South Carolina recently released Information Letter 2024-16 (Tax Legislative Update for 2024). The letter includes legislative updates to South Carolina’s income tax withholding rates, effective July 2, 2024, and beyond. Under the new legislation, income tax must be withheld at the maximum individual tax rate – instead of 7%- for the following types of income:
- Prizes or winnings of $500 or more for individuals, partnerships, trusts and estates;
- Rent or royalty payments to nonresidents;
- Distributions by a trust or estate to a nonresident beneficiary;
- Purchases of real property from a nonresident seller; and
- Wages paid to an individual who fails to provide a taxpayer identification number.
For 2024, the maximum individual income tax rate was 6.2%. For 2025, the rate was projected to be reduced to 6.1% if general fund revenues were projected by the Revenue and Fiscal Affairs Office to increase by at least 5%. That condition was not met, so the rates will remain at 6.2% for 2025. Prior to this legislative change, withholding for these income types was set at a flat 7% rate and was not adjusted on an annual basis.
South Carolina Information Letter 2024-16 can be found here.
