Self-employed taxes and LLC costs in South Carolina, 2026
South Carolina rewrote its income tax for 2026, and the new return starts from federal AGI instead of federal taxable income.
Total tax on this income in 2026
$19,455
Put aside 23% of each payment · $4,864 per quarter
| Self-employment tax (15.3%) | $12,010 |
| Federal income tax | $5,790 |
| South Carolina income tax | $1,655 |
| QBI deduction used | $12,579 |
| Effective rate on all income | 22.9% |
With an S corp election and a $34,000 salary, about $3,484 less tax (check it).
Computed by Radif Partners from IRS and South Carolina agency documents read on October 15, 2026 · How we calculate
South Carolina is one of the cheapest states to keep an LLC: the articles cost $110 under the state code, and an LLC taxed as a partnership or a disregarded entity then files no annual report and owes no franchise tax. The income tax changed shape in 2026. Act 110 leaves two brackets, 1.99 % on the first $30,000 of taxable income and 5.21 % above, for every filing status. The return now starts from federal adjusted gross income, so the federal standard deduction and the 20% QBI deduction no longer reduce the state figure; a South Carolina deduction of $15,000 single or $30,000 joint replaces them. On $75,000 of profit a single freelancer owes about $1,268 to the state and $16,763 in total. An LLC taxed as an S corp pays a corporate license fee of at least $25, and at $120,000 of profit the election saves around $4,831.
South Carolina at a glance, 2026
| LLC filing fee | $110 |
| none for an LLC taxed as a partnership or disregarded entity | none |
| Income tax | 1.99 % to 5.21 % |
| S corporation election | followed by the state |
| Tax on $75,000 of profit (single) | $16,763 in all, $1,268 to South Carolina |
The 2026 tax year is the first under Act 110, signed on March 30, 2026. The Department of Revenue explains it in Information Letter 26-20: the top rate falls to 5.21 %, the brackets shrink to two, and the law allows further cuts in later years. The less visible change matters more to a sole proprietor. South Carolina used to begin with federal taxable income, which meant the federal standard deduction and the QBI deduction carried over automatically. It now begins with AGI and grants its own deduction, which phases out at higher incomes.
Losing the QBI deduction at the state level
For a freelancer, AGI is roughly Schedule C profit minus half of self-employment tax and a few adjustments. The 20% qualified business income deduction is taken after AGI on the federal return, so it no longer shrinks the South Carolina base. A designer with $40,000 of profit pays about $336 to the state; a married couple filing jointly on $110,000 of business profit owes around $1,953. Because both brackets apply to all filing statuses, the joint return gains only from the doubled state deduction. The state income tax comparison shows where this places South Carolina among its neighbors.
State income tax on a freelance profit
South Carolina income tax
$687
| State share of profit | 1.1% |
| Total with federal | $12,724 |
The lower rate for active business income
Section 12-6-545 of the South Carolina Code has for years let owners of pass-through businesses elect a reduced rate on active trade or business income, and lets qualifying partnerships and S corporations pay it at the entity level. The information letter on Act 110 does not say how that election fits with the new brackets, so the calculator ignores it. A CPA can tell you whether it still helps at your income.
An LLC with almost no upkeep
Once the articles are filed, a South Carolina LLC taxed as a partnership or disregarded entity has no yearly report and no franchise tax, per section 33-44-1204. That changes with the S election: the company files the corporate annual report with its state return and pays the corporate license fee, $15 plus $1 per $1,000 of capital stock and paid-in surplus, with a $25 minimum under section 12-20-50. For a small consulting firm that fee rarely exceeds the minimum, so the election turns on federal payroll math, which the LLC vs S corp page lays out.
Paying during the year
Estimated payments are required once you expect to owe $100 or more with the SC1040, a low bar. The 2026 SC1040ES keeps the federal calendar and adds a shortcut: file the return by February 1, 2027 and pay the full balance, and the January installment can be skipped. At $75,000 of profit, a quarter of the whole tax bill, federal and state, is about $4,191.
South Carolina income tax brackets
| Taxable income, single | Rate | Taxable income, joint | Rate |
|---|---|---|---|
| $0 to $30,000 | 1.99 % | $0 to $30,000 | 1.99 % |
| over $30,000 | 5.21 % | over $30,000 | 5.21 % |