South Carolina Tax Exemption for Military Retired Pay

In South Carolina, the deduction for military retired pay is unlimited—100% of qualified military retirement income may be deducted from South Carolina taxable income for resident taxpayers. There is no dollar cap, no age requirement, and no income phaseout. This means that the full amount of your military retirement pay (whether $20,000, $50,000, $100,000+, etc.) can be subtracted on your South Carolina return, even though it may still be taxable at the federal level. The same full deduction also applies to eligible surviving spouses receiving military retirement benefits.