South Carolina Payroll Tax Guide (2026)
South Carolina keeps payroll light: no local wage tax, no state minimum wage law, no employee-funded disability program. Employers withhold income tax at 0%, 3% and 6% using the SC W-4, and pay unemployment tax between 0.060% and 5.460% on $14,000.[6]
South Carolina payroll at a glance
South Carolina has two state payroll taxes: graduated income tax withheld from employees, and unemployment insurance contributions that employers pay alone on the first $14,000 each worker earns.[6]
What changed for South Carolina payroll in 2026
Five items moved for South Carolina employers this year. Anything below is what have changed since the 2025 tables, so a rate card carried over from last year will be wrong in at least one place.
2026 South Carolina payroll tax calculator
Enter one employee’s annual gross wages to see what the employer owes, what comes out of the paycheque, and the true cost of employment.
Employer pays
Withheld from the employee
State income tax withholding is not included above: it depends on the employee’s Form SC W-4, South Carolina Employee’s Withholding Allowance Certificate, 2026 version. South Carolina requires its own certificate rather than relying on the federal W-4, and the employer may be required to send a copy to SCDOR. and filing status, so it cannot be estimated from gross pay alone.
Payroll tax rates & the nexus question
South Carolina runs three state payroll taxes. The table below is the whole state layer for 2026.[6]
The state payroll taxes
| Tax | Paid by | 2026 rate | Wage base |
|---|---|---|---|
| UI | Employer | 0.060%–5.460%; 1.060% new | $14,000 |
| Departmental Administrative Contingency Assessment | Employer | 0.06% | $14,000 |
| Income tax withholding | Employee | 0.00%–6.00% | No limit |
South Carolina assigns each experienced employer to one of 20 rate classes by benefit ratio. For 2026 the total effective rate runs from 0.060% in class 1 to 5.460% in class 20, every class includes the 0.06% Departmental Administrative Contingency Assessment, and DEW states that no solvency surcharge will be imposed for 2026. DEW also states that 2026 rates will decrease or remain unchanged from their 2025 levels.[6]
Who has to register
Under South Carolina Code Section 41-27-210 an employing unit becomes an employer once it pays $1,500 or more in wages for service in employment in any calendar quarter in the current or preceding calendar year, or once it has at least one individual in employment for some portion of a day in each of 20 different calendar weeks, consecutive or not, in the current or preceding year.[6] Income tax withholding is administered separately by South Carolina Department of Revenue, so most employers end up with two state account numbers, not one.
Multistate and remote employees
When an employee works in more than one state, the four-part test below decides which state the wages are reported to. The tests run in order: you stop at the first one that gives an answer.
- 1. Localisation of service→
- 2. Base of operations→
- 3. Place of direction & control→
- 4. Employee’s residence
One remote employee is usually enough. A single person working from home in South Carolina generally creates an obligation to register and report wages here, even if the business has no office, property or customers in the state.
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Ask a Payroll SpecialistRegistration & return filing
Registration is online and free. The unemployment account and, where one exists, the withholding account are opened separately and carry different numbers.[6]
How to register
- Cross the wage threshold→
- State Unemployment Insurance Tax System (SUITS)→
- Receive account number→
- Annual tax rate notice delivered through SUITS, where employers can also view their rate history→
- File & deposit online
Under South Carolina Code Section 41-27-210 an employing unit becomes an employer once it pays $1,500 or more in wages for service in employment in any calendar quarter in the current or preceding calendar year, or once it has at least one individual in employment for some portion of a day in each of 20 different calendar weeks, consecutive or not, in the current or preceding year.[6]
Deposit schedule
Resident withholding agents pay on the same frequency as their federal deposits. Non-resident withholding agents pay quarterly if they withhold under $500 a quarter, due by the last day of the month following the quarter, and monthly if they withhold $500 or more a quarter, due by the 15th of the following month.[1]
Returns, reports & due dates
| Form | What it is | Due |
|---|---|---|
| Quarterly unemployment insurance wage report and contribution payment, filed in SUITS; employer status is established on Form UCE-151, Employer Status Report | Quarterly unemployment return | April 30, July 31, October 31, January 31 |
| Form WH-1605 for the first, second and third quarters, and Form WH-1606 for the fourth… | Income tax withholding returns | Resident withholding agents pay on the same frequency as their federal |
| Annual reconciliation | Year-end withholding reconciliation | January 31 |
| Form 941 | Federal quarterly return | Last day of the month after quarter end |
| Form 940 | Federal unemployment, annual | January 31 |
| New hire report | Report of newly hired employees | Within 20 days of start date |
Quarterly unemployment returns are due April 30, July 31, October 31, January 31. A return filed one day late is delinquent, and in most states the penalty attaches to the return, not the payment.[6]
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Subject wages vs. exempt payments
Not every dollar an employee receives is a taxable wage. The split below governs what goes into the unemployment wage base and what is reported at year end.[6]
Subject wages
- Salaries, hourly pay, overtime and piece rates
- Commissions, bonuses and incentive pay
- Most cash tips reported by the employee
- Vacation, holiday and paid sick leave when taken as wages
- Severance and payments in lieu of notice
- The cash value of meals and lodging provided as compensation
- Employer contributions to a non-qualified deferred compensation plan
Not subject
- Reimbursements of genuine business expenses under an accountable plan
- Employer contributions to a qualified retirement plan
- Employer-paid premiums for accident and health insurance
- Most third-party sick pay after the sixth calendar month
- Payments to a genuine independent contractor
- Workers compensation benefits
The wage base is per employer, per year, not per job. If you hire someone in August who already earned $14,000 elsewhere, your unemployment clock still starts at zero. The one exception is a successor employer taking over an existing payroll, who inherits the wages already paid.
Glossary of key terms
- Taxable wage base
- The slice of each employee’s annual pay that unemployment tax is calculated on. In South Carolina that is $14,000 for 2026. Earnings above it are still wages, they are simply no longer taxed for unemployment.
- Experience rating
- The method South Carolina Department of Employment and Workforce uses to set each employer’s own unemployment rate from its history of claims. Employers with fewer charged claims move down the schedule; those with more move up.
- New employer rate
- The rate assigned before an employer has enough history to be experience rated. It normally applies for two to three years, then the account moves onto the experience schedule.
- Form SC W-4, South Carolina Employee’s Withholding Allowance Certificate, 2026 version. South Carolina requires its own certificate rather than relying on the federal W-4, and the employer may be required to send a copy to SCDOR.
- The state withholding certificate. It sets how much income tax comes out of each cheque and is filed with the employer, not with South Carolina Department of Revenue.
- Reserve account
- The running balance of contributions an employer has paid in, less the benefits charged against it. The ratio of that balance to taxable payroll is what drives the assigned rate.
- Successor employer
- A business that acquires another’s payroll may inherit both its experience rate and the wages already paid toward the wage base for the year. Getting this wrong is a common acquisition error.
- Localisation of service
- The first of four tests deciding which state a multistate employee’s wages are reported to. If substantially all the work is in one state, that state wins and the remaining tests are never reached.
- FUTA credit reduction
- A reduction in the 5.4% federal unemployment credit applied to states that have carried an outstanding federal loan for two or more consecutive Januaries. It raises the effective FUTA rate and is settled each November.
- Supplemental wages
- Bonuses, commissions, awards and similar payments made outside the regular payroll cycle. Many states set a separate flat withholding rate for them.
South Carolina payroll tax, layer by layer
Federal tax applies everywhere and is the larger number. The state layer is what changes when you cross a border.
Layer 1: Federal
| Tax | Rate | 2026 base |
|---|---|---|
| Social Security | 6.2% each side | $184,500 |
| Medicare | 1.45% each side | No limit |
| Additional Medicare | 0.9% employee only | Over $200,000 |
| FUTA, standard | 0.6% net | $7,000 |
| Federal income tax | Per Form W-4 | No limit |
South Carolina has no FUTA credit reduction for 2026, so the standard 0.6% net rate applies, $42 per employee. The final list is not published until 10 November 2026.[14]
Layer 2: State
| Tax | Rate | 2026 base |
|---|---|---|
| UI, new employer | 1.060% | $14,000 |
| UI, experienced | 0.060%–5.460% | $14,000 |
| Departmental Administrative Contingency Assessment | 0.06% | $14,000 |
| Income tax, standard | 0.00%–6.00% | No limit |
Layer 3, county & city: no payroll tax, but a wage floor
No county or city in South Carolina levies its own payroll or income tax withheld by employers. The local layer shows up as minimum wage, not as tax.[10]
The state minimum wage is $7.25 an hour, which is the federal floor, effective 2009-07-24. The tipped cash wage is $2.13. No local ordinance sets a higher floor. South Carolina has no state minimum wage law, so employers subject to the Fair Labor Standards Act must pay the federal minimum wage of $7.25 an hour. No South Carolina city or county sets a separate rate, and the tipped cash wage and tip credit are the federal figures.[10]
Overtime exemption is a separate test. A salaried employee is exempt from overtime only above $35,568 a year ($684.00 a week) federal FLSA, and only if the duties test is also met. Paying a salary is not by itself enough.[13]
South Carolina payroll FAQs
New employers go into rate class 30, which carries a 1.000% base rate plus the 0.06% contingency assessment, giving a total effective rate of 1.060% on the first $14,000 each employee earns. The rule is that a new employer gets whichever is higher, the class 12 rate for the year or one percent. Experienced employers sit in classes 1 through 20, from 0.060% up to 5.460%.
Once it pays $1,500 or more in wages in any calendar quarter in the current or preceding calendar year, or once it has at least one person in employment for some portion of a day in each of 20 different calendar weeks in the current or preceding year. Registration, wage reporting and payment all run through SUITS.
SCDOR’s 2026 withholding formula first takes a standard deduction of 10% of gross wages capped at $7,500, plus $5,000 for each allowance claimed on the SC W-4. It then withholds nothing on the first $3,640, 3% from 3,640 to $18,230, and 6% above $18,230. Use the 2026 tables or the 2026 formula, not the prior year versions.
Form WH-1605 covers the first, second and third quarters and Form WH-1606 covers the fourth quarter and doubles as the annual reconciliation. All four are due by the end of the month after the quarter closes: 30 April, 31 July, 31 October and 31 January. Both forms are filed on MyDORWAY.
No. South Carolina has no state minimum wage law, so employers subject to the Fair Labor Standards Act pay the federal $7.25 an hour, with a tipped cash wage of $2.13 and a maximum tip credit of $5.12. No South Carolina city or county sets its own rate.
No. There is no state disability insurance, paid family leave premium or employee unemployment contribution in South Carolina, and no local wage tax anywhere in the state. Unemployment insurance is funded entirely by employers, so income tax withholding is the only state deduction from a South Carolina paycheck.
$14,000 per employee per calendar year. Once an employee reaches that in wages from you, no further unemployment tax is due on that employee for the rest of the year. The count restarts on 1 January and does not carry over from a previous employer.
$7.25 an hour, which matches the federal floor. No local ordinance sets a higher rate. The tipped cash wage is $2.13.
April 30, July 31, October 31, January 31. A return is delinquent the day after the deadline even if the tax itself was paid on time, so file the return whether or not you can pay.
Sources & methodology
- South Carolina Department of Revenue – Withholding Tax
- South Carolina Department of Revenue – 2026 SC Withholding Tax Formula (WH-1603F)
- South Carolina Department of Revenue – 2026 SC Withholding Tables (WH-1603)
- South Carolina Department of Revenue – 2026 SC W-4, South Carolina Employee’s Withholding Allowance Certificate
- South Carolina Department of Revenue – Individual Income Tax
- South Carolina Department of Employment and Workforce – Tax Rate Information
- South Carolina Department of Employment and Workforce – State Unemployment Insurance Tax System (SUITS)
- South Carolina Department of Employment and Workforce – Unemployment Insurance Tax Forms
- South Carolina General Assembly – Code of Laws Title 41 Chapter 27, definition of employer (Section 41-27-210)
- US Department of Labor, Wage and Hour Division – State Minimum Wage Laws, updated 1 July 2026
- US Department of Labor, Wage and Hour Division – Minimum Wage
- US Department of Labor, Wage and Hour Division – Fact Sheet 15: Tipped Employees Under the FLSA
- US Department of Labor, Wage and Hour Division – Earnings thresholds for the EAP exemption (salary levels)
- Internal Revenue Service – Tax Topic 759, Form 940 and Federal Unemployment Tax
Need help with South Carolina payroll compliance?
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