Is my military income taxable to South Carolina?

According to the South Carolina filing instructions:

If you are a resident of South Carolina, all of your income is taxable to South Carolina no matter where it was earned or the source of the income.

If you are a nonresident of South Carolina stationed in South Carolina, your active duty military pay is not taxable to South Carolina.

South Carolina should not be listed as the state on the military W-2. If it is, ask your employer for a corrected W-2 showing your correct Home of Record.

If one spouse is a resident and the other is not, and you filed a joint federal return, you must file a joint nonresident South Carolina return.

Is my military retirement taxable?

According to the South Carolina filing instructions, beginning tax year 2022, individuals may deduct all military retirement income included in their South Carolina taxable income.

If you are eligible for this retirement credit, please go to:

1. State
2. Edit (three dots)
3. Subtractions from Income
4. Social Security and Retirement Deductions
5. Enter qualified amount of military retirement income

Prior to 2022
Taxpayers with military retirement income could deduct only a portion of the income on the return.

Under age 65: In 2019 the deduction is limited to $14,600. Taxpayers must have earned income (Military retirement income not included) to claim the deduction.

Age 65 and older: In 2019, the deduction is limited to $27,000. For taxpayers over age 65, there is no requirement for earned income.

2021: Military Retirement Deduction: For the 2021 tax year, qualifying military retirees age 65 and older with taxable military retirement income may deduct up to $30,000 of military retirement income included in South Carolina taxable income. For the 2021 tax year, eligible military retirees of any age with both earned income and military retirement income may deduct up to $17,500 of earned income.

To take the Retirement Deduction on your South Carolina return (prior to 2022), follow these steps in the program:

1. State
2. Edit (three dots)
3. Subtractions from Income
4. Social Security and Retirement Deductions
5. Military Retirement

Is my reserve income taxable?

Inactive Duty Military pay is taxable on the federal return but not on the South Carolina return. If any deductions were taken on the federal return that are due to the reserve income, you must add the deductions back onto the state return.

To add the deductions taken on the federal return back to the state return, follow these steps in the program:

1. State
2. Edit (three dots)
3. Additions to Income
4. Expenses Related to National Guard and Military Reserve Income
5. Enter amount under National Guard and Military Expenses

To take the subtraction for the National Guard and Reserve members inactive duty training, follow these steps in the program:

1. State
2. Edit (three dots)
3. Subtractions from Income
4. National Guard/Reserve Annual Training and Drill Pay

Additional Information

• South Carolina filing instructions
• South Carolina Military Spouse Relief Act