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08 July 2025

South Carolina law lowers the state's top marginal tax rate, retroactive to January 1, 2025

The South Carolina Department of Revenue announced that in keeping with the 2025–2026 budget enacted under H. 4025, the top marginal personal income tax rate is lowered from 6.2% to 6.0%, retroactive to January 1, 2025. (South Carolina Department of Revenue, Information Letter #25-11, 6-1-9-2025.)

Background

S. 1087, enacted in 2022, lowered the state's top marginal income tax rate from 7.0% to 6.5%, retroactive to January 1, 2022. Beginning with tax year 2023 and each year thereafter, it decreases the rate by 0.1% until it reaches 6.0% if revenue goals are met.

In 2023, H. 4300 lowered the top marginal personal income tax rate to 6.4% effective January 1, 2024.

In 2024, H. 5100 lowered the top marginal personal income tax rate from 6.4% to 6.2%.

The updated withholding formula and tables once available will be published here.

Ernst & Young LLP insights

Employers should consider notifying employees living and/or working in South Carolina of the decrease in the top marginal personal income tax rate and suggest they review their Form SC W-4, Employee's Withholding Allowance Certificate.

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Contact Information

For additional information concerning this Alert, please contact:

Workforce Tax Services - Employment Tax Advisory Services

Published by NTD’s Tax Technical Knowledge Services group; Jennifer Mannetta, legal editor

Document ID: 2025-1396

 

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