Where does South Carolina’s personal income tax stand?

COLUMBIA, S.C. (WSPA) — South Carolina’s new budget will take effect July 1, lowering the top income tax rate to 6%.

But unlike other neighboring states, the state lets taxpayers deduct federal taxes first, making the state less competitive.

“That doesn’t help us when people are Googling us and looking and they don’t realize that [South Carolina] allows you to take all your federal deduction before we assess our tax, and no one else does that,” said Rep. Brandon Newton (R – Lancaster). “Because of that, it makes [the state] look uncompetitive, and so the goal is to get back our ability to control our tax code and take that away from the feds.”

In the final weeks of the legislative session, the House approved a bill to make the current tax brackets 1.99% for people making up to $30,000, and 5.39% for people who make above that.

Lawmakers claim that the bill, if ratified, would gradually lower both rates and eventually move to a single 1.99% flat tax for everyone.

“When you start digging in and looking at what it actually is doing it in this bill did that,” explained Rep. Beth Bernstein (D – Richland). “It actually was going to cause one third of South Carolinians taxes to go up.”

Newton added it’s important for the Senate to make changes they feel are necessary so that they can pass this bill.

“We have to balance our budgets,” he said. “We can’t just give a tax cut. We can’t pay for it.”

Even though lawmakers aren’t currently in session, there have been conversations behind closed doors about what comes next for the bill in 2026.

“We’ve started the actually the finance committee staff is really just started diving into the house bill,” said Sen. Ross Turner (R – Greenville). “At the same time, there’s it’s just like I said, we’re looking at overall tax reform and how this would look if it fit into that.”

“But I was not prepared to vote for a bill that had at the outset was going to have such a impact on those working-class families,” Bernstein said.

Lawmakers said if the state keeps seeing strong revenue growth, the bill in its current form could eventually open the door to ending state income tax completely.