Your Ultimate Guide to South Carolina Payroll

Employers must navigate various regulations and requirements to ensure proper payroll withholding in each US state. This guide introduces what employers must pay and withhold from payroll in South Carolina, including unemployment insurance, personal income tax, and workers’ compensation. 

Paying unemployment insurance (UI) in South Carolina

On top of withholding federal taxes such as Medicare and Social Security taxes, you are also responsible for withholding and paying certain South Carolina state taxes from your employee’s payroll. These taxes together are referred to as employer payroll taxes or payroll withholding. One of the taxes you will need to pay is unemployment insurance (UI). 

Unemployment insurance is a national program administered by the US Department of Labor. The program provides temporary payments to people who are unemployed through no fault of their own. Employers can manage their South Carolina unemployment insurance through the online portal.

For more information on paying your unemployment insurance, refer to the South Carolina Department of Employment and Workforce.

South Carolina state unemployment insurance (SUI) tax rates

South Carolina’s unemployment insurance rates are determined annually based on the employer’s experience rating and the state’s Unemployment Insurance Trust Fund balance. Employers can access their specific tax rates through the South Carolina Department of Employment and Workforce’s online portal.

Employers are responsible for paying unemployment insurance contributions based on these rates. Contributions help maintain the unemployment fund, supporting employees in times of job loss.

Withholding personal income tax from your South Carolina employee

Employers are also responsible for withholding certain South Carolina state taxes from their employee’s payroll. Personal income tax, also known as individual income tax or state income tax, is a tax on the income of South Carolina residents. Employers must deduct the tax from the employee’s wages and withhold it. 

After you withhold the tax from your employee, you are responsible for paying the amount you withheld to the state. You can file and pay the withholding amount online.

For more information on paying the withholding amount, refer to the South Carolina Department of Revenue.

State withholding tax rates in South Carolina

South Carolina uses a progressive tax rate system, which means the rate varies depending on the income level of the employee. Employers must use the state's tax withholding tables to calculate the appropriate withholding amount for each employee. For more information, visit the South Carolina Department of Revenue - Withholding Tax.

Employers can manage these tax payments using South Carolina’s MyDORWAY online system, ensuring timely and accurate remittance.

Paying South Carolina workers’ compensation

In addition to paying South Carolina payroll taxes, employers also need to pay for workers’ compensation. Unlike most other states, you will not need to purchase workers’ compensation coverage until you have four or more employees in South Carolina. 

Workers’ compensation is a type of insurance that covers wages and medical benefits for employees who are injured while performing their job. The state of South Carolina provides information online to help you find a qualified commercial carrier. Employers should verify that their workers’ compensation insurance complies with the state’s regulations for workers’ compensation.

Payroll tax due dates in South Carolina

Adhering to payroll tax due dates is crucial to maintain compliance and avoid penalties. South Carolina has specific deadlines for various tax filings:

Quarterly tax filings

Employers are required to file quarterly tax reports, with due dates at the end of the month following each quarter:

Annual reconciliation

An annual reconciliation of withheld taxes must be submitted by January 31st of the following year. For more information on the filing deadlines, visit the South Carolina Department of Revenue - Filing Deadlines.

Submission process for payroll taxes in South Carolina

Employers must file payroll tax forms electronically using South Carolina’s MyDORWAY system. The state mandates online filing for efficiency and accuracy. Employers should use forms such as WH-1605 (Quarterly Withholding Return) and WH-1606 (Annual Reconciliation Return).

The MyDORWAY system allows employers to register, file, and pay their payroll taxes electronically. It supports efficient and accurate tax filing and payments, minimizing the risk of errors and ensuring compliance. For more information on electronic filing, visit the South Carolina MyDORWAY System.

Withholding paid family leave from South Carolina employees

South Carolina does not currently have a state-mandated paid family leave program. However, employers may need to comply with federal FMLA requirements. Employers should stay informed about any future state legislation that could introduce similar programs.

Simplify US payroll tax compliance with Deel

While this guide provides essential information on South Carolina payroll taxes, payroll compliance and state requirements extend beyond what is covered above. To streamline the process and ensure full compliance, companies can turn to Deel. 

Deel offers a comprehensive solution for managing US and international payroll, including payments, taxes, worker classification, and more. Speak with an expert today to see how you can streamline your US payroll processes and ensure compliance with state regulations.