According to South Carolina Instructions for Form SC-1040, below is a list of subtractions from income that South Carolina allows on the state return.
Social Security and Retirement Deductions
Taxable Social Security and Railroad Retirement Benefits are not taxable to South Carolina. Enter the taxable portion of these types of income as shown on your Federal Form 1040, Lines 16b and Lines 20b or Form 1040A Lines 12b & 14b.
Permanent Disability Retirement Income
You qualify for a deduction of Disability Retirement Income if you are totally and permanently disabled, receive income from a disability retirement plan, and eligible for the homestead exemption. The deduction is limited to disability payments received from retirement plans.
Taxable Qualified Retirement Income
South Carolina allows a Retirement Deduction for taxable Qualified Retirement Income. The maximum deduction amount is determined by your age. If you are under age 65, you may claim a deduction of up to $3,000. If you are age 65 or older, you may claim a deduction of up to $10,000.
Taxable Qualified Military Retirement
An individual taxpayer who has military retirement income, each year may deduct an amount of his South Carolina earned income from South Carolina taxable income equal to the amount of military retirement income that is included in South Carolina taxable income. Click here for additional information on the Military Retirement deduction.
Surviving Spouse Retirement Exclusion
If you are a surviving spouse receiving benefits for a decedents qualified retirement income, you may exclude up to the maximum exclusion amount based on the age the descendant would be if he or she were alive. If the decedent was under age 65 at the time of their death, the spouse may deduct up to$3,000. If the decedent was age 65 or older at the time of their death, the spouse may deduct up to $10,000.
National Guard Reserve Annual Training and Drill Pay
Income received from national Guard or Reserve members for customary annual training, weekend drills, and other inactive duty training is generally exempt from South Carolina income tax.
Out-of-state Gains Included in Your Federal Taxable Income
If you have income from out-of-state rental property; a business located outside South Carolina; or gain from real property located out of state, as reported on your Federal tax return, enter the amount of corresponding gain as a subtraction.
- NOTE: Personal service income (W-2 or business wages) is taxable to South Carolina no matter where it is earned. Do NOT deduct W-2 or business wages from your taxable income.
South Carolina offers a subsistence allowance of $8.00 per regular workday for Police and all commissioned law enforcement officers paid by South Carolina municipal, county, state governments or the federal government, full-time firefighters, and full-time emergency medical service personnel. The number of workdays to enter should be provided by your employer.
Net Capital Gain Deduction
The Net Capital Gain Deduction is automatically calculated on your South Carolina return based on the information that was carried from your Federal Schedule D. You will only enter an amount here if what is carried from your federal return needs to be adjusted.
Volunteer firefighters, rescue squad workers, volunteer hazardous material HAZMAT team members, reserve police officers, Department of Natural Resource (DNR) deputy enforcement officers, members of the State Guard, and State Constables are allowed to deduct $3,000. If a taxpayer and spouse both qualify, enter $6,000.
Contributions To South Carolina Tuition Prepayment Program Or College Investment Program
You may deduct 100% of any contributions to the South Carolina Investment Program (Future Scholar) made between January 1, 2017 to April 15, 2018 and you may also deduct 100% of any contribution to the South Carolina Tuition Prepayment Program made between January 1, 2017 to December 31, 2017.
Form SC I-335 Active Trade or Business Income Deduction
Form I-335, Active Trade or Business Income Reduced Rate Computation, identifies active trade or business income and calculates the tax at a flat income tax rate instead of the graduated income tax rate that applies to ordinary income. DO NOT complete Form SC I-335 if your SC taxable income is less than or equal to $10,960.
Consumer Protection Services
If you purchased a monthly or annually contract or subscription for identity theft protection and resolution services, you may deduct these costs. This deduction is only for taxpayers who file a SC return between 1998-2012. The deduction is limited to $300 for an individual and $1,000 on a joint return.
For more information regarding these South Carolina subtractions from income, please click here.
To enter any of the above subtractions to income within your account, please follow the steps below:
- State Section
- Edit (blue pencil)
- Subtractions from Income