State Retirement Income Tax Deduction

2025-2026 Bill 5364: State Retirement Income Tax Deduction - South Carolina Legislature Online

South Carolina General Assembly
126th Session, 2025-2026
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H. 5364
STATUS INFORMATION
General Bill
Sponsors: Rep. J.L. Johnson
Document Path: LC-0563SA26.docx
Introduced in the House on March 11, 2026
Currently residing in the House Committee on
Ways and Means
Summary: State Retirement Income Tax Deduction
HISTORY OF LEGISLATIVE ACTIONS

Date

Body

Action Description with journal page number

3/11/2026

House

Introduced and read first time (
House Journal-page 30
)

3/11/2026

House

Referred to Committee on
Ways and Means
(
House Journal-page 30
)

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legislative information
at the website
VERSIONS OF THIS BILL
03/11/2026

A bill

TO AMEND THE SOUTH
CAROLINA CODE OF LAWS BY ADDING SECTION
12-6-1172
SO AS TO ALLOW A SOUTH
CAROLINA INCOME TAX DEDUCTION OF ALL SOUTH CAROLINA STATE RETIREMENT INCOME;
AND BY AMENDING SECTION
12-6-1170
, RELATING TO RETIREMENT INCOME DEDUCTIONS, SO
AS TO MAKE A CONFORMING CHANGE
.

B
e it enacted by the
General Assembly of the State of South Carolina:

S
ECTION 1.
A
rticle 9, Chapter 6, Title 12 of the S.C. Code is
amended by adding:

S
ection
12-6-1172
.
(
A) An individual
taxpayer may deduct all South Carolina state retirement income that is included
in South Carolina taxable income.

(
B)
The term "retirement income," as used in this section, means the total of all
otherwise taxable income not subject to a penalty for premature distribution
received by the taxpayer or the taxpayer's surviving spouse in a taxable year
from a qualified South Carolina state retirement plan as provided for in Title
9. For purposes of a surviving spouse, "retirement income" also includes a
retirement benefit plan and dependent indemnity compensation related to the
deceased spouse's South Carolina state service.

(
C) A
surviving spouse receiving South Carolina state retirement income that is
attributable to the deceased spouse shall apply this deduction in the same
manner that the deduction applied to the deceased spouse. If the surviving
spouse also has another retirement income, an additional retirement exclusion
is allowed.

(
D)
The department may require the taxpayer to provide information necessary for
proper administration of this subsection.

S
ECTION 2.
S
ection
12-6-1170
(C) of the S.C. Code is amended to
read:

(
C)
(
1) Notwithstanding any other
provision of this section, if a taxpayer claims a deduction pursuant to Section
12-6-1171
or
12-6-1172
, then the deduction allowed
by this section must be reduced by the
cumulative

amount the taxpayer deducts pursuant to Section
12-6-1171

or
12-6-1172
; however, this subsection does not apply if the deduction
claimed pursuant to Section
12-6-1171
or
12-6-1172

is claimed by a surviving spouse.

(
2)
In the case of married taxpayers who file a joint federal income tax return,
the reduction required by item (1) applies to each individual separately, so
that the reduction only applies to the amount the individual claiming the
deduction pursuant to Section
12-6-1171
or
12-6-1172

otherwise could have claimed pursuant to this section if the individual had not
filed a joint return.

S
ECTION 3. This act takes effect upon approval
by the Governor and applies to income tax years after 2026.

----XX----

This web page was last updated on March 11, 2026 at 11:22 AM