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SC Increases Retirement Pay Deduction

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Recently, South Carolina Governor Nikki Haley signed a law increasing the amount of military retired pay that can be deducted from gross income when filing state income tax for veterans receiving retired pay and surviving spouses receiving survivors' benefits.

South Carolina joins 17 other states that exempt a portion of, or all military retired pay from state income tax. See our State Retirement Income Tax page for details. Nine states currently do not have any state income tax. By increasing the deduction to $17,500 for retirees under age 65 and $30,000 for those 65 and older, the new law almost totally eliminates state income tax on military retired pay.

Currently, veterans’ retirement income tax exemption for those 64 and younger is $3,000. Under the new law, SC military pay exemptions will be phased in over a period of five years. Under the new law, exemptions will go up to :

  • $5,900 in 2016
  • $8,800 in 2017
  • $11,700 in 2018
  • $14,600 in 2019
  • $17,500 in 2020

For ages 65 and older, tax exemption is $15,000 under the current law. Under the new law, that figure increases to:

  • $18,000 in 2016
  • $21,000 in 2017
  • $24,000 in 2018
  • $27,000 in 2019
  • $30,000 in 2020

For information about other benefits available to residents of SC see our South Carolina State Veterans Benefits page, or for details on the state where you live see our State Veterans' Benefits page.

 

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