South Carolina Income Tax Rates & Brackets (Tax Year 2025 — Filed in 2026)

Remote Workers and Multi-State Taxation

Living in South Carolina, Working for an Out-of-State Employer

As a South Carolina resident, you owe South Carolina income tax on all income, regardless of where your employer is located.

What this means:

• Employer location does NOT determine your South Carolina tax obligation
• Income from employers based in other states — including states with no income tax — is fully taxable in South Carolina
• South Carolina law requires proper state tax withholding for resident employees
• If your out-of-state employer does not withhold South Carolina tax, you must make quarterly estimated tax payments

Example: A South Carolina resident working remotely for a Texas-based company owes South Carolina income tax on all wages earned. Texas has no income tax, so the resident’s entire income is taxable only by South Carolina.

Example 2: A South Carolina resident working remotely for a New York-based company owes South Carolina income tax on all wages. If New York also attempts to tax those wages (see New York’s Convenience of the Employer rule below), the resident may claim a credit on their South Carolina return for taxes paid to New York.

Source: https://dor.sc.gov/iit/new-sc-filing | https://dor.sc.gov/sites/dor/files/forms/IITPacket_2025.pdf

Working in South Carolina, Living in Another State

Non-residents who physically perform work inside South Carolina owe South Carolina income tax on wages earned from South Carolina sources.

Physical Presence Rule: Income is sourced to South Carolina based on where work is physically performed. Working in South Carolina — even temporarily — creates a South Carolina tax obligation for non-residents.

What non-residents owe:

• South Carolina income tax on all personal service income earned while physically in South Carolina
• File SC1040 with Schedule NR
• Claim a credit in their home state for taxes paid to South Carolina (if the home state allows it)

Employer withholding obligation: Employers must withhold South Carolina income tax for non-residents working in South Carolina, even if the employer is not based in South Carolina.

Source: https://dor.sc.gov/tax/withholding/faq | https://dor.sc.gov/sites/dor/files/forms/IITPacket_2025.pdf

⚠️ Interstate Tax Risk Indicator

Remote workers with connections to South Carolina commonly encounter dual taxation complications with specific states:

Working with these states requires careful planning:

• New York — Applies the “convenience of the employer” rule; a New York-based employer’s remote employees in South Carolina may still be taxed by New York on all wages if the remote arrangement is for employee convenience rather than employer necessity
• Pennsylvania — Has 3,800+ local income tax jurisdictions; Pennsylvania residents working in South Carolina may still owe local earned income tax to their Pennsylvania municipality
• Connecticut — Complex credit system; Connecticut previously applied a convenience rule but its current enforcement status varies
• California — Aggressive residency audits for former residents; individuals who left California to work in South Carolina should ensure they have established a clear change of domicile

Source: https://dor.sc.gov/iit | IRS Publication 505: https://www.irs.gov/forms-pubs/about-publication-505

“Convenience of the Employer” Rule — South Carolina Does NOT Apply

South Carolina does not apply a “convenience of the employer” rule. Non-residents are taxed only on income from work physically performed in South Carolina. If a non-resident works from home in another state for a South Carolina-based employer, South Carolina does not tax that income solely because the employer is located here.

However, if the other state (such as New York) applies its own convenience rule, the remote worker may be taxed by that other state on income earned while physically in South Carolina, potentially creating double taxation. In that case, South Carolina residents may claim a credit under S.C. Code Ann. § 12-6-3400 for taxes properly owed and paid to the other state.

Source: https://dor.sc.gov/tax/withholding/faq

Reciprocal Agreements

South Carolina does not have reciprocal agreements with any other state. There is no reciprocity arrangement that would allow residents to pay income tax only to their state of residence when working in another state.

This means:

• South Carolina residents who physically work in another state must file a non-resident return in that state (unless that state has no income tax)
• They may then claim a credit on their South Carolina return for taxes paid to the other state (SC1040TC)
• Workers from other states physically working in South Carolina must pay South Carolina income tax on wages earned here

Source: https://dor.sc.gov/tax/withholding/faq | https://dor.sc.gov/forms-site/Forms/WH105.pdf

Multi-State Tax Filing

When earning income in multiple states as a South Carolina resident:

1. File a resident return in South Carolina (SC1040) reporting all income from all sources
2. File non-resident returns in other states where income was physically earned
3. Claim a credit on the South Carolina return for taxes properly paid to other states

Forms required:

• SC1040TC — Credit for Taxes Paid to Another State (attach copy of other state’s return)
• Schedule NR — if filing as nonresident/part-year resident

Source: https://dor.sc.gov/sites/dor/files/forms/IITPacket_2025.pdf | https://dor.sc.gov/forms-site/Forms/SC1040TC_2020.pdf