rate. Fiduciaries are subject to the requirement to make quarterly payments of estimated income tax in the same manner as for federal income tax purposes. The return due date is the same as the federal return. Grantor trusts, to the extent that they are grantor trusts will be ignored for all South Carolina tax purposes.

Income Tax

South Carolina's income tax structure follows federal income tax laws, allowing the same adjustments, exemptions and

deductions with only a few modifications. In fact, the starting point for calculating your state tax liability is your federal taxable income. Income tax rates begin at 2.5 percent of taxable income, graduating to a maximum of 7 percent on taxable income exceeding $11,550. The individual income tax brackets are adjusted annually to help offset the effects of inflation.
When comparing South Carolina's tax rates with other states, it's important to look at each state's total tax package, not just the tax rates. For example, some states tax Social Security benefits. South Carolina does not. In the first year you receive income from a qualified retirement plan, such as a company pension, 401(K) or IRA, you may claim a retirement deduction. For tax year 1998 and forward, taxpayers under age 65 may claim a deduction of up to $3,000 of qualified retirement income taxed.
A South Carolina resident also becomes eligible at age 65 or older to claim a deduction against any source of income. The maximum deduction allowed is $15,000. However, this must be reduced by any other retirement deduction claimed by the taxpayer, not including surviving spouse retirement deduction amounts. (Special rules apply to taxpayers who made an election on the retirement deduction prior to 1998.
If you are separating from active duty in the Armed Forces but wish to continue your military career at the local level, National Guard and Reserve annual training and weekend drill pay is not taxed in South Carolina.
In addition to these deductions and those normally allowed on the federal return, the state allows the following benefits:
Disability retirement income for a permanent and total disability is deductible.
There is no intangibles tax in South Carolina. Intangibles tax is collected in many states that do not have a general personal income tax and is imposed on bank accounts, interest, dividends, stocks, bonds and other assets.
You do not pay a tax in this state on property you sell in another state. South Carolina has adopted the federal provision allowing up to $500,000 (if married filing jointly, otherwise the provision is $250,000) of the gain from the sale of your home to be excluded from tax.
A two-wage earner credit allows married couples to take a maximum tax credit of $210 annually if both work.
Social Security income that is taxed on your federal income tax return is deductible for South Carolina purposes.
A credit is allowed for income taxes paid to another state on income that is taxable in both states.
You receive an additional state income tax credit for child care or elderly care expenses.
South Carolina allows a credit of up to $300 annually for nursing care in-home or in a licensed institution.
Parents may claim an additional deduction equal to the amount of the federal personal exemption ($2,700 for 1998, but adjusted annually) for each child under the age of 6.

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