Updated October 16, 2026. Quick answer: South Carolina allows the original owner of a qualified retirement account a retirement deduction of up to $3,000 under age 65 or up to $10,000 at 65 or older on qualified retirement income from the taxpayer’s own plan, not counting income that resulted in a federal premature withdrawal penalty. The instructions define that income as “income from plans defined in IRC 401, 403, 408, and 457”; neither document prints 403(b) or 457(b) by name.
State retirement-income forms, line by line: South Carolina retirement deduction.
South Carolina at a glance
| Item | What the documents say |
|---|---|
| How the state treats 403(b) and 457(b) withdrawals | The plan definition cites Code sections 403 and 457; the documents do not name 403(b) or 457(b) plans |
| Do the state’s documents name these plans? | The documents read name neither 403(b) nor 457(b) plans |
| Retirement exclusion or credit | Retirement deduction of up to $3,000 under age 65 or $10,000 at 65 or older |
| Public-employee pension rule | Yes, the instructions include public employee retirement plans of federal, state and local governments |
| Rate in the documents read | Top rate of 6.0% in the statute’s schedule |
| Changed for 2026? | The documents read describe no 2026 change |
What the South Carolina documents say
The SC1040 instructions say a taxpayer “may claim a retirement deduction up to $10,000 on qualified retirement income” at 65 or older and, under 65, “under age 65 may claim a retirement deduction up to $3,000”. The deduction rests on Section 12-6-1170 of the South Carolina Code.
The statute’s rate schedule prints the top bracket as “6.0% times the amount minus $642”.
Withholding and federal tax
Whether a state withholds is a separate rule: see state withholding on retirement withdrawals. Federal rules: 403(b) withdrawal rules and 457(b) withdrawal rules. The IRS says pension and annuity payments from a qualified employer plan have “all or some portion of the amounts you receive may be taxable”.
What the documents do not say
- The documents cite IRC 403 and 457 but do not print 403(b) or 457(b).
- The instructions do not say how a 403(b) or 457(b) account in particular is treated under the deduction.
- The tax tables referred to in the instructions were not read.
Common mistakes
- Assuming South Carolina’s rule for a 401(k) or IRA also covers a 403(b) or 457(b): read whether its documents name the plan.
Related: whether South Carolina taxes 401(k) and IRA withdrawals, South Carolina retirement taxes, whether South Carolina taxes pensions, 403(b) withdrawal rules, 457(b) withdrawal rules, and state withholding on retirement withdrawals.
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Answer againSources
- SC1040 Instructions, 2025 Individual Income Tax booklet: https://dor.sc.gov/sites/dor/files/forms/SC1040Instr_2025.pdf
- South Carolina Code of Laws Title 12 Chapter 6: https://www.scstatehouse.gov/code/t12c006.php
- IRS Tax Topic 410, Pensions and annuities: https://www.irs.gov/taxtopics/tc410
Sources: the primary documents linked above, read on October 16, 2026. General information, not tax advice. Your own facts decide the outcome, and a tax professional or the state agency itself is the right place to confirm anything consequential.