Updated October 2, 2026. Quick answer: For 2026 South Carolina computes income tax as 1.99% times taxable income up to $29,999, and as 5.21% times taxable income minus $966 at $30,000 or more. Act 110 of 2026, signed on March 30, 2026, replaced three brackets with two and lowered the top rate; the Department of Revenue explains it in Information Letter 26-20.
The 2026 computation
| Taxable income | 2026 tax computation |
|---|---|
| $0 to $29,999 | 1.99% times taxable income |
| $30,000 or more | 5.21% times taxable income, minus $966 |
Information Letter 26-20, dated August 31, 2026, says “The Governor signed Act 110 of 2026 into law on March 30, 2026.” The changes are effective for income tax years beginning after December 31, 2025. The letter lists them as “Replaces three income tax brackets with two brackets” and “Reduces the top marginal tax rate”. For $30,000 or more it prints “(5.21% times taxable income) minus $966”.
Why the two lines meet at $30,000 (a recomputation)
The two formulas should give the same tax at $30,000 if the schedule has no step in it. This page recomputes both: 1.99% of $30,000 is $597 and 5.21% of $30,000 minus $966 is $597 (both computed). They agree, so the subtraction of $966 is what makes the higher rate start from the bracket threshold instead of from the first dollar.
A worked example
As a computed example (an illustration, not a source figure), take $80,000 of South Carolina taxable income in 2026. The tax is 5.21% times that amount minus $966, which is $3,202 (computed). Taxable income is the figure after South Carolina’s own deductions, which the same law changed.
Indexing and the possible rate cuts
The letter says the “taxable income amounts in the brackets will be adjusted each year using the Chained Consumer Price Index for All Consumers”, as provided in Section 12-6-520 of the South Carolina Code. It also says that “Beginning with the 2027 tax year, the top marginal income tax rate of 5.21% will be decreased” if the Board of Economic Advisors projects that income tax revenues rise by at least 5% in the fiscal year, and that the cuts continue until the top rate reaches 1.99%. That is a 2027 and later mechanism: nothing in the letter changes the 2026 computation above.
A caution on withholding tables
The letter also lists adjusted withholding tables among the Act 110 changes, which this page does not reproduce. See how the state treats retirement income on the South Carolina retirement taxes page.
Common mistakes
- Using the pre-2026 three-bracket schedule. Act 110 replaced it for tax years beginning after 2025.
- Applying 5.21% to the first dollar without subtracting $966, which overstates the tax.
- Assuming the 2027 rate cut is already in effect. It depends on a revenue forecast.
- Using the withholding table as the tax computation for the return.
Related: how South Carolina taxes retirement income, whether South Carolina taxes pensions, whether South Carolina taxes Social Security, and the federal 2026 tax brackets.
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Sources
- South Carolina Department of Revenue, SC Information Letter #26-20, Individual Income Tax Reform (August 31, 2026): https://dor.sc.gov/sites/dor/files/policies/IL26-20.pdf
- South Carolina Department of Revenue (where later updates appear; no figure on this page comes from it): https://dor.sc.gov/
Sources: the primary documents linked above, read on October 2, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the plan administrator or the agency itself is the right place to confirm anything consequential.