What is the South Carolina PTET rate?

South Carolina's PTET rate is 3.00% flat. 3% flat rate on active trade or business income (per § 12-6-545; SC graduated individual rate runs 0%–6% for non-electing income).

Is the South Carolina owner credit refundable?

South Carolina's PTET owner credit is non-refundable. [PLACEHOLDER: state DOR cite] — pin owner mechanic (exclusion vs credit) in SC1065/SC1120S 2025 instructions.

Does South Carolina PTET affect composite-return filing?

Stacks. See the composite-vs-PTET page for the full matrix.

South Carolina · SC

South Carolina Pass-Through Entity Tax (PTET)

South Carolina's PTET regime is one of the 37+ state workarounds to the federal SALT cap (IRC §164(b)(6)). The election is annual, statute-pinned below, and interacts with composite filing and §199A QBI in state-specific ways.

Statute: S.C. Code § 12-6-545(G) (election for PTE entity-level 3% tax)
State DOR portal: https://www.dor.sc.gov/income-tax-tax-rate-reduction-active-trade-or-business-income-pass-through-business
Election deadline: [PLACEHOLDER: state DOR cite] — pin election timing rules in SC1065/SC1120S instructions.
Election form: Form I-435 (Active Trade or Business Income for Electing PTE); reported on SC1065 (partnership) or SC1120S (S corp); I-335 for individual reporting
Entity-level rate: 3.00% — 3% flat rate on active trade or business income (per § 12-6-545; SC graduated individual rate runs 0%–6% for non-electing income).
Eligible entities: s-corp, partnership, llc-as-s, llc-as-partnership
Owner credit: non-refundable — [PLACEHOLDER: state DOR cite] — pin owner mechanic (exclusion vs credit) in SC1065/SC1120S 2025 instructions.
Composite interaction: stacks
§199A QBI base reduction: Yes — Reduces federal flow-through income (Notice 2020-75).
Last verified: 2026-05-11

Source: dor.sc.gov/income-tax-tax-rate-reduction-active-trade-or-business-income-pass-through-business + I-435 + I-335 + 2025 SC1065. SC's 3% rate is the LOWEST in the manifest — competitive intel.

IRC §164(b)(6)Notice 2020-75 IRC §199A

Reference computation

For a South Carolina pass-through entity with $500,000 of qualified net income allocated to this state, at a 37% federal marginal bracket, the entity-level PTET and federal-deduction math is:

South Carolina — reference example

QBI allocation·SC rate= Entity-level tax

$500,000×3%=$15,000

S.C. Code § 12-6-545(G) (election for PTE entity-level 3% tax)

Entity tax·Federal bracket= Federal deduction (gross)

$15,000×37%=$5,550

At a 37% federal bracket, the entity-level deduction saves $5,550 in federal tax. Net of §199A QBI offset (~20% × bracket × entity tax = $1,110), aggregate benefit is approximately $4,440.

IRS Notice 2020-75

Run the picker pre-filled for South Carolina

Election walkthrough

Verify eligibility. South Carolina accepts: s-corp, partnership, llc-as-s, llc-as-partnership. Active trade or business income only — excludes passive investment income and capital gains/losses.
Check the deadline. [PLACEHOLDER: state DOR cite] — pin election timing rules in SC1065/SC1120S instructions. Beginning tax year 2021, qualified PTE may elect entity-level 3% tax on active trade or business income.
Compute the entity-level tax. Apply the 3.00% rate to qualified net income.
Pay and file. Use Form I-435 (Active Trade or Business Income for Electing PTE); reported on SC1065 (partnership) or SC1120S (S corp); I-335 for individual reporting. Quarterly estimates may be required.
Owners claim the state credit. non-refundable credit on the personal state return.
Verify composite interaction. Composite interaction: stacks. See composite vs PTET.
Run the federal §199A QBI math. PTET reduces the QBI base proportionally; net the federal SALT-arbitrage against the §199A offset.

South Carolina PTET — common questions

Annual deadline reminder

State PTET law revises annually. South Carolina's data was last verified on 2026-05-11. Re-confirm with the state DOR primary source before electing or filing. Last full-site review: 2026-05-12.

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Reference computation

For a South Carolina pass-through entity with $500,000 of qualified net income allocated to this state, at a 37% federal marginal bracket, the entity-level PTET and federal-deduction math is:

South Carolina — reference example

QBI allocation·SC rate= Entity-level tax

$500,000×3%=$15,000

S.C. Code § 12-6-545(G) (election for PTE entity-level 3% tax)

Entity tax·Federal bracket= Federal deduction (gross)

$15,000×37%=$5,550

At a 37% federal bracket, the entity-level deduction saves $5,550 in federal tax. Net of §199A QBI offset (~20% × bracket × entity tax = $1,110), aggregate benefit is approximately $4,440.

IRS Notice 2020-75

Election walkthrough

Verify eligibility. South Carolina accepts: s-corp, partnership, llc-as-s, llc-as-partnership. Active trade or business income only — excludes passive investment income and capital gains/losses.

Check the deadline. [PLACEHOLDER: state DOR cite] — pin election timing rules in SC1065/SC1120S instructions. Beginning tax year 2021, qualified PTE may elect entity-level 3% tax on active trade or business income.

Compute the entity-level tax. Apply the 3.00% rate to qualified net income.

Pay and file. Use Form I-435 (Active Trade or Business Income for Electing PTE); reported on SC1065 (partnership) or SC1120S (S corp); I-335 for individual reporting. Quarterly estimates may be required.

Owners claim the state credit. non-refundable credit on the personal state return.

Verify composite interaction. Composite interaction: stacks. See composite vs PTET.

Run the federal §199A QBI math. PTET reduces the QBI base proportionally; net the federal SALT-arbitrage against the §199A offset.

South Carolina PTET — common questions