Paycheck Amounts Are Going Up for Most South Carolina Residents in 2023
Most South Carolina workers will be starting 2023 off on the right financial foot with a bump in their paychecks, as the state has announced adjustments to its withholding tax tables, partly due to tax cuts passed by state legislators in the summer through the Comprehensive Tax Cut Act of 2022.
The top income tax rate has been reduced from 7% to 6.5% and could see further future reductions “if certain general fun growth tests are met,” according to the South Carolina Department of Revenue (SCDOR). One of the Comprehensive Tax Cut Act of 2022’s goals is to phase in a reduction of the top marginal tax rate to 6%, per TrackBill’s summary.
South Carolinians have been receiving small increases in their paychecks (and small decreases in their income tax returns) since January 2017, when the state addressed out-of-date withholding calculation tables and began paying back excessive withheld tax liability by employers from wages or salary.
Due to outdated withholding tables prior to 2017, South Carolina found itself over-withholding taxpayers’ wages (SCDOR claims this amounted to $1.5 billion in 2015) and is obligated to repay this to residents through individual tax returns.
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Citing unreliable general fund budgeting, unnecessary administrative costs and undeniable risk due to the over-withholding, the South Carolina tables were overhauled in 2017 for the first time in 25 years and are now updated every year.
Using SCDOR’s example, this is how withholding table adjustments might affect the paycheck of a taxpayer who makes an annual salary of $39,000 and takes three allowances:
- Using 2022 tax rates and withholding tables, this taxpayer would have $1,378.86 in withholding.
- Using 2023 tax rates and withholding tables, the withholding would be $757.35, which equates to an additional $621.51 total in their paychecks throughout the year.
SCDOR notes that most South Carolina employees should notice fewer state taxes withheld from their 2023 paychecks, depending on factors like how much a worker makes and how often they are paid. However, the amount withheld will be affected if a worker chooses to have more taxes taken out of his wages. Only state income taxes are affected by the withholding adjustments, not federal, local or other state taxes.
According to CBS affiliate WLTX News19, the adjusted withholding tax tables will affect paychecks starting on Jan. 1, 2023, and taxes filed in 2024 for tax year 2023.
The state requires withholding not only from workers’ wages, but for prizes and winnings, royalties awarded, work contracts exceeding $10,000 for non-residents, rental payments on residential units (five or more) or commercial properties (one or more) held by non-residents, and net proceeds from non-resident real estate and associated tangible personal property located in South Carolina, per the Department of Revenue.
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