South Carolina tax filing changes due to federal legislation

CAROLINA FOREST, SC (WMBF) - South Carolina taxpayers will see differences between their federal and state tax filings this year due to the state’s decision not to adopt changes from the federal One Big Beautiful Bill Act.

South Carolina’s conformity to the Internal Revenue Code ended in 2024, meaning the state no longer automatically adopts federal tax law changes.

State legislation has not passed any new laws to implement the same changes and deductions available at the federal level.

In a conformity letter from Jan. 30, the state said it will not implement specific deductions, including qualified tips, overtime, and passenger vehicle loan interest.

Liberty Tax franchise owner Susan Vatell said these deductions will impact service members filing the most.

“So the big ones that we’re seeing is that South Carolina is not doing the no tax on tips and overtime, so they’re adding that back into your income,” Vatell said.

Seniors may also be impacted due to the state not implementing the senior deduction.

South Carolina has its own deduction for seniors, so they will see little to no difference from past years.

Vatell expects those impacted to see differences between federal and state tax calculations.

“People that are having a lower tax liability are having a higher one in South Carolina because they’re adding back in the tips and overtime,” she said.

While legislation can be voted on, Vatell recommends taxpayers file as soon as they can.

“I still think everyone should file as soon as they can cause waiting, we’re just never sure if they’re going to do it or not. They haven’t voted on it, they haven’t done anything on it yet,” she said.

The state still has time to conform, but there would be some exceptions to the bill from state legislation when passed, meaning taxpayers are still likely to see additions or subtractions on this year’s filings.

Feel more informed, prepared, and connected with WMBF. For more free content like this, download our apps. Have feedback that can help us improve? Click here.