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Understanding Personal Income Tax in South Carolina

Filed under State Taxes. Fact checked on February 13, 2013.

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South Carolina's personal income tax is discussed.

If you are a resident or nonresident of South Carolina and receive taxable income individually from property owned or business transacted in South Carolina, you are subject to tax on net income. Therefore, if you are operating your business as an S corporation, partnership, limited liability company, or sole proprietorship, you will be subject to a personal income tax on your business income that passes through to you.

The following marginal tax rates and taxable income brackets apply for the 2012 tax year (brackets are annually adjusted):

Taxable Income Amount of Tax
$0 to not over $2,800 $0
Over $2,800 to not over $5,600 3% minus $84
Over $5,600 to not over $8,400 4% minus $140
Over $8,400 to not over $11,200 5% minus $224
Over $11,200 to not over $14,000 6% minus $336
Over $14,000 7% minus $476

Active trade or business income tax rate. The tax rate on active trade or business income received by the owner of a pass-through business may be reduced to 5% for tax years beginning in 2009 through 2011, 4.33% for 2012, 3.67% for 2013, and 3% for tax years beginning after 2013. Active trade or business loss must first be deducted, dollar for dollar against active trade or business income. Any remaining active trade or business loss is multiplied by a fraction, the numerator of which is the rate of tax imposed at the active trade or business income tax rate, and the denominator of which is the highest individual income tax rate.

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