South Carolina Payroll Compliance Guide 2026

South Carolina quietly offers one of the best new-employer payroll tax environments in the country. The 0.55% new employer SUI rate is a fraction of what businesses pay in California (3.4%), New York (4.025%), or even neighboring North Carolina (1.0%). Income tax rates are declining annually and on track to reach 6% in 2027. The minimum wage stays at the federal floor, and there are no mandatory state paid leave contributions. For employers relocating operations to South Carolina or opening their first location in the state, the payroll compliance picture is straightforward and inexpensive to start.

South Carolina Payroll Obligations at a Glance

State Unemployment Insurance (SUI)

South Carolina's unemployment insurance is administered by the South Carolina Department of Employment and Workforce (DEW). SUI is an employer-only tax; employees do not contribute.

SUI Rates for 2026

• New employer rate: 0.55% — one of the lowest new employer rates in the United States
• Experienced employer range: 0.06% to 5.46%
• Taxable wage base: $14,000 per employee per calendar year
• Maximum annual SUI cost per employee: $764.40 (at 5.46%)
• New employer annual cost per employee: $77.00 (at 0.55%)

South Carolina's new employer SUI cost of $77.00 per employee per year is remarkable. In California, a new employer pays $238 per employee just on the base rate. In New York, $281.75. South Carolina's combination of a 0.55% rate and the $14,000 wage base produces SUI expenses that are a fraction of what comparable businesses pay in other states. Even at the maximum experience rate of 5.46%, the $14,000 wage base caps annual SUI at $764.40 per employee — still lower than many states' costs at much lower rates.

Experience Rating

South Carolina DEW assigns experience rates annually using a benefit ratio formula. Your benefit ratio equals total UI benefits charged to your account divided by your average annual taxable payroll. Employers with few or no former employees drawing UI build favorable ratios. Experienced employers with excellent histories can reach 0.06% — annual SUI cost of $8.40 per employee.

FUTA Credit

South Carolina employers who pay SUI in full and on time receive the standard 5.4% FUTA credit, reducing effective FUTA to 0.6% on the first $7,000 per employee. South Carolina's UI trust fund has remained solvent; no FUTA credit reduction is currently in effect.

State Income Tax Withholding

South Carolina uses a graduated income tax administered by the South Carolina Department of Revenue (SCDOR). Rates range from 0% to 6.4% in 2026.

2026 South Carolina Income Tax Brackets

Withholding is based on the employee's Form SC W-4. Employees without a South Carolina W-4 on file are withheld as single with zero exemptions. SCDOR publishes updated withholding tables each year; download them at dor.sc.gov before running your first January payroll.

South Carolina's Declining Income Tax Rate

South Carolina enacted legislation to reduce its top individual income tax rate from 7% to 6% over a multi-year period. The reductions occur annually as long as certain state revenue conditions are met:

The 6.4% rate held from 2024 through 2026; the schedule targets 6.0% in 2027 based on meeting revenue thresholds. The reductions are not guaranteed — the South Carolina General Assembly can adjust the schedule. Update withholding tables each January to reflect any rate change.

South Carolina Minimum Wage 2026

South Carolina's minimum wage is the federal minimum of $7.25 per hour. South Carolina has no state minimum wage statute separate from the federal baseline, and state law preempts local governments from setting higher minimum wages. No South Carolina city or county has a local minimum wage above $7.25.

Tipped Employees

South Carolina follows the federal tip credit framework. Tipped employees can be paid $2.13/hr provided tips bring total compensation to at least $7.25/hr per workweek. If tips fall short, the employer makes up the difference. Document all tip credit elections in writing.

Overtime

South Carolina follows the federal FLSA overtime standard: non-exempt employees earn 1.5 times their regular rate for hours over 40 in a workweek. No South Carolina-specific overtime rules exist beyond federal law.

Pay Frequency and Final Paycheck Rules

Pay Frequency

South Carolina requires employers to pay wages at least twice per month if employees are paid by the month, or at least every two weeks if paid weekly or bi-weekly. Employers must notify employees of their regular paydays in writing. The South Carolina Department of Labor, Licensing and Regulation oversees wage payment requirements.

Final Paycheck

South Carolina requires final wages to be paid by the next regular payday following the employee's last day of work. This deadline applies to both resignations and terminations. South Carolina does not require same-day or next-business-day final payment.

South Carolina treats accrued, earned vacation as wages if the employer's written policy grants it as a vested benefit. An employer whose handbook says unused vacation pays out upon separation must include it in the final paycheck. If the policy is silent or prohibits vacation payout upon termination, consult an employment attorney to confirm enforceability in South Carolina.

New Hire Reporting

South Carolina employers must report all new hires and rehires to the South Carolina New Hire Reporting Program within 20 days of the hire date. Reports include employee name, address, SSN, date of hire, employer name, address, and EIN. Submit at scnewhire.com or by fax. Multistate employers can use the federal new hire portal at acf.hhs.gov.

Employer Registration in South Carolina

South Carolina Department of Revenue — Withholding Account

Register at MyDORWAY (dor.sc.gov) for your state income tax withholding account. You receive a South Carolina withholding tax account number used on all returns and W-2 filings.

South Carolina Department of Employment and Workforce — SUI Account

Register with DEW at dew.sc.gov for your unemployment insurance account. Online registration is available. DEW assigns your employer account number and new employer SUI rate upon registration.

Filing Schedules and Deadlines

State Withholding

SUI Quarterly Deadlines

W-2 Filing

South Carolina W-2s must be submitted to SCDOR by January 31. Employers with 50 or more W-2s must file electronically. W-2s must include the SC withholding account number and reflect South Carolina withholding amounts.

Federal Payroll Taxes

• Social Security (OASDI): 6.2% employer + 6.2% employee on wages up to $176,100 (2026)
• Medicare: 1.45% employer + 1.45% employee on all wages; 0.9% Additional Medicare Tax on wages over $200,000
• FUTA: 6.0% on first $7,000 per employee, reduced to 0.6% with the full South Carolina SUI credit
• Federal income tax withholding: Based on each employee's W-4
• Form 941: Quarterly federal payroll tax return, due April 30, July 31, October 31, and January 31

Frequently Asked Questions

Why is South Carolina's new employer SUI rate so low?

South Carolina's new employer SUI rate of 0.55% reflects the state's historically lower unemployment benefit usage, a well-funded UI trust fund, and a $14,000 wage base that keeps per-employee costs contained. At $77 per employee per year for new employers, it is one of the most favorable SUI cost environments for businesses expanding into the Southeast.

What is South Carolina's income tax top rate in 2026?

South Carolina's top income tax rate is 6.4% in 2026. The state has been reducing its top rate from 7% and is targeting 6.0% by 2027. The reductions occur annually if revenue conditions are met. Update withholding tables at the start of each year in case the rate changes.

What is South Carolina's minimum wage?

South Carolina's minimum wage is the federal minimum of $7.25/hr. No state minimum above the federal floor exists, and local governments cannot set higher local minimum wages. The $2.13/hr federal tipped minimum cash wage applies to tipped employees provided tips bring total pay to $7.25/hr.

When must South Carolina employers issue a final paycheck?

Final wages must be paid by the next regular payday following the last day of work. There is no same-day requirement. The SC Payment of Wages Act allows employees to sue for unpaid wages plus attorney's fees, so accurate and timely final pay processing matters.

Does South Carolina have paid family leave or state disability insurance?

No. South Carolina has no state paid family leave program and no state disability insurance. State payroll obligations are limited to SUI and income tax withholding. Federal FMLA governs unpaid leave for eligible employees at covered employers with 50 or more employees.

Is South Carolina a right-to-work state?

Yes. South Carolina is a right-to-work state, meaning employees cannot be required to join a union or pay union dues as a condition of employment. This reduces the complexity of collective bargaining agreements for employers in industries where unions are common in other states. South Carolina's right-to-work status, combined with low SUI rates and no state PFL, makes it one of the more business-friendly payroll environments in the Southeast.