Updated September 4, 2026. Quick answer: Partially, and the same way regardless of source. South Carolina taxes public, private, and federal pensions identically, but shelters a slice of every retiree’s qualified retirement income with a deduction of $3,000 under age 65 or $10,000 at 65 or older, plus a separate age-65 deduction of up to $15,000 (single) or $30,000 (married, both 65+) against any income. Military retirement pay is fully exempt.
Confidence note: high. This page is scoped to pension, IRA and 401(k) taxation specifically. For the state’s full retirement-tax picture (Social Security, tax rates, estate and probate), see how South Carolina taxes retirement income generally.
Pending, not current law: Senate Bill 207 (2025 to 2026 session) would raise the deductions to $20,000/$40,000 with inflation indexing; only introduced and referred to committee, not passed.
How pensions and retirement-account withdrawals are taxed
| Public (state/local government) pensions | Partially exempt via the general retirement-income deduction below; South Carolina does not distinguish public pensions from private ones. |
|---|---|
| Private (employer) pensions | Partially exempt via the same general retirement-income deduction; identical treatment to public pensions. |
| Federal government pensions (FERS/CSRS) | Partially exempt via the same general retirement-income deduction; identical treatment to public and private pensions. |
| Military retirement pay | Fully exempt since tax year 2022 (Act 156 of 2022), replacing the older capped deduction. |
| IRA and 401(k)/403(b) distributions | Covered by the same general retirement-income deduction as pensions: the statute’s definition of “retirement income” explicitly includes IRC sec. 401, 403, 408 and 457 plans. |
| General retirement-income exclusion | Retirement-income deduction: up to $3,000 (under 65) or $10,000 (65+) per qualifying taxpayer on qualified retirement income; separately, an age-65 deduction against any South Carolina income of up to $15,000 (single) or $30,000 (married, both 65+). Figures are the most recently published (2025) amounts. |
Coordinate this with your overall retirement plan
An adviser can help weigh how much of a pension or IRA withdrawal to take this year, whether a Roth conversion makes sense before or after a move, and how state tax interacts with the rest of your plan, but that does not replace the numbers in your own return.
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Social Security
Social Security is never taxed by South Carolina. Social Security has its own rules in every state; see the full breakdown in how South Carolina taxes retirement income generally.
Statute and sources
Governing citation: S.C. Code Ann. sec. 12-6-1170 (general/age-65 deductions), sec. 12-6-1171 (military).
- S.C. Dept. of Revenue, Revenue Ruling #22-11
- S.C. Dept. of Revenue, 2025 SC1040 Instructions
- S.C. Code Ann. Title 12, Chapter 6
Read September 4, 2026.
Related: how South Carolina taxes retirement income generally · does South Carolina tax Roth conversions? · Roth conversion taxes, all 51 jurisdictions.
General information drawn from each state’s own published statutes and revenue-department guidance, not legal, tax or financial advice. Figures and exemption amounts are current as of the date in the quick answer, are set by state law, and can change by future legislation; any pending bill named on this page is not yet law. This page cannot see your own return, which governs. We are not a law firm, a tax adviser, or a fiduciary, and this is not personalized advice.