Clear Money Guide
What this state guide covers
A quick view of the questions, practical details and source notes below.
Updated July 28, 2026. Quick answer: Partly, and it depends on your age and how much of the cap your other retirement income already uses. South Carolina offers a retirement-income exclusion that is limited — by age, by a dollar cap, or both — so a conversion can be sheltered up to a point and taxed above it.
The same question for annuity payments: does South Carolina tax annuity income.
The same question for military retired pay: does South Carolina tax military retirement.
The same question for gains from selling investments: does South Carolina tax capital gains.
The same question for ordinary 401(k) and IRA withdrawals: does South Carolina tax 401(k) and IRA withdrawals.
More on South Carolina: How to Dissolve an LLC in South Carolina, District of Columbia to South Carolina Retirement Taxes (2026) and South Carolina Executor Bond Requirement.
Confidence note: the rule is well established; the answer for you depends on your age and your other retirement income in the conversion year.
Why a conversion is a different question from a withdrawal
Almost every state summary answers “how does South Carolina tax retirement income?” That is a question about distributions. A Roth conversion is not a distribution in the ordinary sense — it is a voluntary election to recognise income now in exchange for tax-free growth later. Whether a state’s retirement exclusion reaches that election is a separate question, and it is the one that decides your bill.
This is the most consequential case for planning, because the answer is a number rather than a yes or no. A capped exclusion means a conversion is not simply taxed or not taxed — it is taxed above the line where your other retirement income has already consumed the cap.
Two practical consequences. Converting in a year with less other retirement income leaves more of the cap available. And if the exclusion is age-gated, converting before you reach the gate can be markedly more expensive than converting after it — which is a timing decision, not a tax rate.
What South Carolina does with the converted amount
State income tax: restructured for TY2026 by H.4216 (signed March 30, 2026): 1.99% on income under $30,000; 5.21% marginal rate above (tax = 5.21% of income minus $966); new SCIAD standard deduction ($15,000 single / $30,000 MFJ, income-limited); revenue triggers to cut the top rate further
How South Carolina treats IRA and plan income: retirement income deduction of $3,000 a year under 65, rising to $10,000 at 65+; and from the year a resident turns 65 a separate deduction of up to $15,000 against any income. The two do not stack: the $15,000 is reduced by whatever is claimed under the retirement deduction, so $15,000 a person is the ceiling — $30,000 on a joint return when both spouses are 65 (S.C. Code §12-6-1170(A), (B)) Code § 12-6-1170): up to $3,000/year under age 65, up to $10,000/year at 65+; plus, from the year a resident turns 65, a $15,000 deduction against any income (reduced by the retirement deduction claimed). Verify these deduction amounts on 2026 forms – H.4216 rewrote the deduction architecture (SCIAD) and SCDOR’s H.4216 notice does not address retirement deductions. (A $22,500 head-of-household tier also applies under the new SCIAD architecture.)
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Source: WiserAdvisor’s service descriptionWhat to ask a preparer about South Carolina
How much of my exclusion will other retirement income already consume in the year I convert, and does my age at conversion change it?
Converting around a move
Converting in the year you move into South Carolina is the case that catches people. Residency at the moment of conversion is what generally determines which state gets to tax it, so a conversion executed a week before a move and one executed a week after can produce different bills.
Four separate taxes change when you move, not one: income tax on withdrawals, treatment of Social Security, estate tax, and inheritance tax. A state that looks good on conversions can be worse on the other three.
The state bill is the smaller half
Whatever South Carolina does, the conversion is federal ordinary income first. The federal bracket you land in, and whether the conversion pushes you over an IRMAA threshold two years later, will usually move more money than the state line does. The state answer tells you whether to convert here; the federal answer tells you how much to convert at once.
Paying the tax from outside the account matters more than either. Using converted dollars to pay the bill shrinks the balance that was the entire point of converting.
Figures verified against the SCDOR notice on H. 4216, the enacted text of H. 4216 (Act 110 of 2026), S.C. Code §§ 12-6-1170 and 12-6-1171 and the SCDOR 2025 SC1040 instructions on September 30, 2026.
Sources
Authority: SCDOR: Information about H. 4216; S.C. Code § 12-6-1170 (retirement deduction); S.C. Code § 12-6-1171 (military retirement).
Compiled from state statutes, session laws and revenue-department publications and adversarially verified in July 2026. Dataset confidence for South Carolina: medium.
This page states what the cited authority says. It is not tax advice, and a conversion large enough to matter is worth putting in front of a preparer who can see your whole return.
Nearby states
Also on South Carolina, from the other end of the plan: South Carolina probate cost — the filing fee, the statutory schedule, and the small-estate route.
A capped exclusion means the answer is a number rather than a yes or a no. Put the cap you have left this year into the Roth conversion state tax calculator with the amount you plan to convert, and it returns what is sheltered, what is taxed, and what the conversion costs once the federal bill is counted alongside it.