South Carolina / State / 124th General Assembly, 2021-2022

2022 Act No. 156 (H.3247) and 2022 Act No. 228 (S.1087) Removed every cap and age tier from the military retirement income deduction

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Signed 2022-05-13 · Takes effect 2022-05-13

Two acts on the same subject in the same session amended Section 12-6-1171(A) to read that an individual taxpayer may deduct all military retirement income included in South Carolina taxable income. The Code Commissioner read the two amendments together. Act No. 156 is the Workforce Enhancement and Military Recognition Act and Act No. 228 is the Comprehensive Tax Cut Act of 2022; both first apply to tax years beginning after 2021. What they replaced was the 2016 Act No. 272 phase-in, which had allowed five thousand nine hundred dollars under age sixty-five and eighteen thousand dollars at sixty-five and above, rising annually to 2020. Tracked because the offset survives and is the part that changes the arithmetic: Section 12-6-1170(C)(1) reduces the general retirement income deduction by the amount deducted under Section 12-6-1171, and SC Revenue Ruling 22-11 confirms the reduction reaches both the three thousand and ten thousand dollar general retirement deduction in Section 12-6-1170(A) and the fifteen thousand dollar age sixty-five and older deduction in Section 12-6-1170(B), except where the military deduction is claimed by a surviving spouse. A retiree at sixty-five with more than fifteen thousand dollars of military retired pay loses both general deductions entirely.