Retirement brings with it a slower pace of life. You won’t have to worry about work anymore, and you’ll have plenty of time for hobbies and to do the things you prefer! However, this raises two important questions. Where exactly should you spend your retirement years? And what about retirement taxes? Thankfully, South Carolina is the answer to all your worries. Not only is it one of the best places to retire, but it is also extremely tax-friendly. In fact, according to Kiplinger, South Carolina is the top 6 retirement spot in the United States. Hence, read on to know more about South Carolina retirement taxes, and what exactly makes it so great.
What is one of the best ways to stretch your dollar? Save on property taxes. And in South Carolina, you can enjoy the low effective property tax rate at just 0.57%. In fact, this is significantly lower than the national average of 1.1%. If that sounds enticing, there is better news for you. If you choose to spend your retirement in South Carolina, you will eventually end up as a legal resident of South Carolina. And that means you can enjoy more tax benefits. Specifically, you will be exempted from property taxes (also known as the Homestead Tax Exemption) as long as you are over the age of 65. Essentially, that means the first $50,000 of your home is exempt from the municipal, county, school, and real property taxes. To enjoy this benefit, simply apply for it at your county auditor’s office.
Social Security Taxes
Another great tax benefit that you will love in South Carolina is Social Security taxes. But what exactly is Social Security taxes? Social Security tax refers to the tax paid by both employers and employees in the United States to fund the Social Security program. And typically, you (if you are an employer or employee) will have to pay 6.2% of your wage to the Social Security tax in the United States. If you are self-employed, you will have to pay a higher Social Security tax of 12.4%. Sounds terrifyingly high, doesn’t it? Thankfully, you do not need to pay for any Social Security taxes in South Carolina. You do not need to pay a single cent for Social Security taxes, and yet you can still enjoy the Social Security benefits. And that also means your retirement income can go even further in South Carolina.
Other Tax Breaks
Apart from the exemptions to social security taxes and property taxes, what else makes South Carolina so tax-friendly? Here in South Carolina, you can enjoy retirement income deductions. Specifically, you can claim up to a large sum of $10,000 for retirement income deductions. And that means as long as you are 65 years old, you can deduct up to $10,000 in retirement income, from pensions, IRAs, and many others. On top of this benefit, you can also enjoy state income tax deductions. Specifically, you can deduct up to $15,000 deductions from South Carolina’s state income tax.