South Carolina 529 tax deduction in 2026
No yearly ceiling on the subtraction, a deadline that runs to mid-April, and a tax schedule with only two steps.
South Carolina tax saved on this contribution
$625
5.2 % of what you put in comes back on your 2026 return.
| Subtracted from state income | $12,000 |
| Your state marginal rate | 5.21 % |
| Cap that applies this year | no cap |
| Back per $1,000 contributed | $52 |
South Carolina: Contributions to SC College Investment Program (Future Scholar) accounts are deductible from SC taxable income without a dollar cap other than the plan's maximum contribution limit; contributions made up to April 15 of the next year can be deducted for the prior year. Read on 2026-10-19. No federal deduction exists for 529 contributions.
| Taxable income | Marginal rate | Tax saved |
|---|---|---|
| $50,000 | 5.21 % | $625 |
| $100,000 | 5.21 % | $625 |
| $200,000 | 5.21 % | $625 |
| $400,000 | 5.21 % | $625 |
Worked out by Radif Partners · How we calculate · South Carolina rule read on October 19, 2026, brackets of tax year 2026 · not tax advice
South Carolina lets a taxpayer subtract the full amount contributed to a Future Scholar account from state taxable income, with no yearly dollar cap; the only ceiling is the plan's own balance limit of $575,000 per beneficiary. The value of each deducted dollar depends on which of the two 2026 rates it would have been taxed at: 1.99 % on the first $30,000 of taxable income and 5.21 % on the rest, the same schedule for single and joint filers. A Greenville couple with $95,000 of taxable income who put $12,000 in Future Scholar save $625. Deposits made up to April 15 can be claimed on the previous year's return. Contributions to another state's plan earn nothing. Non-qualified withdrawals bring back the deducted principal as income and tax the earnings, while K-12 tuition within the federal limit, student loans and Roth IRA rollovers are treated as qualified.
| Benefit for contributions | Deduction |
|---|---|
| Cap | No dollar cap |
| Another state’s plan counts | No, in-state plan only |
| State plans (official names, no recommendation) | Future Scholar 529 College Savings Plan - Direct Plan, Future Scholar 529 College Savings Plan - Advisor Plan |
| Account balance limit | $575,000 |
| K-12 withdrawals qualified for state tax | Yes |
| 529 to Roth IRA rollover qualified | Yes |
| Student loan payments qualified | Yes |
| Add-back on a rollover to another state’s plan | Not settled by the state text |
A subtraction without a ceiling
Most states that reward 529 deposits stop counting at a few thousand dollars. South Carolina Code 59-2-30 does not set a yearly figure at all: what you contribute to the College Investment Program, sold as Future Scholar, comes off South Carolina taxable income. The practical limit is the plan's maximum contribution, $575,000 per beneficiary according to the Future Scholar common questions page. For the couple above, the $12,000 deposit removes $12,000 from the return and $625 of tax. Nothing has to be carried into later years, because nothing is left over.
The $30,000 step matters for large deposits
Act 110 of 2026 (H. 4216) cut the schedule to two rates for tax years after 2025, and the Department of Revenue notice puts the step at $30,000. A deduction removes the top dollars of income first, so as long as taxable income stays above that line, each dollar is worth 5.21 %. Below it the value falls to 1.99 %.
Take a single earner at $38,000 who receives an inheritance and puts $20,000 into an account. Only $8,000 of the deposit sits above the step; the remaining $12,000 pushes income into the low band. The saving is $656, or 3.28 % per dollar. A part-time worker at $26,000 who never reaches the step gets $60 on $3,000. Spreading a large gift over two tax years, each deposit claimed on its own return, can keep more of it at the higher rate.
A big Future Scholar deposit near the step
South Carolina tax saved on this contribution
$656
| Subtracted from state income | $20,000 |
| Your state marginal rate | 5.21 % |
| Cap that applies this year | no cap |
| Back per $1,000 contributed | $33 |
The act also lets the top rate drop further in later years, so the per-dollar value of a deduction taken in 2026 may be higher than one taken in 2028.
April 15 belongs to the previous year
Future Scholar's tax benefits page and Information Letter #20-14 both allow a contribution made by April 15 to be deducted for the prior tax year. A family that files in March, sees the tax due, and then funds the account in early April can still lower that same return.
Home plan only
The statute ties the deduction to South Carolina's own program, so the couple at $95,000 would save $0 with the same $12,000 placed in another state's plan. The out-of-state plan page works out what a lower fee elsewhere would have to make up.
What the Department of Revenue treats as qualified
Information Letter #20-14 says K-12 tuition paid within the federal per-beneficiary limit has been free of South Carolina tax since 2018, and that the excess is a non-qualified withdrawal. Future Scholar now lists $20,000 a year from 2026 along with credential costs; we found no Department guidance confirming the higher figure, though state law defines a qualified withdrawal by reference to the federal code. Information Letter #24-4 covers rollovers to a Roth IRA, and the plan counts student loan payments as qualified.
When money is spent on something else, Code 59-2-80 taxes the earnings and adds back the principal to the extent it was deducted. No official text we read says whether moving the account to another state's plan triggers that add-back, so the question stays open.
Deducted principal at stake in South Carolina
South Carolina tax if the deductions come back
$1,876
| Amount added back | $36,000 |
| Your state marginal rate | 5.21 % |