--- title: "South Carolina Payroll 2026: 5.21% Top Tax & UI" description: "South Carolina's 2026 reform sets income tax at 1.99% then a 5.21% top rate, with a $14,000 unemployment wage base and 1.06% new-employer rate. Teamed EOR guide." canonical: https://www.teamed.global/country-hiring-guides/united-states/south-carolina/state-income-tax-and-unemployment-insurance --- United States · South Carolina · State tax child Served by Teamed US Inc., Delaware · Payroll via SUNA Solutions # How does *South Carolina state income tax and unemployment insurance* work in 2026? South Carolina's 2026 reform replaced its old brackets with two rates: 1.99% on income under $30,000 and a 5.21% top rate above it. Employers also fund a $14,000 unemployment wage base at an effective 1.06% new-employer rate. Last reviewed 17 July 2026 · South Carolina, United States guide ![The historic Charleston, South Carolina waterfront at golden hour: pastel antebellum row houses along the Battery, palmetto trees, and church steeples rising above the harbour under a warm Lowcountry sky.](/cluster-assets/country-hiring-guides/united-states/south-carolina/state-income-tax-and-unemployment-insurance/images/hero.webp) Illustration · Charleston, South Carolina South Carolina just rewrote its income tax and left the payroll plumbing exactly where it was. H.4216, the 2026 reform, scrapped the old three-bracket system and put two rates in its place: **1.99%** on taxable income under **$30,000** and a **5.21%** top rate above that, down from 6% the year before. The rate changed; your filing obligations did not. Your employer cost sits in two boxes. State withholding follows the new 2026 tables and the redesigned [SC W-4](https://dor.sc.gov/forms), so you collect a fresh form from every employee. [Unemployment insurance](https://www.dew.sc.gov/employers/tax-rate-information) runs on a **$14,000 wage base** at an effective **1.06%** new-employer rate, then moves onto experience rating between 0.06% and 5.46%. ## Does South Carolina have a state income tax in 2026, and what is the rate? Yes. For 2026 South Carolina charges **1.99%** on taxable income below **$30,000** and a **5.21%** top rate on income at or above that, under [H.4216](https://www.scstatehouse.gov/sess125_2023-2024/bills/4216.htm), the reform signed in March 2026. The old graduated brackets, topping out at 6%, are gone. The top rate has been cut year on year: 6.2% in 2024, 6% in 2025, and 5.21% now. The reform also builds in a trigger that lowers the top rate further in future years when state revenue grows fast enough. Plan for the trajectory. South Carolina ran a graduated system for years, then compressed it: the top marginal rate stepped from 6.2% in 2024 to 6% in 2025, and [H.4216](https://www.scstatehouse.gov/sess125_2023-2024/bills/4216.htm) reset the whole structure to two rates for 2026, with 5.21% at the top. Further reductions are written into the law, fired only when the Board of Economic Advisors projects revenue growth of 5% or more, and capped so a cut cannot cost the state more than 200 million dollars in a year. For your employee, each step down is real take-home pay. For your finance team, the effective South Carolina withholding line drifts lower over time rather than holding flat, but your obligation does not. You still register for withholding with the [South Carolina Department of Revenue](https://dor.sc.gov/), collect a signed SC W-4, remit on your assigned schedule, and reconcile annually. Compare the approach to how neighbouring states handle it: [North Carolina state tax](/country-hiring-guides/united-states/north-carolina/state-income-tax-and-unemployment-insurance) runs a flat 4.5% structure with no trigger mechanism. The rate changed here; the filing did not. ## How do you withhold South Carolina tax on wages in 2026? Regular wages are withheld using South Carolina's 2026 withholding tables, which already reflect the H.4216 rates of 1.99% and 5.21%. You and your payroll system had to switch to the 2026 tables and the redesigned [2026 SC W-4](https://dor.sc.gov/forms) from 1 January 2026. Because the brackets changed mid-cycle, your job is collecting a current SC W-4 from every employee and confirming your payroll system uses the new tables, not last year's. H.4216 reset the tables, so a payroll run that still uses the 2025 figures withholds the wrong amount. The [South Carolina Department of Revenue](https://dor.sc.gov/) publishes one set of withholding tables that bakes the 1.99% lower rate and the 5.21% top rate into the per-pay-period maths, after the allowances your employee claims on the SC W-4. Get the form on file and point the system at the 2026 tables, and regular-wage withholding runs correctly. Your [wage and overtime obligations](/country-hiring-guides/united-states/south-carolina/wage-overtime-and-meal-break-law) sit alongside this, as do your [leave obligations](/country-hiring-guides/united-states/south-carolina/paid-family-and-sick-leave). Supplemental pay, such as a bonus paid separately, is the one area to confirm before you run it. The [SCDOR](https://dor.sc.gov/) reissued its withholding guidance for 2026, but the precise supplemental flat rate sits inside the [WH-1603A instructions](https://dor.sc.gov/forms) and is worth checking against the current document rather than carrying over a prior-year number. When in doubt, combine the bonus with the most recent regular wage payment and withhold on the total using the 2026 tables, then reconcile at year end. ## What is South Carolina's unemployment insurance wage base and rate for 2026? South Carolina's UI taxable wage base is **$14,000 per employee** for 2026, unchanged from 2025. New employers sit in rate class 30 and pay an effective [UI rate](https://www.dew.sc.gov/employers/tax-rate-information) of **1.06%**: a 1.00% base rate plus the 0.06% contingency assessment. Once you have enough claims history, your rate moves onto experience rating, ranging from **0.06%** to **5.46%** for 2026, with every class including a small contingency assessment. SC Dept of Employment and Workforce · S.C. Code Ann. 41-31 Pay UI on the first **$14,000** of each employee's wages in 2026. Start at an effective new-employer rate of **1.06%**. Once experience-rated, your rate sits between **0.06%** and **5.46%**. File quarterly via the [SC DEW employer portal](https://www.dew.sc.gov/employers). Source: [SC DEW, Tax Rate Information](https://www.dew.sc.gov/employers/tax-rate-information) South Carolina held its UI wage base flat at $14,000 for 2026, one of the lowest in the country. You pay UI on the first $14,000 of each employee's wages in the calendar year; everything above that is not taxed, so your per-head UI cost is capped tightly regardless of salary. Compare that cap to how Georgia's UI structure works next door: Georgia's wage base is set independently and reviewed each year by the [Georgia Department of Labor](/country-hiring-guides/united-states/georgia/state-income-tax-and-unemployment-insurance). You hold the 1.06% rate until you have been liable long enough to be experience-rated, after which the rate tracks your own layoff history within the 0.06% to 5.46% band. Both figures are quoted on the same basis: DEW's total tax rate is base rate plus solvency surcharge plus the 0.06% contingency assessment, so the 0.06% to 5.46% band and the 1.06% new-employer rate are all contingency-inclusive. Worth knowing that DEW publishes two conventions for new employers: its November 2025 press release quotes a new employer rate of 1.0%, while its 2026 rate table shows a total effective rate of 1.060% for rate class 30. The rate table is the operative document, and we quote it. The federal layer sits on top: [FUTA](https://www.irs.gov/taxtopics/tc759) is 6.0 percent on the first $7,000 of wages, less the full state credit for compliant payers, leaving an effective 0.6%. ## What federal payroll and leave rules apply to South Carolina employees? You run the full federal stack: [Social Security](https://www.ssa.gov/employers/) at **6.2%** to $184,500, Medicare at 1.45%, and FUTA at an effective 0.6% on the first $7,000. South Carolina has no state minimum wage, so the federal **$7.25 an hour** applies, with a tipped cash wage of $2.13. South Carolina mandates no state paid family leave and no state disability insurance, so [federal FMLA](https://www.dol.gov/agencies/whd/fmla) is the only job-protected family leave layer that applies. South Carolina has never enacted a state minimum wage, so the federal $7.25 floor governs under the [Fair Labor Standards Act](https://www.dol.gov/agencies/whd/flsa), and it allows the federal tip credit: a tipped employee may be paid a $2.13 cash wage as long as tips bring them to at least $7.25 an hour, with you covering any shortfall. There is no state overtime rule beyond the federal time-and-a-half after 40 hours in a week. For the full wages picture for your South Carolina hire, see [South Carolina wage and overtime law](/country-hiring-guides/united-states/south-carolina/wage-overtime-and-meal-break-law). On leave, South Carolina runs no state programme. There is no state paid family and medical leave fund and no state disability insurance, so the only job-protected family leave is [federal FMLA](https://www.dol.gov/agencies/whd/fmla), which gives eligible staff up to 12 weeks of unpaid leave at employers with 50 or more employees within 75 miles. For everything beyond that, paid time off is whatever you offer contractually. Read the full picture in [South Carolina paid leave](/country-hiring-guides/united-states/south-carolina/paid-family-and-sick-leave). The federal stack stays standard: [Social Security](https://www.ssa.gov/employers/) at 6.2% to $184,500, 1.45% Medicare on all wages, and the 0.6% effective FUTA. ## How Teamed runs South Carolina payroll end to end Teamed becomes your legal [employer of record](/employer-of-record) in South Carolina for [**from $599 per employee per month flat**](/pricing). **Zero FX** mark-up. Statutory employer cost passes through itemised on every invoice. You hire the person. Teamed registers with the [Department of Revenue](https://dor.sc.gov/) and [DEW](https://www.dew.sc.gov/employers), withholds on the 2026 tables at the 1.99% and 5.21% rates, runs unemployment insurance on the $14,000 base, and collects the new SC W-4. Everything runs on **one platform**. **Real HR and legal experts** handle your South Carolina hires and know the H.4216 two-rate reset, the $14,000 UI wage base, and the SC W-4 changeover by heart. **An actual person**, not a chatbot or a pooled queue. You see every cost: state withholding, UI contributions, and federal employer taxes **pass through at cost, itemised** and auditable on every invoice. **No setup fee, no exit fee.** Contractor onboarding, [EOR payroll](/employer-of-record), and entity graduation all live on **one platform**: a South Carolina contractor who converts to W-2 keeps their record, and that same employee can **graduate** to your own US entity without switching systems. Because the top rate is falling and the UI base is low, the cost case for your own entity tends to arrive later per headcount than in a high-tax state. Use the [Crossover Calculator](https://www.teamed.global/tools/crossover-calculator) to see the month the model flips, or check your total [employer cost](https://www.teamed.global/tools/employer-cost) before you commit. EOR is the right model for South Carolina, **until it isn't**. When the time comes, see [South Carolina termination law](/country-hiring-guides/united-states/south-carolina/termination-law-and-at-will-exceptions) for what offboarding obligations look like. Teamed Client Operations The mistake we see on South Carolina in 2026 is treating a tax cut as a payroll cut. The brackets were rewritten mid-year, which means new tables and a fresh SC W-4 from every employee, plus the unemployment wage base and the federal stack still running underneath. A lower top rate is not less work on the register. Budget for the boxes that carry the cost. A note from Tom Price-Daniel South Carolina rewrote its income tax for 2026: two rates now, a 5.21% top rate, down from 6%. What did not change is the work: new withholding tables, a fresh SC W-4 from everyone, and a $14,000 unemployment wage base to fund. A smaller rate is not a smaller payroll. That gap is the part we run for you. Tom Price-Daniel · Co-founder, Teamed ## Related United States guides - [Hiring in the United States, overview](/country-hiring-guides/united-states)country parent - [South Carolina wages & overtime](/country-hiring-guides/united-states/south-carolina/wage-overtime-and-meal-break-law)sibling - [South Carolina paid leave](/country-hiring-guides/united-states/south-carolina/paid-family-and-sick-leave)sibling - [South Carolina termination law](/country-hiring-guides/united-states/south-carolina/termination-law-and-at-will-exceptions)sibling - [North Carolina state tax & UI](/country-hiring-guides/united-states/north-carolina/state-income-tax-and-unemployment-insurance)neighbour same topic - [Georgia state tax & UI](/country-hiring-guides/united-states/georgia/state-income-tax-and-unemployment-insurance)neighbour same topic - [Employer of Record overview](/employer-of-record)core - [Pricing, Zero FX Fixed](/pricing)core - [EOR vs Entity Crossover Calculator](https://www.teamed.global/tools/crossover-calculator)tool - [Employer Cost Calculator](https://www.teamed.global/tools/employer-cost)tool - [Talk to an expert](https://www.teamed.global/contact)CTA A note on this page. This is a guide, not legal advice. South Carolina's 2026 income tax structure under H.4216, its withholding tables and SC W-4, UI wage base and rate schedule, and the federal figures above update when the General Assembly acts or the Department of Revenue, DEW, the IRS, or the SSA issue new figures. The supplemental withholding rate in particular should be confirmed against the current SCDOR WH-1603A guidance. The top rate is legislated to fall further when state revenue triggers are met. Confirm specific numbers with the South Carolina Department of Revenue, DEW, or your Teamed US specialist before relying on any figure here.