South Carolina does not tax Social Security Disability Insurance (SSDI) benefits

South Carolina has no state income tax on SSDI payments. This means you will not owe South Carolina state tax on your federal disability benefits, regardless of how much you receive or what other income you have. The state treats SSDI the same way it treats Social Security retirement benefits — both are exempt from state taxation.

However, you may still owe federal income tax on your SSDI, depending on your total income for the year. The federal tax treatment is separate from South Carolina's rule. You should plan for both when you file your annual return.

Key Takeaways

  • South Carolina does not tax SSDI payments at the state level, so you owe no state income tax on those benefits.
  • Federal income tax on SSDI is determined by your total income and filing status, not by South Carolina law.
  • If you have other income sources (wages, interest, pensions), you may owe federal tax even though SSDI itself is not taxed by the state.
  • You do not need to file a South Carolina state return if SSDI is your only income, but you may need to file a federal return.

How South Carolina's tax exemption works

South Carolina's exemption applies to all SSDI payments you receive from the Social Security Administration. The state does not tax these benefits under its income tax code. This is a blanket rule — it does not depend on your age, your reason for receiving disability, or how long you have been on the program.

The exemption also covers Supplemental Security Income (SSI) if you receive that program instead of or in addition to SSDI. Both are treated as non-taxable income for South Carolina purposes.

Federal tax on SSDI is separate from South Carolina tax

Even though South Carolina does not tax SSDI, the federal government may. Whether you owe federal tax depends on your combined income — that is, SSDI plus any other income you have, such as wages, self-employment income, interest, dividends, or pensions.

The federal threshold for owing tax on SSDI is based on your filing status and total income. If SSDI is your only income and it is below the threshold for your filing status, you will not owe federal tax. If you have other income, you may owe federal tax even if your SSDI alone would not trigger a tax bill.

The Social Security Administration sends you a Form SSA-1099 each January showing how much SSDI you received in the previous year. You use this form to report your benefits on your federal tax return.

When you must file a federal return but not a South Carolina return

Many people who receive SSDI in South Carolina must file a federal return but do not need to file a state return. This happens when your total income is high enough to require a federal return but you have no South Carolina taxable income (since SSDI is exempt).

For example, if you received $15,000 in SSDI and $8,000 in wages, you would likely owe federal tax on part of your SSDI. You would file a federal return. But you would not file a South Carolina return because South Carolina does not tax SSDI, and the wages alone might not reach South Carolina's filing threshold.

Check the current federal filing thresholds each year, as they change. The Social Security Administration website and the IRS website both publish these thresholds by filing status and age.

Other South Carolina tax considerations for people on SSDI

South Carolina does not have a state income tax at all — it was eliminated in 2024. This means no one in South Carolina owes state income tax on any source of income, including wages, pensions, interest, or SSDI. You will not receive a South Carolina tax bill regardless of your income level.

However, South Carolina does have other taxes, such as sales tax and property tax. These are not affected by whether you receive SSDI. If you own property, you may owe property tax. If you make purchases, you pay sales tax like any other resident.

What to do if you receive SSDI and live in South Carolina

Each January, check your mail for Form SSA-1099 from the Social Security Administration. This form shows your SSDI income for the previous year. Keep it with your tax records.

If you have other income (wages, self-employment, interest, pensions), add it to your SSDI amount to find your total income. Use this total to determine whether you must file a federal return. You can use the IRS filing threshold tool on irs.gov or speak with a tax preparer.

You do not need to file a South Carolina state return. South Carolina has no state income tax, so there is no state return to file for anyone.

Frequently Asked Questions

Do I owe South Carolina tax on my SSDI?

No. South Carolina does not tax SSDI payments. The state has no income tax on any source of income as of 2024, so you will not owe state tax on your disability benefits.

Will I owe federal tax on my SSDI?

It depends on your total income. If SSDI is your only income and it is below the federal threshold for your filing status, you will not owe federal tax. If you have other income, you may owe federal tax on part of your SSDI. Check the IRS filing thresholds for your age and filing status each year.

What form shows how much SSDI I received?

The Social Security Administration sends you Form SSA-1099 each January. It lists your total SSDI payments for the previous year. You use this form to report your benefits on your federal tax return if you must file one.

Can I file my taxes myself, or do I need a tax preparer?

You can file yourself using free tax software if your situation is straightforward (SSDI plus maybe one other income source). If you have multiple income sources, investments, or are unsure whether you must file, a tax preparer or the IRS Free File program can help.

What if I moved to South Carolina from another state that taxes SSDI?

You only owe tax to the state where you live. Once you move to South Carolina, you follow South Carolina's rules — no state income tax on SSDI. You may still owe federal tax based on your total income.