-
Overall Rank
34
Down 6 places since 2026 -
21
Down 10 places since 2026 -
27
Down 3 places since 2026 -
28
No change since 2026 -
40
No change since 2026 -
Unemployment Insurance Tax Rank
26
Up 1 place since 2026
South Carolina ranks 34th overall on the 2027 State Tax Competitiveness Index.
Score 4.99 / 10
Notable Changes South Carolina is singled out in the study for this year's changes.
In the 2027 Index
South Carolina passed rate reductions this year, bringing its top individual income tax rate from 6 percent to 5.21 percent. However, the scoring benefit of the rate reduction was outweighed by its lagged general conformity, low Section 179 limitation, and lack of Section 168(n) expensing. In the end, South Carolina’s overall ranking dropped six spots, from 28th to 34th.
Snapshot date: The 2027 Index measures each state's tax law as of July 1, 2026. Changes enacted after that date are not reflected in these ranks.
About South Carolina's Tax Code
South Carolina levies an individual income tax with two brackets, a top marginal rate of 5.21 percent, and a marriage penalty. By contrast, neighboring North Carolina levies a flat 3.99 percent individual income tax and does not impose a marriage penalty, making South Carolina’s levy particularly uncompetitive regionally. Pass-through businesses enjoy a preferential rate on business income, which helps them but creates distortions and drives up the ordinary rate.
The Palmetto State maintains a reasonably competitive corporate tax code, featuring a flat rate of 5 percent. However, the state also relies heavily on tax credits rather than focusing on broad-based rate relief. The state imposes a capital stock tax without capping maximum payments. Capital stock taxes are levied against a business’s net worth (or accumulated wealth) and tend to penalize investment. Moreover, businesses are required to pay capital stock taxes regardless of profitability.
The state also applies a different formula to assess distinct property types, known as split roll taxation, and South Carolina is the only state to apply school property taxes to commercial and industrial property but not to residential property, raising costs for businesses and renters compared to homeowners.
Component Scores
#34 overall · 4.99 / 10Each component is scored from 0 to 10, where 10 is best. Select a component for its detail page.
| Component | Rank | Score | |
|---|---|---|---|
| Corporate Taxes | #21 | 5.40 / 10 | |
| Individual Income Taxes | #27 | 5.26 / 10 | |
| Sales Taxes | #28 | 4.68 / 10 | |
| Property Taxes | #40 | 4.25 / 10 | |
| Unemployment Insurance Taxes | #26 | 5.12 / 10 |
Ranking Changes, 2020–2027
#34 in 2027 · down 3 places from 2020South Carolina ranked 31st in 2020 and ranks 34th in 2027, a decline of 3 places. The axis is zoomed to the state's range. Ranks for 2020 through 2026 are backcast under the current methodology.
Show the Table
| Year | Overall | Corporate | Individual Income | Sales | Property | Unemployment Insurance |
|---|---|---|---|---|---|---|
| 2020 | 31 (4.98) | 6 (5.65) | 28 (5.14) | 29 (4.65) | 39 (4.35) | 29 (4.87) |
| 2021 | 29 (4.99) | 7 (5.64) | 30 (5.04) | 29 (4.65) | 38 (4.39) | 22 (5.17) |
| 2022 | 32 (4.99) | 8 (5.67) | 30 (5.04) | 32 (4.48) | 37 (4.42) | 21 (5.31) |
| 2023 | 28 (5.10) | 9 (5.67) | 23 (5.36) | 29 (4.64) | 37 (4.43) | 24 (5.11) |
| 2024 | 31 (5.07) | 11 (5.66) | 23 (5.33) | 27 (4.64) | 38 (4.39) | 26 (5.01) |
| 2025 | 30 (5.04) | 9 (5.63) | 23 (5.33) | 27 (4.64) | 41 (4.23) | 28 (5.02) |
| 2026 | 28 (5.05) | 11 (5.59) | 24 (5.31) | 28 (4.66) | 40 (4.21) | 27 (5.12) |
| 2027 | 34 (4.99) | 21 (5.40) | 27 (5.26) | 28 (4.68) | 40 (4.25) | 26 (5.12) |
South Carolina Compared across the States
#34 overallEach row places the states on a 0 to 10 score scale for one measure. South Carolina is the large outlined dot, and the dashed line is the 50-state median, so a dot to its right scores better than the typical state. Hover over or tab to any dot for detail, and select it to open that state's profile.
Overall
#34 4.99
Corporate Taxes
#21 5.40
Individual Income Taxes
#27 5.26
Sales Taxes
#28 4.68
Property Taxes
#40 4.25
Unemployment Insurance Taxes
#26 5.12
- South Carolina
- Other states, by rank (1st to 50th)
- 50-state median
South Carolina and Its Neighbors
#34 overallSouth Carolina borders 2 states and ranks 34th overall; every one of them ranks higher.
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North Carolina #11 Score 5.60 23 places better -
Georgia #24 Score 5.26 10 places better -
South Carolina #34 Score 4.99 This state
What Each Component Includes
The five components of the Index, what each one covers, and where South Carolina lands. Open any component for the full breakdown.
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Corporate Taxes
Rank #21Includes corporate income taxes and gross receipts taxes. Measures the impact of each state’s principal tax on business activities.
Full Breakdown for South Carolina → -
Individual Income Taxes
Rank #27Covers the tax individuals pay on income, and with it a significant number of businesses — sole proprietorships, partnerships, and S corporations — that report their income through the individual income tax code.
Full Breakdown for South Carolina → -
Sales Taxes
Rank #28Covers the general sales tax levied on the purchase price of goods and services, plus excise taxes on gasoline, diesel, tobacco, vapor products, beer, and spirits, and taxes on digital advertising.
Full Breakdown for South Carolina → -
Property Taxes
Rank #40Includes taxes on real and personal property, net worth, and the transfer of assets — among them capital stock, estate, inheritance, and real estate transfer taxes.
Full Breakdown for South Carolina → -
Unemployment Insurance Taxes
Rank #26Covers the taxes employers pay into the state unemployment insurance program to finance benefits for workers recently unemployed.
Full Breakdown for South Carolina →
Tax Data Explorer
Every policy variable behind South Carolina's 2027 scores, grouped by the report's tables, as of July 1, 2026. Its bordering states are shown alongside to start. Search the variables and values, or add up to 4 states to compare side by side.
145 data points · Shaded values differ from South Carolina
Corporate Taxes: Corporate Income Tax Rates
| Variable | South Carolina | Georgia | North Carolina |
|---|---|---|---|
| Bracket 1 | 5.0% > $0 | 4.99% > $0 (differs) | 2.0% > $0 (differs) |
| Gross Receipts Tax | No | No | No |
Corporate Taxes: Tax Credits and Gross Receipts Deductions
| Variable | South Carolina | Georgia | North Carolina |
|---|---|---|---|
| Job Credits | Yes | Yes | No (differs) |
| Research and Development Credits | Yes | Yes | No (differs) |
| Investment Credits | Yes | Yes | No (differs) |
| Compensation Expenses Deductible | n.a. | n.a. | n.a. |
| Cost of Goods Sold Deductible | n.a. | n.a. | n.a. |
Corporate Taxes: Net Operating Losses
| Variable | South Carolina | Georgia | North Carolina |
|---|---|---|---|
| Conforms to Federal NOL Treatment | Yes | Yes | No (differs) |
| Carryback (Years) | Conforms to federal treatment | Conforms to federal treatment | 0 (differs) |
| Carryback Cap | Conforms to federal treatment | Conforms to federal treatment | $0 (differs) |
| Carryforward (Years) | Conforms to federal treatment | Conforms to federal treatment | 15 (differs) |
| Carryforward Cap | Conforms to federal treatment | Conforms to federal treatment | Unlimited (differs) |
Corporate Taxes: Treatment of Capital Investment
| Variable | South Carolina | Georgia | North Carolina |
|---|---|---|---|
| Section 168(k) Expensing | 0% | 0% | 15% (differs) |
| Conforms to Section 163(j) Limitation | No | No | Yes (differs) |
| GILTI Inclusion | Decouples | Decouples | Decouples |
| Section 174 Expensing | No | Yes (differs) | No |
| Section 168(n) Expensing | No | No | No |
Corporate Taxes: Other Corporate Base Variables
| Variable | South Carolina | Georgia | North Carolina |
|---|---|---|---|
| Federal Income Used as State Tax Base | Yes | Yes | Yes |
| Conformity Status | Static (not current) | Static (current) (differs) | Static (not current) |
| Allows Federal ACRS or MACRS Depreciation | Yes | Yes | Yes |
| Allows Federal Depletion | Yes | Yes | Partial (differs) |
| Throwback Rule | No | No | No |
| Foreign Tax Deductibility | No | No | No |
| Corporate AMT | No | No | No |
| Brackets Indexed for Inflation | Flat CIT | Flat CIT | Flat CIT |
Individual Income Taxes: Individual Income Tax Rates
| Variable | South Carolina | Georgia | North Carolina |
|---|---|---|---|
| Bracket 1 | 1.99% > $0 | 4.99% > $0 (differs) | 3.99% > $0 (differs) |
| Bracket 2 | 5.21% > $30,000 | n.a. (differs) | n.a. (differs) |
| Standard Deduction (Single Filer) | $8,350 | $12,000 (differs) | $12,750 (differs) |
| Personal Exemption (Single Filer) | n.a. | n.a. | n.a. |
| Personal Exemption Credit (Single Filer) | n.a. | n.a. | n.a. |
| Personal Exemption per Dependent | $4,930 | $5,000 (differs) | n.a. (differs) |
| Personal Exemption Credit per Dependent | n.a. | n.a. | n.a. |
| Average Local Income Tax Rate | None | None | None |
| Surtaxes on Wage Income | n.a. | n.a. | n.a. |
Individual Income Taxes: Marriage Penalty, Capital Income, Indexation
| Variable | South Carolina | Georgia | North Carolina |
|---|---|---|---|
| Marriage Penalty | Yes | No (differs) | No (differs) |
| Married Couples Can File Separately on One Return | No | No | No |
| Convenience Rule | No | No | No |
| Interest Taxed | Yes | Yes | Yes |
| Dividends Taxed | Yes | Yes | Yes |
| Capital Gains Taxed | Yes | Yes | Yes |
| Combined Capital Gains Tax Rate | 2.918% | 4.99% (differs) | 3.99% (differs) |
| Tax Brackets Indexed for Inflation | Yes | Yes | Yes |
| Standard Deduction Indexed for Inflation | No | No | No |
| Personal Exemption Indexed for Inflation | Yes | No (differs) | Yes |
| Progressivity Ratio | 1.00 | 1.00 | 1.00 |
Individual Income Taxes: Other Individual Base Variables
| Variable | South Carolina | Georgia | North Carolina |
|---|---|---|---|
| Federal Income Used as State Tax Base | Yes | Yes | Yes |
| Conformity Status | Static (not current) | Static (current) (differs) | Static (not current) |
| Credits for Taxes Paid to Other States | Yes | Yes | Yes |
| AMT Levied | No | No | No |
| Recognition of S Corporation Status | Yes | Yes | Yes |
| Section 179 Expensing Limit | $1,250,000 | $2,560,000 (differs) | $25,000 (differs) |
| Tips | Taxable | Partial (differs) | Taxable |
| Overtime | Taxable | Partial (differs) | Taxable |
| Filing and Withholding Threshold Index | 1.132 | 5.659 (differs) | 0 (differs) |
Individual Income Taxes: Other Individual Income Variables
| Variable | South Carolina | Georgia | North Carolina |
|---|---|---|---|
| Income Recapture | No | No | No |
Sales Taxes: Sales and Excise Tax Rates
| Variable | South Carolina | Georgia | North Carolina |
|---|---|---|---|
| State Sales Tax Rate | 6.00% | 4.00% (differs) | 4.75% (differs) |
| Average Local Sales Tax Rate | 1.49% | 3.56% (differs) | 2.35% (differs) |
| Maximum Local Sales Tax Rate | 3.00% | 5.00% (differs) | 3.50% (differs) |
| Gasoline Tax (Cents per Gallon) | 28.75 | 34.05 (differs) | 41.25 (differs) |
| Diesel Tax (Cents per Gallon) | 28.75 | 38.05 (differs) | 41.25 (differs) |
| Cigarette Tax (Dollars per Pack of 20) | $0.57 | $0.37 (differs) | $0.45 (differs) |
| Beer Tax (Dollars per Gallon) | $0.768 | $0.48 (differs) | $0.6171 (differs) |
| Spirits Tax (Dollars per Gallon) | $5.42 | $3.79 (differs) | $18.23 (differs) |
| Vapor Tax Ratio to Cigarette Tax | 5.00% | 5.00% | 5.00% |
Sales Taxes: Business-to-Business Exemptions
| Variable | South Carolina | Georgia | North Carolina |
|---|---|---|---|
| Business Inputs | Some Taxable | Some Taxable | Some Taxable |
| Farm Equipment | Exempt | Exempt | Exempt |
| Office Equipment | Taxable | Taxable | Taxable |
| Manufacturing Machinery | Exempt | Exempt | Exempt |
| Manufacturing Raw Materials | Exempt | Exempt | Exempt |
| Business Fuel and Utilities | Exempt | Partial (differs) | Exempt |
| Business Leases and Rentals | Taxable | Taxable | Taxable |
| Information Services | Taxable | Exempt (differs) | Exempt (differs) |
| Software as a Service (SaaS) | Exempt | Exempt | Exempt |
| Platform as a Service (PaaS) | Taxable | Exempt (differs) | Exempt (differs) |
| Digital B2B Products | Exempt | Exempt | Exempt |
| Payroll Services | Exempt | Exempt | Exempt |
| Data Center Purchases | Exempt | Exempt | Exempt |
| Digital Advertising Tax | No | No | No |
Sales Taxes: Consumer Goods and Services in the Base
| Variable | South Carolina | Georgia | North Carolina |
|---|---|---|---|
| Groceries | Exempt | Exempt | Exempt |
| Clothing | Taxable | Taxable | Taxable |
| Prescription Medication | Exempt | Exempt | Exempt |
| Nonprescription Medication | Taxable | Taxable | Taxable |
| Gasoline | Exempt | Exempt | Exempt |
| Landscaping | Exempt | Exempt | Exempt |
| Repair Services | Exempt | Exempt | Taxable (differs) |
| Real Estate Services | Exempt | Exempt | Exempt |
| Parking | Exempt | Exempt | Exempt |
| Dry Cleaning | Taxable | Exempt (differs) | Taxable |
| Fitness Services | Exempt | Exempt | Exempt |
| Barber Services | Exempt | Exempt | Exempt |
| Veterinary Services | Exempt | Exempt | Exempt |
| E-Books | Exempt | Taxable (differs) | Taxable (differs) |
| Streaming Video | Taxable | Taxable | Taxable |
| Medical Services | Exempt | Exempt | Exempt |
| Legal Services | Exempt | Exempt | Exempt |
| Financial Services | Exempt | Exempt | Exempt |
| Accounting Services | Exempt | Exempt | Exempt |
| Sales Tax Holiday | Yes | No (differs) | No (differs) |
Sales Taxes: Sales Tax Structure
| Variable | South Carolina | Georgia | North Carolina |
|---|---|---|---|
| Uniform Base Definitions | Yes | Yes | Yes |
| Unified Tax Administration | Yes | Yes | Yes |
| Safe Harbor for Remote Sellers | Gross Sales Threshold | Sales or Transactions Threshold (differs) | Gross Sales Threshold |
Property Taxes: Property and Capital Stock Tax Rates
| Variable | South Carolina | Georgia | North Carolina |
|---|---|---|---|
| Property Tax Collections per Capita | $1,579 | $1,735 (differs) | $1,203 (differs) |
| Property Tax as a Percentage of Personal Income | 2.60% | 2.76% (differs) | 1.83% (differs) |
| Assessment Limit | Yes | Yes | No (differs) |
| Levy Limit | No | No | No |
| Capital Stock Tax Rate | 0.1% | Fixed dollar payment schedule (differs) | 0.15% (differs) |
| Capital Stock Tax Maximum Payment | Unlimited | $5,000 (differs) | Unlimited |
| Payment Options for Capital Stock and Corporate Income Taxes | Pay both | Pay both | Pay both |
Property Taxes: Property Tax Bases
| Variable | South Carolina | Georgia | North Carolina |
|---|---|---|---|
| Tangible Personal Property Tax | Yes | Yes | Yes |
| Tangible Personal Property De Minimis Exemption | None | $20,000 (differs) | None |
| Intangible Property Tax | No | No | No |
| Inventory Tax | No | Partial (differs) | No |
| Real Estate Transfer Tax | Yes | Yes | Yes |
| Split Roll | Yes | No (differs) | No (differs) |
| Split Roll Ratio | 1.50 | 1.00 (differs) | 1.00 (differs) |
| Estate Tax | No | No | No |
| Inheritance Tax | No | No | No |
| Gift Tax | No | No | No |
Unemployment Insurance Taxes: UI Tax Rates
| Variable | South Carolina | Georgia | North Carolina |
|---|---|---|---|
| Minimum Rate | 0.06% | 0.04% (differs) | 0.06% |
| Maximum Rate | 5.46% | 8.10% (differs) | 5.76% (differs) |
| Taxable Wage Base | $14,000 | $9,500 (differs) | $34,200 (differs) |
| Most Favorable Schedule: Minimum Rate | 0.00% | 0.01% (differs) | 0.06% (differs) |
| Most Favorable Schedule: Maximum Rate | 5.40% | 5.40% | 5.76% (differs) |
| Least Favorable Schedule: Minimum Rate | 0.00% | 0.04% (differs) | 0.06% (differs) |
| Least Favorable Schedule: Maximum Rate | 5.40% | 8.10% (differs) | 5.76% (differs) |
| Employer Contributions as a Share of Total Wages | 0.20% | 0.19% (differs) | 0.28% (differs) |
| Employer Contributions as a Share of Taxable Wages | 0.73% | 1.07% (differs) | 0.64% (differs) |
| Trust Fund Solvency Ratio | 1.1 | 0.54 (differs) | 1.29 (differs) |
| New Employer Rate | 1.00% | 2.64% (differs) | 1.00% |
Unemployment Insurance Taxes: Experience Formulas and Charging Methods
| Variable | South Carolina | Georgia | North Carolina |
|---|---|---|---|
| Experience Formula Based On | Benefits Ratio | Reserve Ratio (differs) | Reserve Ratio (differs) |
| Benefits Charged in Proportion to Base-Period Wages | No (most recent or principal employer) | No (most recent or principal employer) | Yes (differs) |
| Charged If Employee's Benefit Award Is Reversed | No | No | Yes (differs) |
| Charged for Reimbursements on Combined Wage Claims | No | No | Yes (differs) |
| Charged If Employee Left Voluntarily | No | No | No |
| Charged If Employee Was Discharged for Misconduct | No | No | No |
| Charged If Employee Refused Suitable Work | No | No | Yes (differs) |
| Charged If Employee Continues to Work Part-Time | No | Yes (differs) | No |
Unemployment Insurance Taxes: Other UI Base Variables
| Variable | South Carolina | Georgia | North Carolina |
|---|---|---|---|
| Solvency Tax | No | No | No |
| Taxes for Socialized Costs or Negative Balance Employers | No | No | No |
| Loan and Interest Repayment Surtaxes | Yes | No (differs) | No (differs) |
| Reserve Taxes | No | No | Yes (differs) |
| Surtaxes for UI Administration or Non-UI Purposes | Yes | Yes | No (differs) |
| Temporary Disability Insurance | No | No | No |
| Voluntary Contributions | No | Yes (differs) | Yes (differs) |
| Years to Qualify for Experience Rating | 1 | 3 (differs) | 2 (differs) |
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About the Authors
Janelle Fritts is a Senior Policy Analyst with the Tax Foundation’s Center for State Tax Policy. She is the lead researcher on the annual State Tax Competitiveness Index and serves as a resource to policymakers in their efforts to modernize and improve the structures of their state tax codes. Her work has been cited in The New York Times, the Associated Press, Bloomberg, and numerous state media outlets across the country.
Jared Walczak is a Senior Fellow at the Tax Foundation, where he spent five years as Vice President of State Projects, and president of Walczak Policy Consulting.
Nicole Fox is a Policy Analyst with the Center for State Tax Policy at the Tax Foundation, where she serves as a resource to policymakers in their efforts to modernize and improve the structure of their state tax codes.
Katherine Loughead is the Vice President of State Tax Policy at the Tax Foundation, where she oversees the state tax policy team’s research agenda and serves as a resource to policymakers in their efforts to modernize and improve the structure of their state tax codes.
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