South Carolina Mileage Deduction 2026: New 1.99% and 5.21% Brackets

South Carolina's old 6% top rate is gone. H.4216, signed March 30, 2026, replaced the graduated schedule with two brackets for tax year 2026: 1.99% on taxable income under $30,000 and 5.21% at $30,000 and above, less a $966 offset. If you are working from a 6% figure, you are overstating what a mileage deduction saves you here.

Source: South Carolina Department of Revenue, Information About H. 4216: "The tax rate for income less than $30,000 is 1.99%" and "The tax rate for income from $30,000 and above is 5.21%, minus $966." Effective for tax year 2026, returns due April 15, 2027. Verified August 2026.

What the deduction is worth under the new brackets

At 15,000 business miles you deduct $11,138 at the 76¢ rate in effect from 1 July 2026 (72.5¢ before that). A self-employed filer above the $30,000 line saves roughly $580 in South Carolina tax at 5.21%, plus about $4,154 federally, for around $4,734 in total. The federal figure assumes a 22% marginal bracket plus 15.3% self-employment tax and no qualified business income deduction. Your own number moves with your bracket.

Under the retired 6% schedule the same deduction was worth about $684 to the state side. The mileage deduction did not get smaller; the rate it offsets did.

The bracket edge is where tracking pays most

South Carolina's two-bracket structure creates a sharp step at $30,000 of taxable income. A driver whose net income lands just above that line is offsetting dollars at 5.21%, while the same deduction applied below the line offsets at 1.99%. Because a full year of business miles routinely runs $8,000 to $12,000 in deductions, a complete log is often what moves taxable income across that step in the first place.

That makes the marginal value of the last few hundred logged miles considerably higher than the average value of all of them, which is not how most drivers think about it.

The active trade or business election

Sole proprietors and single-member LLC owners in South Carolina may elect a flat rate on active trade or business income rather than the standard schedule. The election is made annually, so it is worth recomputing each year rather than setting once and forgetting. Run the numbers both ways after your mileage deduction is applied, not before, because the deduction changes which side wins.

How to File

Deduct your business miles on federal Schedule C, Line 9 at 76¢ (the rate from 1 July 2026; 72.5¢ before that)/mile. South Carolina starts from federal adjusted gross income, so the deduction carries through automatically. South Carolina has no local income taxes, so there is one state rate and one federal rate to plan against. If you expect to owe more than $100 in state tax, make quarterly estimated payments.

FAQ

Is South Carolina's top income tax rate still 6%?

No. For tax year 2026 the rate above $30,000 of taxable income is 5.21%, less a $966 offset, under H.4216. The Department of Revenue also notes the top rate may fall further if the Board of Economic Advisors projects revenue growth of 5% or greater.

Does South Carolina require mileage reimbursement?

No. South Carolina has no state law requiring private employers to reimburse mileage.

Can W-2 employees deduct mileage in South Carolina?

No. The mileage deduction for W-2 employees was permanently eliminated under the One Big Beautiful Bill. If your employer does not reimburse, you have no tax remedy.

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