South Carolina: Retirement Haven or Tax Trap?

By on February 1, 2012 in Current Events, Retirement with 68 Comments

If you are at or nearing retirement in your federal career, you may be thinking of relocating to a new state. South Carolina is a state that often attracts newcomers with its mild weather, attractive cities, and lots or recreational activities, but look closely at the state’s income tax structure before taking the relocation plunge.

There is no doubt that South Carolina is a pretty part of the country. The weather is mild, and shopping, sightseeing, and recreational opportunities abound in cities such as Greenville, Columbia and Charleston.

Greenville is home to Falls Park on the Reedy River which runs through downtown. The old bridge that crosses the downtown river was torn down in a park renovation a few years ago and a new suspension bridge was erected in its place. Visitors to downtown can find a number of shops, restaurants, and even free WiFi while enjoying spending time eating lunch or just relaxing on a bench in the well maintained gardens that sprawl throughout the park.

Image of shopping district in Falls Park
Shops in Falls Park
Image of Falls Park on the Reedy
Suspension bridge crossing the Reedy River
Image of Falls Park on the Reedy grounds
Falls Park on the Reedy

Charleston is a historic city with roots dating back as far as the 1600s. The horse drawn carriage tours that operate in the historic downtown section are a great way for visitors to see and learn about the city and its rich history. With numerous shops, restaurants, and a beautiful waterfront, one could spend days in the city and not get bored.

Image of horse drawn carriage tour in Charleston
Horse drawn carriage tour in Charleston

Clearly, South Carolina offers would-be residents some enticing opportunities. But what kind of taxes would you face as a retiree relocating to the city? Be sure to look closely.

Income Tax

While you are likely to earn less income in your Golden Years than you did during your working years, you still will draw income from retirement savings and may even have a pension or annuity which means the state’s income tax rules will affect you since retirement income is taxed (Social Security benefits, however, are not taxed).

The individual income tax rates graduate from 3% on taxable income starting at $2,761 up to a top rate of 7% on taxable income exceeding $13,800. That means you’d have to have very little income to avoid paying the state’s top rate. Among states that charge personal income tax, South Carolina ranks 13th nationally.

What about deductions? For retirement income, if you’re under 65, $3,000 in retirement income is exempt. You can take this deduction for income received from any qualified retirement plan. If both spouses receive retirement income, each is entitled to an individual deduction.

From 65 onwards, the deduction per spouse on retirement income is $10,000. This deduction must be offset by any other retirement deduction that is claimed. For taxpayers age 65 and older, the total of the $15,000 per taxpayer.  Example: If a taxpayer claims the $10,000 retirement deduction, he or she would only be eligible for $5,000 under the age 65 and older deduction. A surviving spouse may continue to take a retirement deduction on behalf of the deceased spouse.

Some taxpayers 65 and older may not have to file a tax return if they meet certain conditions. An individual is not required to file a South Carolina income tax return who has (1) a single, surviving spouse, head of household federal filing status, or a married, filing separately filing status when the spouse does not itemize deductions and (2) gross income less that the sum of the federal exemption amount, the applicable standard deduction amount, and any age 65 and older deduction for which the taxpayer qualifies.

Further, an individual is not required to file a South Carolina income tax return who has (1) a federal joint filing status and (2) combined gross income of less than the sum of (a) twice the federal exemption amount, (b) the standard deduction if the individual and spouse had the same household at the close of the tax year, and (c) any age 65 and older deduction for which the taxpayer qualifies.

The following are also deductible:

  • Disability income for permanent and total disability
  • Care of a special needs child
  • Interest received from federal obligations

Property Tax

The market value of a legal residence and up to five acres of surrounding land is assessed at 4%. The first $50,000 of fair market value of a primary residence is exempt from local property taxes for residents 65 and older under a homestead exemption.

Your car is taxed as well under personal property tax. Tax rates vary and are determined by the county auditor in each county. Registering the car will cost you $15 for the title fee and $24 every two years for the registration fee. The registration fee drops to $22 if you are 64 years old and $20 for those $65 and older. A driver’s license is $12.50 and is renewable every 5 years on your birthday.

Speaking of driving, South Carolina also imposes a 16 cent per gallon fuel tax that is included in the price paid at the pump.

Sales Tax

6% (prescription drugs and unprepared food items exempt); 25 counties impose an additional 1% local option sales tax; a number of counties impose a 2% sales tax.  Seniors 85 and older pay 5%, provided they request it and show proof of age at the time of the purchase.


The number of deductions offered to retirees who take up residence in South Carolina coupled with the pretty weather and recreational attractions may indeed be enough convince many people to relocate there during retirement. On the other hand, Florida, another warm weather state with lots of coastlines, has no state income tax whatsoever which would make filing your annual tax returns simpler.

If you choose to relocate during your retirement, you should always consider all options of living in a new state carefully and be sure to consult a financial advisor or tax attorney.


© 2016 Ian Smith. All rights reserved. This article may not be reproduced without express written consent from Ian Smith.


About the Author

Ian Smith is one of the co-founders of He enjoys writing about current topics that affect the federal workforce. Ian also has a background in web development and does the technical work for the web site and its sibling sites.

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  1. Richard Rider says:

    Southern states are figuring out that refugee retirees are an economic plus. Seniors seldom commit “jail time” crimes, don’t commute during rush hours and — MOST IMPORTANT — don’t breed. Public schooling is the biggest cost for most states.

    Consider: My retired sister and hubby were in Carlsbad, but couldn’t afford to retire in CA. So they recently bought a lovely new 2,300 sq ft single story home in North Myrtle Beach, SC for $290K — 1.5 miles from the beach. Total property tax? $880. IF they were not seniors, they’d have paid more — a whopping $1,100. That savings largely offsets (for most) SC’s relatively higher 7% state income tax.

  2. braniff1 says:

    I get it, so I will take my 500 a month retirement which includes my social security and move to Wyoming and live with a buffalo. Just don’t come to my state.

  3. J.R.M says:

    Don’t move there. It’s awful there, really don’t go. 🙂 (jk, trying not to get the place crowded) No, but really it’s pretty awful. See what I did there.

  4. saywhatagain42 says:

    Don’t move here! We are awash with crime, traffic, taxes, vagrants, and golfers.

  5. Fiddle Andy says:

    We’ll thank you for all the wonderful info about my future retirement home. Considering I live in Maryland where everything including the rain is taxed I’ll consider Charleston SC a real bargain and the location is one of the most friendliest, clean and cultural rich locations in the country. I’ll take less congestion, less crime, a lower cost of living and clean beaches minutes away as a trade off to a few taxes any day.

  6. BillxT says:

    90+ degrees and 95%+ humidity may be the author’s definition of “pretty weather”, it ain’t mine, give me the southwest’s 95%+ temp and <15% humidity any year.

  7. lwe6576 says:

    We decided to move from Virginia to South Carolina when my husband retired and we haven’t regretted one minute doing that. Much lower cost of living here plus we get tax breaks being retired and will get even more when we turn 65 this year. Gas is the cheapest of just about anywhere else and property taxes are lower than Virginia. You live in Florida you pay higher insurance premiums, higher property taxes and a higher sales tax plus you have the hot weather and bugs. You can’t escape the taxes – they get you no matter what, but you can at least shoot for the lowest overall cost of living.

  8. Seagap says:

    Just started looking around. I’ve lived in Florida 33 years and love the good life and low/no taxes. Jump in the RV and head for the mountains in the summer – back home after hurricane season. Cruises, the beach, etc. But, too far from kids and grands. Need northern Florida, GA, SC, or NC. There’s good people everywhere, and my voting booth is private so politics don’t bother me. If you don’t like certain people, you won’t be happy anywhere because there are always the good, bad, and the ugy.

  9. $26307850 says:

    Florida has no tax on income and also no tax on grocery store bought food, except things like soda and chips. There’s also no personal property taxes. Lived there twice and trying to make the third time a charm!

  10. zenutoo says:

    I have a pension from County Government in PA which I already paid State income tax on there. Does this mean I have to pay State income tax on it again in South Carolina?

    • $3521088 says:

      My husband and I retired here in SC from NY. We too have a civil service retirement that we would not have had to pay state tax on if we stayed in NY. BUT, our property taxes here are 650 a year, in NY they would have been 6 grand for the same property. Right now gasoline here is 3.10 a gallon. Where we used to live in NY it is 4.10. There is a property tax on your vehicle, however, in NY you pay whatever the % tax is such as 10% when you buy the vehicle. In SC you only pay 300 maximum tax on a vehicle then every year you pay a couple of hundred in personal property tax. The total is less than the sales tax in NY. You are taxed on the value of the vehicle so it goes down every year. We live just south of Myrtle Beach about 6 miles from the ocean as the crow flies so our property insurance is a lot lower than close to the water. We’ve been here 9 years and do not regret it.

  11. MSG Retired R Earnest says:

      Try Wyoming if you can handle the cold.

  12. Richdor says:

    I live in North Carolina and in fact, spent most of my Postal Career working here. If you have a 401k (our TSP) you pay no state tax when withdrawal of the funds, only the federal tax rate applies.  This is called the Bailey decision.  There is a date requirement to get this exclusion so you need to refer to your service date of employment.  Be forewarned, though, if you take money from the TSP and roll it over to a traditional IRA, you lose this exclusion.  I never regretted moving here 28 years ago—low taxes, nice weather, good schools, mountains and beaches. The savings in property taxes alone compared to my former state of New Jersey was enough to entice our family to come here.

  13. FedHRConsultant says:

    Living in Henderson, NV and loving every minute of it. This area has everything socially, recreationally, no state tax and near perfect weather about 9 months a year with a little extra dry heat in mid-summer (not a problem). I love it here because there is so much to see and do whether you like outdoor activities, mountain trail hiking, boating on Lake Mead or lots of shows, dining and shopping. Plenty of parks and free senior center activities in Henderson too! This is the city of parks, all kinds of parks for dogs, people and sports activities. And there is always people watching on the strip of Las Vegas just minutes from my door. Housing is very low cost right now so grab it while it’s down because it will go back up.

    • Steve says:

      If you Nevadans are smart, you’ll build a 100 foot high steel fence with razor sharp barbed wire along the top, for the entire length of the Rocky Mountains and then plant land mines for a couple of miles on your side of the fence – to help keep those egg sucking dog, Communist, liberal, Marxist, socialist totalitarian, gun grabbing, greasy liberals who infest California from fleeing the mess they’ve made of their state and flooding into Nevada, where they will promptly resume doing what comes natural to destructive termites and destroy Nevada.

  14. oldgymrat says:

    If you are considering one of those active adult communities be aware of the fees that go toward cutting the grass, raking leaves, and snow in the common areas. Much like the condo fees in the hi-rises.

  15. Glenn says:


    Deep Breath, some of us have to live with Liberal friends/family and it’s a cultural blind spot for some.

  16. Glenn says:


    Good list.

    For various reasons I am looking at New Mexico (my ethnic racial mix parallels NM,) Kids in (currently) MO, and remaining Family in CA/OR, cost of living.  No area is perfect (NM politics) but each person needs to look at ALL the factors and balance their priorities.



  17. Shelvyhm says:

    I am a native Georgian who chose to move home after retiring in DC. My only comment is that I have NEVER heard anyone in the south plan to move north when they retired. Wonder why?

    • Steve says:

      Simple answer. Nobody in their right mind can stand to be around obnoxious, repulsive, nosy, meddlesome, psychopathic, insane liberal Yankees.

      Especially those from New York. Never in my entire life have I ever met or known anyone from New York who I could stand to be around for more than 5 minutes at a stretch.

    • BillnOpusForPresident says:

      COLD. As we get older, our bodies, joints, etc handle cold weather much worse.

  18. Tonto_mejor says:

    NC does not tax a federal pension at all if you qualify under the Bailey settlement

  19. PitbullDad says:

    Choosing a state to retire based only on tax obligations is misplaced and short-sighted. The author only casually mentions this when he says in the last sentence “…
    you should always consider all options of living in a new state carefully…”

    You have to rank your own priorities and go from there. Figure out how important these variables are to you. For example:

    *mountains and valleys
    *water access (ocean, river, lake)
    *rural, suburban, urban
    *potential for regional growth in coming decades (esp. if you are wanting to escape “the rat race”
    *transportation access (airports, highways, rail, etc.) to your favorite destinations
    *grandchildren (children)
    *medical care
    *entertainment (arts)
    *spectator sports (high school, college, pro)
    *”senior living” (e.g., “The Villages”)
    *opportunity for community involvement (e.g., civic groups)
    *shopping (retail, groceries, etc.)
    *”culture” of local population
    *cost of housing

    For me, all these issues intersected in the Eastern Panhandle of West Virginia, 2 hours from WDC –where my daughter is– much much cheaper cost of housing and living, and virtually all the amenities that are important to us. Finding lots of feds retire here. It’s DC’s best kept secret, for now.

    • OldRet says:

      I like it! We go to The “Woods Resort” just west of Hedgesville every year on our anniversary and love visiting Martinsburg, Cacapon, Berkeley Springs (Tari’s..yum), and the historical sites. We have even considered building a house at “The Woods”.

    • scooter says:

       WV is a great place for you.  Please stay there.  Avoid SC at all costs.

    • $26307850 says:

      And a corrupt state government which stays largely in the hands of one party continuously which always means lots of corruption.

  20. Moody Mb says:

    As a South Carolinian, I ask that you PLEASE move to Florida. 

    • Gen812 says:

      They’re right! There are a bunch of smug ass-holes living in South Carolina, and apparently ‘Moody’ is their leader!

      • saywhatagain42 says:

        Oh we are far worse than that and this is a terrible place to live. No one in their right mind would move here. It’s one big insane asylum. 🙂

        • lwe6576 says:

          Yeah, it is totally crazy time in South Carolina. Especially the Upstate. Wouldn’t want anyone to move here. I don’t know what we were thinking. lol

    • $26307850 says:

      Gladly. Much better tax benefits. Lived there twice and love it!

  21. VA ISO (Retired) says:

    Evangelicals, tea-partiers, conservatives and unregenerate Confederates?  Give me Pennsylvania any day. 

    • OldRet says:

      No state income tax on Federal pensions (yea!) any my royalties are exempt up to around 10K also. Very reasonable cost of living, housing prices and moderate climate. we avg about 10-12 inches of snow a month in Jan and Feb which isn’t too bad unless one of those nor-easters strike. Central PA is also very conservative I might add.

    • Dcr6490 says:

      So, are you saying that there are no evangelicals, tea-partiers or conservatives in PA??  We all know that’s not true.  And what’s wrong with those people anyway?  You sound like the typical liberal, Obama lover who preaches one way, but does just the opposite.

    • lazycs says:

      Yea I much prefer, drive by’s, drug pushers, taxi’s with plexiglass windows, toll roads and potholes so large they are used as bear traps yep good old PA

    • Me says:

      Pennsyltucky? What a confused state.  What’s hilarious is that you probably think of yourself as an open-minded person.

    • $26307850 says:

      Nothing like a liberal state with high tax rates to pay for all the give aways. Pennsylvania is beautiful, but someone else can pay those tax rates. I’ll take St. Augustine, Florida any day.

  22. WeatherGuy says:

    Very nice article. Good work Ian. As your reward, do 12 more states that are as good or better than SC

  23. Geoisbgn says:

    Would you please consider a comparison of SC to NC.  Thank you.

    • OldRet says:

      A lot will depend on your individual circumstances. Age, type of pension, amount of pension, when you started working, when you were vested, financial assests, area of SC/NC, marital status etc. From my research, as a general rule for Federal pensioners you are probably better off in SC if you are older (i.e. 65+) and poorer (25-30K per person or 60K/couple) and better off in NC if you are younger (i.e. 55-65) and a little better off (30K+/person or more than 60K/couple).

  24. Accountant_DOE_Retired says:

    New mexico is beautiful too. high desert means summer never gets to 100 and the snow melts in a day in the winter. And the first $1,000 of capital gains is excluded and the tax rate is 2.49% after that. Ordinary income is taxed at a max 4.9%. Sales tax around 6.5%. Great place to live. I’m an immigrint from California, a crowded expensive hight tax beautiful state. 

    • OldRet says:

      My dad retired in Las Cruces. Nice place but if you want to work at all you have to be bilingual for a lot of jos.

  25. lazycs says:

    Oh yea taxes are too high, better to retire in Maryland CA or NY where the living is cheeeep

  26. Glennhartzog says:

    I was born in SC, lived there 30 years, moved to NC, lived there 30 years.  Last year I moved back to SC.  I don’t know about the income taxes being all that different, but I love being back in SC.  The people, waaay cheaper gas prices, no pain-in-the-butt vehicle inspections, and a refreshing  spirit of independence (versus political correctness) that I can’t explain.  It’s GREAT to be home! 

  27. Brs68 says:

    South Carolina summers are brutal.  That and no income tax was why I retired to the mountain region of Western NC.

    As a result of the North Carolina Supreme Court’s decision in Bailey v. State
    of North Carolina, North Carolina may not tax certain retirement benefits received
    by retirees of the State of North Carolina and its local government or by the
    United States government retirees (including military) for each retirement
    plan if the retiree has five or more years of creditable service as of August
    12, 1989.

  28. Friend says:

    I was thinking about moving to Dillon, SC due to BRAC 2005 (would have put me an hours drive from Fort Bragg). Both South and North Carolina still have Sunday blue laws, e.g. certain parts of Walmart were blocked off until 1 p.m. Having gotten used to being able to shop when I please, I retired instead and stayed in Georgia.

  29. guestwo says:

    Think North Carolina when you think of traps for retirees.  If you did not vest by a certain date for your federal retirement, NC will tax you.

    • OldRet says:

      I think when I was looking at NC you had to be vested by 1989 or somewhere around there for your Federal pension to be exempt from state income taxes. I started work for the Feds in 1971 so I had no problem. Tenn. has no state income tax and property taxes are fairly low too althogh the sales tax and local sales tax are a little steep if I remember correctly and can add to the burden there.

  30. OldRet says:

    The author must have read my commments from a few days ago as to why I stayed in PA and didn’t move to SC.

    • Grumpy says:

      SC for me…lived all over and next to Texas, SC has the friendliest people, a vision of what the future can be, and a basic understanding that freedom means taking responsibility for yourself.
      So, all I can say is “Go North to Pa”…the south is just terrible and have I told ya’ll about the cost of living?