18 Feb Financial and Tax Advantages of Retiring in South Carolina
South Carolina is known for its Southern hospitality and incredible charm. Retiring in this beautiful state will give you more than gorgeous views and quaint little towns — South Carolina offers multiple tax advantages.
Tax Friendliness in South Carolina
Buying a retirement home in Summerville might be a wise financial decision. A South Carolina retirement would mean that you won’t get taxed on your Social Security benefits or railroad retirement income.
In addition, the state allows retirees and senior adults to make special deductions when filing their taxes. From the time you start receiving qualified retirement income until the age of 65, you can take an annual deduction of $3000 from your retirement income. This deduction can be claimed on income received from any qualified retirement plans, such as IRAs, government pension plans, Keogh plans, and private sector pensions.
People 65 or older can claim deductions up to $15,000 on any source of income, and this also applies to their spouses.
South Carolina Boasts Lowest Property Taxes in the Country
South Carolina retirement homes are one of the best investments you can make. The state has one of the lowest property tax rates in the United States. According to Investopedia, SC had the fifth-lowest property tax rate in the nation. Family residences are assessed at 4 percent, a lower ratio than commercial properties, although both are below the national average. Homeowners are then taxed at this lower ratio on the assessed value of their home.
Retirees who are 65 years of age or older, as well as disabled and legally blind people, can benefit from a $50,000 homestead exemption on the fair market value of their residential property.
In 2018, the national property tax average was 1.21 percent. A South Carolina resident pays less than half this rate (0.57 percent) on a home valued at $250,000. In Berkeley County, homes worth around $150,000 are taxed at 0.51 percent. In Dorchester County, the county collects 0.67 percent of the property’s assessed market value in taxes. In Charleston County, that number is even lower — on average, the county collects 0.5 percent of the residential property’s value in taxes.
Personal property taxes in South Carolina are collected on cars, trucks, motorcycles, recreational vehicles, boats, and airplanes. There is a 5 percent tax on all vehicles, including airplanes and boats. The state assesses a personal income tax with a maximum of 7 percent in six tax brackets. The sales tax was at 6 percent in 2018.
Retiring in South Carolina means that you will not pay more than you need on your home. With favorable property taxes and a comfortable cost-of-living, South Carolina is a financially smart investment.