Does South Carolina follow the 2025 federal One Big Beautiful Bill Act tax changes, or must taxpayers adjust their state return?

Plain-English summary

South Carolina starts from your federal income tax numbers, but only up to the version of the Internal Revenue Code (IRC) it has formally adopted. As of this letter, that is the IRC as amended through December 31, 2024. Congress passed the One Big Beautiful Bill Act (OBBBA) in 2025, after South Carolina's 2025 legislative session had already ended — so the state has not yet decided whether to follow OBBBA's changes.

Until the South Carolina Legislature updates its conformity, taxpayers who claim any of these 2025 federal provisions on their federal return must adjust their South Carolina return to back them out:

1. Standard deduction increases — $750 (Single/Married Filing Separately), $1,125 (Head of Household), $1,500 (Married Filing Jointly/Qualifying Surviving Spouse).
2. Senior deduction — an extra $6,000 for individuals age 65+, phasing out above $75,000 modified AGI ($150,000 joint).
3. Tips — deduction for qualified tips, up to $25,000, phasing out above $150,000 ($300,000 joint).
4. Overtime — deduction for qualified overtime above the regular rate, up to $12,500 ($25,000 joint), phasing out above $150,000 ($300,000 joint).
5. Car-loan interest — up to $10,000 on a loan for a qualified personal-use vehicle, phasing out above $100,000 ($200,000 joint).
6. State and local tax (SALT) deduction — up to $40,000 for itemizers, raised from $10,000.
7. Research and experimental expenditures — deduction for domestic R&E paid or incurred in the year (with an election for pre-2025 unamortized amounts); foreign R&E amortized over 15 years.
8. Business assets — the IRC Section 179 expensing limit rises to $2.5 million from $1 million.

Separately, OBBBA changed bonus depreciation (IRC § 168(k)) and a related disaster-relief provision; South Carolina specifically does not adopt those (S.C. Code Ann. § 12-6-50), so taxpayers continue to adjust for them on the state return as before.

The Department says it will issue updated guidance once the Legislature addresses conformity.

What this means for you

South Carolina individual taxpayers

If your 2025 federal return claims the bigger standard deduction, the new senior/tips/overtime/car-loan deductions, the higher SALT cap, or the expanded R&E and Section 179 write-offs, expect to add those benefits back on your South Carolina return until the state conforms. Your South Carolina taxable income may be higher than your federal number as a result.

Tax preparers and accountants

Build the decoupling adjustments into 2025 South Carolina returns now: the eight OBBBA items above, plus the continuing non-conformity to IRC § 168(k) bonus depreciation. Watch for the Department's follow-up guidance after the next legislative session, in case conformity is later updated.

Common questions

Q: Does South Carolina follow the 2025 One Big Beautiful Bill Act?
A: Not yet. As of this letter, South Carolina conforms to the IRC through December 31, 2024, and had not considered OBBBA. Taxpayers must adjust their state return for the OBBBA provisions until the Legislature acts.

Q: Which federal deductions have to be added back for South Carolina?
A: The increased standard deduction; the $6,000 senior deduction; the tips, overtime, and car-loan-interest deductions; the $40,000 SALT deduction; domestic R&E expensing; and the higher $2.5 million Section 179 limit.

Q: What about bonus depreciation?
A: South Carolina specifically does not adopt OBBBA's changes to IRC § 168(k) (or the related disaster-relief provision), so those adjustments continue on the state return (S.C. Code Ann. § 12-6-50).

Q: Will this change?
A: Possibly. The Department will issue updated guidance once the South Carolina Legislature addresses conformity; the treatment described here is current only as of January 30, 2026.

Citations and references

Authority and statutes:

• S.C. Code Ann. § 12-4-320 (Department's authority to issue advisory opinions)
• SC Revenue Procedure #09-3
• S.C. Code Ann. § 12-6-40 (South Carolina conformity to the Internal Revenue Code)
• S.C. Code Ann. § 12-6-50 (IRC provisions South Carolina does not adopt)
• One Big Beautiful Bill Act, Pub. L. No. 119-21 (2025)
• IRC § 168(k) (bonus depreciation; not adopted by South Carolina); IRC § 179 (business-asset expensing)

Source

• Landing page: https://dor.sc.gov/advisory-opinion-search
• Original PDF: https://dor.sc.gov/sites/dor/files/policies/IL26-4.pdf

Original ruling text

STATE OF SOUTH CAROLINA

DEPARTMENT OF REVENUE
300A Outlet Pointe Blvd., Columbia, South Carolina 29210
P.O. Box 125, Columbia, South Carolina 29214-0575

SC INFORMATION LETTER #26-4 (Revised)
SUBJECT:

South Carolina Internal Revenue Code Conformity Update
(Individual Income Tax)

DATE:

January 30, 2026

AUTHORITY:

S.C. Code Ann. Section 12-4-320
SC Revenue Procedure #09-3

SCOPE:

An Information Letter is a written statement issued to the public to
announce general information useful in complying with the laws
administered by the Department. An Information Letter has no
precedential value.

South Carolina Internal Revenue Code Conformity
As of the publication date of this information letter, South Carolina has conformed
with the Internal Revenue Code as amended through December 31, 2024. 1 After the 2025
Legislative Session adjourned in May 2025, Congress passed the One Big Beautiful Bill
Act 2 (OBBBA). South Carolina has not had an opportunity to consider these federal
changes for purposes of state income tax. Therefore, until the South Carolina Legislature
addresses conformity, South Carolina taxpayers will need to adjust their return if the
following 2025 federal provisions are claimed on their federal return: 3

1. Standard Deduction. The standard deduction amounts for filing statuses have
   been increased by $750 for Single and Married Filing Separately, $1,125 for
   Head of Household, and $1,500 for Married Filing Jointly and Qualifying
   Surviving Spouse.
2. Senior Deduction. Individuals age 65 and older may claim an additional
   $6,000 deduction. This deduction applies per eligible individual and phases
   out for taxpayers with modified adjusted gross income over $75,000
   ($150,000 for joint filers).
   S.C. Code Ann. § 12-6-40.
   One Big Beautiful Bill Act, Pub. L. No. 119-21 (2025).
   3
   OBBBA also made modifications to section 168(k) of the IRC and section 304(b) of the Taxpayer
   Certainty and Disaster Relief Act of 2020 that will take effect for the 2025 tax year. South Carolina
   specifically does not adopt these provisions. S.C. Code Ann. § 12-6-50 (2014 & Supp. 2025). Therefore,
   taxpayers claiming these provisions will continue to make these adjustments on their South Carolina return.
   1
   2

3. Tips. Eligible individuals may deduct qualified tips they received in
occupations identified by the Internal Revenue Service (IRS) as customarily
and regularly receiving tips. The maximum annual deduction is $25,000, and
the deduction phases out for taxpayers with modified adjusted gross income
over $150,000 ($300,000 for joint filers).

4. Overtime. Eligible individuals may deduct the portion of qualified overtime
   pay that exceeds their regular rate of pay. The maximum annual deduction is
   $12,500 ($25,000 for joint filers) and phases out for taxpayers with modified
   adjusted gross income over $150,000 ($300,000 for joint filers).
5. Car Loan Interest. Individuals may deduct interest paid on a loan used to
   purchase a qualified vehicle for personal use. The maximum annual deduction
   is $10,000 and phases out for taxpayers with modified adjusted gross income
   over $100,000 ($200,000 for joint filers).
6. State and Local Tax Deduction. Individuals who itemize deductions may
   deduct up to $40,000 in state and local taxes, increased from $10,000.
7. Research and Experimental Expenditures. Taxpayers may deduct domestic
   expenses paid or incurred during the year and may elect to deduct
   unamortized amounts paid or incurred in years before 2025. Foreign expenses
   are amortized over 15 years.
8. Business Assets. The amount taxpayers may expense under IRC Section 179
   increased to $2.5 million from $1 million.
   The Department will issue updated guidance once the Legislature addresses conformity.