February 24, 2021

What are the tax benefits of moving to South Carolina

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South Carolina State is the 40th largest state, covering an area 200 miles wide and 260 miles long. It borders Georgia to the West and North Carolina to the north, and on its Eastern side is the Atlantic Ocean. SC is known for its vibrant coastal lifestyle, world-class golf courses, warm climate, amazing culinary scene, a myriad of green spaces, and great Southern hospitality.

Clearly, the fantastic charm of South Carolina is not lost on people as it has a population of just over 5 million, with the number of residents increasing by over 6% over the last decade. If you’re thinking of relocating to South Carolina State, then you’re not alone.

However, relocation can be expensive more so on your tax liability. Your decision to change states can have a significant impact on your tax liability. Fortunately, as per the U.S. Bureau of Census, South Carolina has a low per capita tax rate.

Let’s take a deeper look into the tax benefits you can enjoy if you choose to move to South Carolina.

South Carolina Retirement Taxes

It’s fair to say that South Carolina retirement taxes are fair for retirees. The state government allows certain exemptions for senior adults and retirees. After the first year, retirees receive retirement income until they turn 65. They can also take an annual deduction from their taxable income of up to $3,000.

Income Tax in SC

The income tax structure adopted by the state follows federal income tax laws and allows many of the same deductions and exemptions, with only a few adjustments. As a matter of fact, the starting point for working out your tax liability is your federal taxable income.

Property Tax (Ad Valorem)

South Carolina school districts, counties, and cities impose taxes on personal property and real estate. The local government is responsible for evaluating and collecting property taxes.

The market value of a residence no bigger than 5 acres is evaluated at 4%. This figure is applied to the market value of the property to establish its assessed value. The tax liability on a property is calculated when the local government applies a millage rate (tax per $1,000 of assessed value) to the assessed value.

Personal property taxes on trucks, cars, RVs, boats, and planes are assessed at 6% to 11% of their market value and are paid every year.

Sales and Use Taxes

Local sales taxes imposed by the state government are used for road and school construction or repairs, as well as other related projects. The sales and use tax rate applied by the state is 5%. However, insulin, dental prosthetics, hearing aids, and prescription drugs are exempt from sales tax.

A 5% use tax is applied to purchases residents have made out of South Carolina such as internet or Cable TV.

The Bottom Line

South Carolina has a lower cost of living and a balanced tax policy. Compared to other states, the tax rates in South Carolina are relatively lower.

To get a clear picture of how convenient the tax structure is, you should try and analyze the total tax package from each state. For instance, certain states have a lower individual income tax rate but they impose taxes on social security benefits while South Carolina doesn’t. The state also has no estate tax for the deceased.

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