The popular personal finance publication Kiplinger puts together a yearly list of how tax-friendly each state is for retirees.
How do North and South Carolina fare?
Let’s take a closer look at the numbers.
State Sales Tax
In North Carolina, the state sales tax rate is a reasonable 4.75%. Prescription drugs and medical equipment are exempt from sales tax. Food is subject to a 2% county tax. Some localities may add up to 2.75% tax.
In South Carolina, the state sales tax is 6% but groceries and some cold prepared foods, prescription drugs, dental prosthetics and hearing aids are exempt. Some localities may add up to 1% more sales tax.
State Income Tax
North Carolinians pay a flat 5.75% income tax regardless of how much income they earn.
South Carolina uses a graduated system for income tax, and residents pay 3% (on taxable income over $2,880 to $6,200) on the low end of the scale and 7% on taxable income over $14,400 at the high end of the scale.
Social security benefits are not taxed in either state, and each state has certain retirement income exemptions that you can read about at the links below.
According to the Tax Foundation, median property tax on North Carolina’s median home value of $154,300 is $1,304, and median property tax on South Carolina’s median home value of $139,200 is $788.
So there you have it. Kiplinger gives the edge to South Carolina as being the most tax-friendly of the two, but neither state earn Kiplinger’s Top Ten list of “Most Tax-Friendly”. South Carolina is classified as “Tax-Friendly” and North Carolina is classified as “Mixed”.
For more information visit Kiplinger.com’s State-by-State Guide to Taxes on Retirees.