SC Exempts Military Retirement

Beginning with tax year 2022, all military retirement pay is exempt from South Carolina Individual Income Tax. This exemption does not include any earned income cap. South Carolina joins more than two dozen states that do not tax military retirement. Those of you who receive this income may want to adjust any SC withholding on this so that you will have more money in your pocket throughout the year.

Also, note that this will replace the $15,000 SC retirement deduction that you may have received in the past. So you will not get both, but if the military amount is higher, then you are certainly better off. Your spouse will continue to receive their own separate retirement deduction if they are entitled to one.