South Carolina joins more than two dozen states that do not tax military retirement. Beginning with tax year 2022, all military retirement pay is exempt from South Carolina Individual Income Tax.
- Earlier this year, the governor signed the Workforce Enhancement and Military Recognition Act, which exempts all military retirement pay that is included in South Carolina taxable income from the state's Income Tax, no matter the taxpayer's age.
- This deduction also can be claimed by a surviving spouse receiving military retirement income from their deceased spouse.
- This exemption does not have an earned income cap.
According to the South Carolina Department of Veterans' Affairs (SCDVA), almost 400,000 military veterans live in South Carolina, and the state has the 8th highest total of military retirees in the nation.