(The Center Square) – Third in corporate tax rank, South Carolina is 29th among 50 states in competitive taxes as judged by the Tax Foundation’s analysis.
Policymakers, taxpayers and business leaders can gauge tax systems state to state many ways, including through the 2026 State Tax Competitiveness Index. It compares more than 150 variables in five major areas: corporate taxes; individual income taxes; sales and excise taxes; property and wealth taxes; and unemployment insurance taxes.
The state is eighth in corporate taxes; 24th in individual income taxes; 27th in unemployment insurance taxes; 28th in sales taxes; and 40th in property taxes. The overall mark is unchanged; individual income taxes are down one, and each of the other four categories improved one spot.
In its analysis, the foundation says South Carolina’s corporate tax code is competitive with a flat rate of 5%.
“However, the state also relies unusually heavily on tax credits rather than focusing on broad-based rate relief,” the report says. “The state imposes a capital stock tax without capping maximum payments. Capital stock taxes are levied against a business’s net worth (or accumulated wealth) and tend to penalize investment. Moreover, businesses are required to pay capital stock taxes regardless of profitability.”
South Carolina has two brackets for individual income tax, with a top marginal rate of 6% and a marriage penalty.
Within the 16-state South as defined by the U.S. Census Bureau, only six states are worse than South Carolina; it is fifth of the eight South Atlantic states, ahead of the Virginias and Maryland.
