At a glance
- Corporate tax
- 5%
- Tax on wages
- 1.99% / 5.21% (2026)
- Sales tax
- 6% + local
- Economic nexus
- $100,000 in gross revenue
- Minimum wage
- $7.25/hr (federal)
- UI wage base
- $14,000
- New-employer UI rate
- 1.060%
- Paid leave program
- None
- Annual report
- With SC1120, Apr 15; license fee min $25
2026 figures, each explained with its source on the area’s page. On top of the federal baseline.
Setup, in order
Qualify with the Secretary of State
Before transacting business in South CarolinaApply for a certificate of authority: $10 filing fee, $100 tax and the minimum license fee.
File the initial annual report
Within 60 days of starting businessFile Form CL-1 with the Department of Revenue and pay the $25 initial license fee.
Open a withholding account
Before the first South Carolina payrollRegister for withholding through MyDORWAY.
Open an unemployment insurance account
Before the first South Carolina payrollRegister with DEW; new employers pay 1.060% on the first $14,000 of wages in 2026.
Report new hires
Within 20 days of the first day of workReport each new hire to the SC New Hire Reporting Program.
Arrange workers’ compensation
At four employeesBuy workers’ compensation coverage once four or more people are regularly employed.
Register for sales tax if you have nexus
When South Carolina gross revenue passes $100,000Register for sales tax; SaaS is taxable, so a software seller crossing $100,000 must collect.
Get local business licenses
When you open a South Carolina locationGet a business license from the city or county where you have an office; renewals are due April 30.
The six areas
- AccountingAccounting and state tax in South CarolinaSouth Carolina taxes corporations at 5% on a single receipts factor, sources services by income-producing activity, decouples from bonus depreciation and conforms to the federal Code only through 2024.Corporate income tax rate5%
- ReceivablesReceivables and sales tax in South CarolinaSouth Carolina charges 6% plus local tax, taxes SaaS as a communications service, and requires remote sellers to register once gross revenue into the state exceeds $100,000.State sales tax rate6%
- PayablesPayables and contractors in South CarolinaSouth Carolina requires 2% withholding on nonresident contractors paid over $10,000 under one contract unless they supply Form I-312, and its SaaS tax reaches software you buy through use tax.Nonresident contractor withholding2%
- PayrollPayroll taxes and employer rules in South CarolinaSouth Carolina payroll is withholding at 1.99% and 5.21% for 2026, unemployment insurance at 1.060% on $14,000 for new employers, written pay terms at hire, final pay within 48 hours, and workers’ comp from four employees.State income tax (2026)1.99% to $30,000; 5.21% above
- ComplianceCompliance and filings in South CarolinaSouth Carolina compliance runs through the Department of Revenue: a $25 CL-1 within 60 days, an annual report and license fee on the SC1120, local licenses due April 30, and unclaimed property by November 1.Certificate of authority$110 plus license fee
- AdvisoryAdvisory: credits and decisions in South CarolinaSouth Carolina offers a 5% research credit that waits for profits, cut individual rates for 2026, and differs from its neighbors on SaaS, contractor withholding and conformity.R&D credit5%
Who you register with
- South Carolina Department of Revenue (SCDOR)Corporate income tax and license fee, withholding, sales tax (MyDORWAY)
- SC Department of Employment and Workforce (DEW)Unemployment insurance registration and quarterly wage reports
- South Carolina Secretary of StateCertificate of authority for a foreign corporation
- SC New Hire Reporting Program (DSS)New hire reports
- South Carolina State Treasurer — Unclaimed PropertyAnnual holder report
Hiring across the border
An employee who lives in one state and works in another is the most common way a startup ends up registered in two. These are South Carolina’s neighbors.
Common questions
Does South Carolina follow the 2025 federal tax law?
Not yet. South Carolina conforms to the Internal Revenue Code as amended through December 31, 2024, and the Department of Revenue’s Information Letter #26-4 says the 2025 federal changes, including domestic research expensing, are not adopted until the Legislature acts. H. 3368, which would have moved conformity to December 31, 2025, failed a Senate vote on March 31, 2026. Until that changes, research costs expensed federally under Section 174A are backed out on the South Carolina return.
Is our SaaS taxable in South Carolina?
Yes, in most cases. The Department of Revenue treats charges for access to cloud software as taxable communications charges for access to an application service provider, and its 2020 private letter rulings applied that to online software subscriptions for business customers. There is no general business-use exemption. A data processing exclusion can apply where the provider manipulates the customer’s data, which turns on the facts.
Do we withhold from out-of-state contractors working in South Carolina?
If the contract with a nonresident exceeds $10,000 and involves services in South Carolina, yes: the payer withholds 2% of each payment and remits it with its regular withholding, unless the contractor gives it a Form I-312 affidavit certifying registration with the Secretary of State or the Department of Revenue. The I-312 stays in your files; it is not sent to the Department.
Do we need to give South Carolina hires anything in writing?
Yes. South Carolina’s Payment of Wages Act requires every employer to notify each employee in writing at hiring of the normal hours and agreed wages, either individually or by posting the terms at the workplace. Changes must be in writing at least seven calendar days before they take effect, except wage increases.
Does the South Carolina license fee grow with our funding rounds?
Usually. South Carolina’s corporate license fee is $1 per $1,000 of capital stock and paid-in surplus, apportioned to the state, plus $15, with a $25 minimum. A startup that has raised $10 million and apportions 5% to South Carolina has a $500,000 base and pays $515. Because it is measured on paid-in capital, not net worth, losses do not reduce it.
Can our South Carolina engineering team earn an R&D credit?
Only once it has South Carolina tax to offset. The credit is 5% of qualified research expenses made in South Carolina, for a taxpayer that also claims the federal research credit, limited to 50% of the tax left after other credits. Unused credit carries forward up to ten years from the expenses, so a pre-profit company banks it rather than using it.
Sources
Checked against each agency’s own page on . Rates and thresholds change, usually on January 1.
- S.C. Code Title 12, Chapter 6 — South Carolina Income Tax Act
- SCDOR — Corporate tax
- SCDOR — Instructions for C and S Corporation Income Tax Returns (SC1120)
- SCDOR — Information Letter #26-4 (revised), IRC conformity update
- South Carolina General Assembly — H. 3368 (2025–2026), IRC conformity bill status
- Office of the Governor — H. 4216 income tax reform signing
- SCDOR — Sales & Use Tax
- SCDOR — Revenue Ruling #18-14, remote sellers and economic nexus
- SCDOR — Private Letter Ruling #20-4, online software subscription service
- SCDOR — Nonresident contractor withholding
- SCDOR — Form WH-1606, Fourth Quarter/Annual Reconciliation
- SC Department of Employment and Workforce — 2026 tax rate information
- S.C. Code Title 41, Chapter 10 — Payment of Wages
- SC Workers’ Compensation Commission — Employer FAQs
- SC New Hire Reporting Program (SC Department of Social Services)
- S.C. Code § 33-1-220 — Secretary of State filing fees
- SC State Treasurer — Unclaimed property reporting flyer
- Municipal Association of SC — Business License Tax Standardization Act
- SCDOR — Schedule TC-18, Research Expenses Credit
General information for US companies, not tax, legal or accounting advice for yours. Rules and thresholds change; confirm the specifics with a CPA or the agency before you act on them.