A bill

 

TO AMEND THE SOUTH CAROLINA CODE OF LAWS BY ADDING SECTION 12-6-1172 SO AS TO ALLOW A SOUTH CAROLINA INCOME TAX DEDUCTION OF ALL SOUTH CAROLINA STATE RETIREMENT INCOME; AND BY AMENDING SECTION 12-6-1170, RELATING TO RETIREMENT INCOME DEDUCTIONS, SO AS TO MAKE A CONFORMING CHANGE.

 

Be it enacted by the General Assembly of the State of South Carolina:

 

SECTION 1.  Article 9, Chapter 6, Title 12 of the S.C. Code is amended by adding:

 

    Section 12-6-1172. (A) An individual taxpayer may deduct all South Carolina state retirement income that is included in South Carolina taxable income.

    (B) The term "retirement income," as used in this section, means the total of all otherwise taxable income not subject to a penalty for premature distribution received by the taxpayer or the taxpayer's surviving spouse in a taxable year from a qualified South Carolina state retirement plan as provided for in Title 9. For purposes of a surviving spouse, "retirement income" also includes a retirement benefit plan and dependent indemnity compensation related to the deceased spouse's South Carolina state service.

    (C) A surviving spouse receiving South Carolina state retirement income that is attributable to the deceased spouse shall apply this deduction in the same manner that the deduction applied to the deceased spouse. If the surviving spouse also has another retirement income, an additional retirement exclusion is allowed.

    (D) The department may require the taxpayer to provide information necessary for proper administration of this subsection.

 

SECTION 2.  Section 12-6-1170(C) of the S.C. Code is amended to read:

 

    (C)(1) Notwithstanding any other provision of this section, if a taxpayer claims a deduction pursuant to Section 12-6-1171 or 12-6-1172, then the deduction allowed by this section must be reduced by the cumulative amount the taxpayer deducts pursuant to Section 12-6-1171 or 12-6-1172;  however, this subsection does not apply if the deduction claimed pursuant to Section 12-6-1171 or 12-6-1172 is claimed by a surviving spouse.

       (2) In the case of married taxpayers who file a joint federal income tax return, the reduction required by item (1) applies to each individual separately, so that the reduction only applies to the amount the individual claiming the deduction pursuant to Section 12-6-1171 or 12-6-1172 otherwise could have claimed pursuant to this section if the individual had not filed a joint return.

 

SECTION 3.  This act takes effect upon approval by the Governor and applies to income tax years after 2026.

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