South Carolina Employer's Payroll Tax Guide: Rates, Deadlines & Compliance

Handling South Carolina state payroll taxes for employers can feel overwhelming without clear guidance. Meeting state-specific payroll tax obligations is a non-negotiable task, but knowing exactly where to start makes it manageable. Whether you're onboarding your first employee or expanding operations into South Carolina, compliance must remain a top priority.

Employers in South Carolina face unique requirements for income tax withholding and unemployment insurance registration. Businesses with employees working even a fraction of their time in South Carolina often need to establish withholding accounts. Missing deadlines or skipping steps can lead to penalties, so staying on top of the process is key.

Here's a detailed breakdown of employer requirements for South Carolina state payroll taxes, including how to register and maintain compliance.

South Carolina Employer Requirements

Businesses with employees earning wages in South Carolina must register for both state income tax withholding and unemployment insurance. Any employer with personnel performing work—even partially—within the state generally needs to set up a South Carolina Withholding Tax Account. This applies to in-state employees, remote workers, and temporary staff.

To register for a South Carolina Withholding Tax Account Number, employers must apply through the Department of Revenue. The online application requires detailed information, including the business's federal Employer Identification Number (EIN), mailing address, and payroll specifics. Once processed, the Department of Revenue assigns an account number for filing and remitting state income tax withholdings.

Employers must also register with the Department of Employment and Workforce to comply with unemployment insurance (UI) requirements. UI taxes fund benefits for eligible unemployed workers in South Carolina. Any new business meeting wage or employment thresholds must set up an account with the Department of Employment and Workforce to contribute to the program.

South Carolina Withholding Tax

South Carolina requires employers to withhold state income taxes from wages paid to employees working within the state. Employers must ensure withholding if an employee's annual wages are expected to exceed $1,000. The state uses a progressive income tax structure, meaning higher income levels are taxed at higher percentages. For 2025, withholding rates for higher-income brackets can reach up to 6.3% or 6.5%, depending on the year's tax guidelines.

To calculate accurate withholding amounts, employees complete South Carolina's W-4 form, which determines exemptions and any additional withholding preferences. The form captures information such as filing status, dependents, and extra amounts the employee elects to withhold. Employers are responsible for applying this information to calculate withholdings correctly. Using outdated forms or failing to update employee records can lead to incorrect withholdings and compliance issues.

Withholding Rates and Exemptions

Supplemental wages, such as bonuses or commissions, are taxed at a flat rate of 6.4% in South Carolina. Employers must apply this specific rate unless employees indicate other preferences on their W-4 forms. This rate simplifies the process for taxing additional income while maintaining compliance with state requirements.

Annual reconciliation with the South Carolina Department of Revenue is mandatory for businesses. Employers submit a reconciliation form along with employee W-2s to confirm that the correct tax amounts were withheld and submitted throughout the year. Missing this step or providing incomplete information can result in penalties or delays.

Unemployment Insurance Tax

South Carolina employers are responsible for paying Unemployment Insurance (UI) tax to provide benefits for workers who lose their jobs. The tax applies to wages up to the state's taxable wage base, which is set at $14,000 for 2025. The taxable wage base changes annually, so employers should verify the current threshold each year to avoid errors.

New employers start with a State Unemployment Tax Act (SUTA) rate of 0.41%. After one year, the Department of Employment and Workforce assigns an updated rate based on the employer's experience within the system. This rate reflects multiple factors:

• Payment history: Employers who consistently file and pay on time may qualify for lower rates.

• Benefit claims: Higher unemployment claims charged to an employer's account can increase their rate.

• Payroll size: While the taxable wage base limits the amount subject to UI tax, larger payrolls contribute to the overall calculation.

Nonprofits with 501(c)(3) status and at least four employees may qualify for unique provisions, such as reimbursement in lieu of contributions. Agricultural employers with 10 or more workers in 20 different weeks or $20,000 in wages during a quarter must also register, though their obligations may vary slightly.

Paying UI Taxes and Reporting

Employers must submit quarterly wage reports and payments. Reports are due by the last day of the month following the end of each quarter. For example, April 30 is the deadline for reporting wages earned between January and March.

Reports must include detailed information for every employee, such as Social Security numbers, names, and wages paid during the quarter. Missing or inaccurate data can delay processing and may result in penalties.

Late filing triggers a penalty of 5% on unpaid taxes for each month the report is overdue, up to 25%. Interest also accrues on late payments. In some cases, the Department of Employment and Workforce may impose additional surcharges to encourage compliance. Timely submissions help avoid unnecessary costs and keep your account in good standing.

Deadlines and Filing Methods

Filing payroll taxes in South Carolina requires precise timing and accuracy. Employers need to follow strict schedules for submitting withholding returns and unemployment insurance (UI) taxes to remain compliant with state requirements. Missing deadlines can result in penalties, interest charges, or both, so it's important to stay organized and proactive.

Withholding Return Deadlines

The frequency of withholding tax filings depends on the total amount withheld. South Carolina assigns filing schedules as quarterly, monthly, or semiweekly based on thresholds.

• Quarterly Filing: Employers withholding $500 or less per quarter must file quarterly. The return is due by the last day of the month following the end of each calendar quarter. For example, the deadline for the first quarter (January–March) is April 30.

• Monthly Filing: Businesses withholding more than $500 per quarter but less than $12,000 annually must file monthly. Returns are due on the 15th of the month following the payroll month (e.g., May 15 for April wages).

• Semiweekly Filing: Employers with annual withholdings exceeding $12,000 file semiweekly. For wages paid Wednesday through Friday, taxes are due the following Wednesday. For wages paid Saturday through Tuesday, the deadline is the following Friday.

Review payroll records regularly to confirm the correct filing schedule. If withholding amounts change or exceed thresholds, adjust the frequency of filings immediately to avoid compliance issues.

UI Tax Deadlines

UI taxes follow a quarterly schedule. Employers submit wage reports and payments by the last day of the month after the quarter ends:

• Q1 (January–March): April 30

• Q2 (April–June): July 31

• Q3 (July–September): October 31

• Q4 (October–December): January 31

Employers who miss these deadlines face a penalty of 5% of unpaid taxes per month, up to 25%. Daily interest accumulates on overdue amounts. Accurate and timely submissions help maintain good standing with the Department of Employment and Workforce.

Filing Methods

The South Carolina Department of Revenue strongly encourages electronic filing. MyDORWAY, the state's online portal, allows employers to submit withholding returns, wage reports, and tax payments efficiently. Electronic submissions reduce processing times and provide instant confirmation, minimizing the risk of errors or delays.

Use MyDORWAY to schedule payroll tax payments in advance, especially for deadlines that fall on weekends or holidays. This ensures timely processing without manual follow-up. Employers who choose paper filing must use state-approved forms and mail them to the appropriate address. However, paper submissions can lead to delays and errors, making electronic filing the preferred method.

Stick to electronic filing whenever possible. The streamlined process and immediate feedback make it easier to stay compliant with South Carolina state payroll taxes for employers.

Common SC Payroll Tax Questions

Employers managing payroll taxes in South Carolina often encounter recurring questions. Knowing the specifics can help businesses handle their obligations with confidence and accuracy. Here's a straightforward breakdown of key topics.

What is the SUTA rate for new employers in SC?

The State Unemployment Tax Act (SUTA) rate for new employers in South Carolina is usually set at 0.41%. This introductory rate applies for the first full calendar year of payroll operations. After the initial period, the Department of Employment and Workforce evaluates the employer's experience rating, which can adjust the rate. Timely submissions, benefit charges, and overall payroll size all play a role in determining the updated rate.

What portion of payroll taxes do employers pay?

Employers cover several payroll tax obligations, including:

• State UI Tax: Applied to wages up to the taxable wage base, with rates based on the employer's experience history.

• Federal UI Tax (FUTA): Calculated at 6% on the first $7,000 of each employee's annual wages, though timely state UI payments often reduce the effective rate to as low as 0.6%.

• Employer Share of FICA: Employers match the employee’s contributions, which include 6.2% for Social Security and 1.45% for Medicare, totaling 7.65% (FICA).

Employees handle their share of FICA and income tax withholdings, but employers are responsible for processing accurate deductions and timely remittance.

Does SC have state withholding tax?

South Carolina requires employers to withhold state income tax from employee wages. Withholding is mandatory when annual earnings exceed $1,000 for an employee working in-state. Employers use the South Carolina W-4 form to determine each employee's exemptions, filing status, and any additional withholdings. Calculations must align with the state's progressive income tax brackets, ensuring compliance with withholding requirements.

How much is my paycheck taxed in South Carolina?

An employee's paycheck in South Carolina reflects federal, state, and FICA deductions. Specific amounts depend on:

• Federal Income Tax: Calculated based on federal W-4 details and IRS tax brackets.

• SC State Income Tax: Ranges from 0% for lower incomes to up to 6.5% for higher earners, depending on current tax year rates.

• FICA Deductions: Employees contribute 6.2% for Social Security and 1.45% for Medicare.

Additional reductions may include health and retirement benefits, garnishments, or other voluntary deductions. Each paycheck reflects a combination of mandatory taxes and personal adjustments.

Payment Methods and Recordkeeping

Employers in South Carolina must deposit payroll tax withholdings using approved methods to stay compliant. The most efficient option is MyDORWAY, the state's electronic filing system. It allows employers to submit payments directly to the South Carolina Department of Revenue and provides immediate confirmation. This can help reduce errors and ensure on-time deposits.

Another option is using third-party payroll providers authorized to handle withholding payments. These services often integrate with payroll systems, automating the process of calculating and remitting taxes. Employers should verify that any provider they use is approved and carefully review reports to confirm deposits are accurate and submitted on schedule.

Maintaining thorough and accurate records is just as important as timely payments. Employers need to keep wage and tax documentation organized and accessible for audits or reconciliation. Records should include:

• Employee names, addresses, and Social Security numbers.

• Gross wages, including bonuses, commissions, and tips.

• Tax withholdings for state and federal income taxes, FICA, and other deductions.

• Dates and amounts of all tax deposits.

• Copies of employee W-2 forms.

• Documentation of unemployment insurance contributions.

The South Carolina Department of Revenue requires employers to retain payroll records for several years. Secure digital storage is a smart choice for organizing and preserving these documents. Using systems with reliable backup ensures records are safe and easily retrievable when needed.

Compliance Tips for Businesses

Managing South Carolina state payroll taxes for employers requires precision and consistent attention to detail. Simple missteps, like miscalculating withholding amounts or missing updates to tax rates, can lead to penalties. Staying ahead means verifying processes, monitoring changes, and using reliable payroll systems to avoid errors.

Verify Deposit Frequencies

Double-check that your payroll deposit schedule aligns with the required withholding thresholds. South Carolina assigns filing frequencies based on the total amount withheld.

• Quarterly Filings: For businesses withholding $500 or less per quarter.

• Monthly Filings: Required for businesses withholding more than $500 per quarter but less than $12,000 annually.

• Semiweekly Filings: Necessary for employers withholding over $12,000 in a year.

Failing to adjust deposit schedules as withholding amounts increase is a common mistake. Schedule regular payroll reviews to ensure compliance with the correct filing frequency.

Monitor State Agency Updates

South Carolina revises tax rates, withholding guidelines, and wage bases annually. Employers need to stay informed about these adjustments to avoid discrepancies in payroll processing. Updates from the South Carolina Department of Revenue or the Department of Employment and Workforce can include changes to SUTA rates, taxable wage bases, or supplemental withholding percentages.

Set time aside at the end of each year to review official announcements and integrate any changes into payroll operations before the new tax year begins.

Schedule Payroll Audits

Routine payroll audits help maintain accuracy in tax filings and employee records. Audits should focus on verifying employee data, ensuring accurate withholding amounts, and confirming correct application of state-specific tax rules.

Key areas to examine:

• Employee filing status and exemptions based on South Carolina W-4 forms.

• Timeliness and accuracy of unemployment insurance contributions.

• Proper classification of employees working in multiple states.

Audits reduce the risk of compliance issues and can identify errors before they result in penalties.

Use Payroll Systems Designed for Accuracy

Manually managing payroll taxes increases the risk of mistakes. Employers should rely on payroll systems that automate tax calculations, track deadlines, and adjust for annual tax updates. For businesses operating in multiple states, systems that handle multi-jurisdiction compliance simplify the process and reduce administrative burdens.

A reliable payroll system should automatically update withholding rates, calculate tax contributions, and generate reports for audits or reconciliations. Investing in accurate payroll solutions saves time and ensures compliance with South Carolina state payroll taxes for employers.

Staying compliant with South Carolina state payroll taxes for employers requires consistent attention to detail and a commitment to accuracy. We understand the challenges of managing payroll taxes, which is why our team at GoCo is dedicated to simplifying the process for you. If you're ready to streamline your payroll operations and maintain compliance with ease, book a demo with us today to see how our platform can help your business thrive.