Active-duty pay
Taxed
Active-duty pay taxable; combat zone exempt.
State Guide · SC
South Carolina — Military Tax Treatment
South Carolina fully exempted military retirement in 2022, joining most southeastern states. Active duty and Guard pay are still fully taxable.
Tax treatment at a glance
Guard & Reserve drill pay
Taxed
Guard and Reserve drill pay is taxable South Carolina income. SCRA protections apply during federal activation but not routine drill.
Military retirement pay
Fully Exempt
Military retirement pay fully exempt as of 2022.
The numbers · verified for tax year 2025
Top marginal rate
6%
Retirement-pay exemption
Full
Beginning with tax year 2022, South Carolina fully deducts all military retirement income — no age requirement, no dollar cap, no phase-in (S.C. Code Ann. § 12-6-1171).
Standard deduction
South Carolina starts from federal taxable income and has no separate state standard deduction, so the federal standard deduction effectively carries over. The graduated rate tops out at 6% for 2025 and has been accelerating downward.
VA disability compensation
Always tax-free
Federally tax-free under 38 USC § 5301. No state taxes VA disability compensation as income — South Carolina included.
Survivor Benefit Plan (SBP)
Follows retirement
South Carolina fully exempted military retirement in 2022 — SBP annuities are generally exempt under the same provision.
Federal rules that override state law
SCRA — Servicemembers Civil Relief Act
Active-duty servicemembers pay state income tax only to their state of legal domicile — not the state where they are stationed. If you are from Texas and stationed in South Carolina, South Carolina cannot tax your military pay. This applies during all active duty periods and during Guard/Reserve mobilizations on federal (Title 10) orders.
MSRRA — Military Spouses Residency Relief Act
Military spouses can maintain their home-state domicile even when living in a different state due to their servicemember's orders. A spouse who is a Texas resident following their servicemember to South Carolina can keep Texas as their tax domicile and avoid South Carolina state income tax on their wages.
Guard & Reserve — the SCRA gap
SCRA pay protections apply during federal (Title 10) activation orders. During routine drill weekends and state-only activations, Guard and Reserve members are state residents serving in their home state — SCRA does not protect their drill pay from state income tax. Whether South Carolina exempts that pay is the state-specific question answered above.
Filing watch-outs
- 01Retirement exemption: SC I-330 or Form SC1040 with the military retirement deduction
- 02Guard members: drill pay is taxable SC income — withhold SC taxes
Veteran-specific tax benefits
Disabled veteran property tax exemption.
Official authority
https://dor.sc.gov/ ↗State tax law changes annually. Verify current rules with the South Carolina Department of Revenue before making any tax decision.
South Carolina military tax — common questions
Does South Carolina tax military retirement pay in 2026?
South Carolina fully exempts military retirement pay. Military retirement pay fully exempt as of 2022.
Does South Carolina tax active-duty military pay?
South Carolina taxes active-duty military pay for state residents. Active-duty pay taxable; combat zone exempt. Under the SCRA, South Carolina can only tax the military pay of service members who are legally domiciled in South Carolina — not those merely stationed there.
Does South Carolina tax National Guard and Reserve drill pay?
South Carolina taxes Guard and Reserve drill pay. Guard and Reserve drill pay is taxable South Carolina income. SCRA protections apply during federal activation but not routine drill.
Is VA disability compensation taxed in South Carolina?
No. VA disability compensation is federally tax-free under 38 U.S.C. § 5301, and no state — including South Carolina — taxes it as income.
If I'm stationed in South Carolina but claim another state, can South Carolina tax my military pay?
No. Under the Servicemembers Civil Relief Act (SCRA), active-duty pay is taxable only by your state of legal domicile, not the state where you are stationed. If your domicile is elsewhere, South Carolina cannot tax your active-duty military pay. Military spouses get the same protection under the MSRRA.
Related tools
Other state guides