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North Carolina and South Carolina Taxes and Exemptions


 

 

*All Information is subject to change!

NORTH CAROLINA

Sales Taxes

State Sales Tax:4.750%  Prescription drugs, medical equipment exempt, food subject to 2% county tax.  Counties may add an additional 2% to 3% tax.
Gasoline Tax: 56.2 cents/gallon (Includes all taxes)
Diesel Fuel Tax: 62.2 cents/gallon (Includes all taxes)
Cigarette Tax: 45 cents/pack of 20

Personal Income Taxes

Tax Rate Range: Low – 6.0%; High – 7.75%
Income Brackets: * Lowest – $12,750; Highest – $60,000
Number of Brackets: 3  The tax brackets reported are for single individuals.  for married taxpayers the same rates apply to income brackets ranging from $21,250 to $100,000.  Lower exemption amounts allowed for high-income taxpayers. For tax year 2012 the starting point for calculating a taxpayers taxable income is the taxpayer’s federal adjusted gross income (AGI).  The previous starting point was the taxpayer’s federal; taxable income.
Personal Exemptions: ** Single – $1,200; Married – $2,400; Dependents – $0 Click here for more information.
Standard Deduction: Single – $3,000; Married filing jointly – $6,000. If you or your spouse are 65 or older you may claim an additional deduction  (See state tax instruction booklet)
Medical/Dental Deduction: Federal amount.  Income tax credit for premiums paid on long-term care insurance that covers the individual, a spouse or dependent.  Credit is equal to 15% of premium cost but may not exceed $350.
Federal Income Tax Deduction: None
Retirement Income Taxes: Social Security is exempt.  At least $4,000 in exclusions for federal, state and local pensions (depending on dates and length of service); up to $2,000 exemption for qualified private pensions, including IRAs.  Out-of-state government pensions also qualify for the $4,000 exemption.  State retirees with at least 5 years of creditable service as of August 12, 1989, will be permanently exempt from state income tax on their retired/retainer pay.  Be sure to investigate the Bailey decision.  Taxable income also includes income derived from gaming in North Carolina.  For more details on retirement income deductions, click here and on the tax form page 13 – click here.
Retired Military Pay: If an individual had five years of creditable service as of August 12, 1989, all military retired pay is exempt from taxes.  Otherwise, a deduction of up to $4,000 is allowed for military pay or survivor’s benefits.
Military Disability Retired Pay: Retirees who entered the military before Sept. 24, 1975, and members receiving disability retirements based on combat injuries or who could receive disability payments from the VA are covered by laws giving disability broad exemption from federal income tax. Most military retired pay based on service-related disabilities also is free from federal income tax, but there is no guarantee of total protection.
VA Disability Dependency and Indemnity Compensation: VA benefits are not taxable because they generally are for disabilities and are not subject to federal or state taxes.
Military SBP/SSBP/RCSBP/RSFPP: Generally subject to state taxes for those states with income tax. Check with state department of revenue office.

Property Taxes

All property, real and personal, is subject to taxation and is assessed based on 100% of appraised value.  Taxes are collected by cities and counties.  Click here for tax rates.

There is an elderly or disabled exclusion which excludes the greater of the first $25,000 or 50% of the appraised value of the permanent residence of the qualifying owner.  A qualifying owner must be at least 65 years old or be totally and permanently disabled.  The owner cannot have an income amount from the previous year that exceeds the income eligibility limit for the urgent year which is $27,100 for 2012.

The state also has a circuit breaker property tax deferment program.  Under this program, taxes for each year are limited to a percentage of the qualifying owner’s income.  The qualifying owner must either be at least 65 years of age or be totally and permanently disabled.  For an owner whose income amount for the previous years does not exceed the income eligibility limit for the current year, which for 2012 is $27,100, the owner’s taxes will be limited to 4% of the owner’s income.  For an owner whose income exceeds the income eligibility limit, which for tax year 2010 is $40,650, the owner’s taxes will be limited to 5% of the owner’s income.

Inheritance and Estate Taxes

On June 27, 2011, a bill was signed into law by North Carolina governor Beverly Perdue.  This law clarifies that the North Carolina estate tax does not apply to the estates of decedents who died in 2010 but will apply to the estates of decedents dying on or after January 1, 2011 with a $5,000,000 exemption, which is indexed for inflation in 2012 so that the 2012 exemption is $5,120,000.

For further information, visit the North Carolina Department of Revenue site.
* The tax brackets reported are for single individuals. For married taxpayers, the same rates apply to income brackets ranging from $21,250 to $200,000. An additional middle income tax credit is allowed.
** Taxpayers who claim standard deduction or itemize deductions on federal return must make adjustments.

 

 

SOUTH CAROLINA

Sales Taxes

State Sales Tax: 6% (prescription drugs and unprepared food items exempt); 25 counties impose an additional 1% local option sales tax; a number of counties impose a 2% sales tax or 3%.  Seniors 85 and older pay 5%.
Gasoline Tax: 35.2 cents/gallon (Includes all taxes)
Diesel Fuel Tax: 41.2 cents/gallon (Includes all taxes)
Cigarette Tax: 57 cents/pack of 20

Personal Income Taxes

Tax Rate Range: Low – 3.0%; High – 7%; No tax on the first $2,630 of taxable income in tax year 2007.
Income Brackets: * Lowest – $2,800; Highest – $14,001
Number of Brackets: 6
Personal Exemptions: * Single – $3,700; Married – $7,400; Dependents – $3,700
Standard Deduction:  Single – $5,700; Married filing jointly – $11,400
Medical/Dental Deduction: Federal amount
Federal Income Tax Deduction:  None
Retirement Income Taxes: Retirement income is taxed. Social Security is exempt.   Under age 65, $3,000 in pension income is exempt.  If you are 65 or older you may exempt $15,000 of retirement income.  You can take this deduction for income received from any qualified retirement plan.  If both spouses receive retirement income, each spouse is entitled to an individual deduction. The $15,000 deduction must be offset by any other retirement deduction that is claimed.  A surviving spouse may continue to tacke a retirement deduction on behalf of the deceased spouse. Some taxpayers age 65 and older may not have to file a tax return if they meet certain conditions.  For more information,click here.
Retired Military Pay: Retirees with 20 or more years of active duty can deduct up to $3,000 annually until age 65 and up to $10,000 per year after age 65.  This deduction extends to the surviving spouse.  Pension or retirement income received for time served in the National Guard or Reserve components is not taxable.  Survivor benefits are taxed following federal tax rules.
Military Disability Retired Pay: Retirees who entered the military before Sept. 24, 1975, and members receiving disability retirements based on combat injuries or who could receive disability payments from the VA are covered by laws giving disability broad exemption from federal income tax. Most military retired pay based on service-related disabilities also is free from federal income tax, but there is no guarantee of total protection.
VA Disability Dependency and Indemnity Compensation: VA benefits are not taxable because they generally are for disabilities and are not subject to federal or state taxes.
Military SBP/SSBP/RCSBP/RSFPP: Generally subject to state taxes for those states with income tax. Check with state department of revenue office.

Property Taxes

Property tax is assessed and collected by local governments.  Both real and personal property are subject to tax. The market value of a legal residence and up to 5 acres of surrounding land is assessed at 4%.  For homeowners 65 and older, the state’s homestead exemption allows the first $50,000 of their property’s fair market value to be exempt from local property taxes.  South Carolina imposes a casual excise tax of 5% on the fair market value of all motor vehicles, motorcycles, boats, motors and airplanes transferred between individuals.  For more information, click here.

Inheritance and Estate Taxes

There is no inheritance tax or estate tax..

For further information, visit the South Carolina Department of Revenue site or 800-763-1295.  If you are planning to move to South Carolina, this link will provide you with some helpful information.
* State allows personal exemption or standard deductions as provided in the Internal Revenue Code.

 

 Courtesy of Retirementliving.com