If you are a resident or nonresident of South Carolina and receive taxable income individually from property owned or business transacted in South Carolina, you are subject to tax on net income. Therefore, if you are operating your business as an S corporation, partnership, limited liability company, or sole proprietorship, you will be subject to a personal income tax on your business income that passes through to you.
The following marginal tax rates and taxable income brackets apply for the 2009 tax year (brackets are annually adjusted):
| Taxable Income |
Amount of Tax |
| Over $0, not over $2,740 |
$0 |
| Over $2,740, not over $5,480 |
3% times the amount less $82.20 |
| Over $5,480, not over $8,220 |
4% times the amount less $137.00 |
| Over $8,220, not over $10,960 |
5% times the amount less $219.20 |
| Over $10,960, not over $13,700 |
6% times the amount less $328.80 |
| Over $13,700 |
7% times the amount less $465.80 |
Active trade or business income tax rate. The tax rate on active trade or business income received by the owner of a pass-through business is reduced to 6% in 2007, 5.5% in 2008, and 5% in 2009 and thereafter. Active trade or business loss must first be deducted, dollar for dollar against active trade or business income. Any remaining active trade or business loss is multiplied by a fraction, the numerator of which is the rate of tax imposed at the active trade or business income tax rate, and the denominator of which is the highest individual income tax rate.