Credits and breaks for South Carolina families: the dependent exemption, the $200 EITC, child care and Future Scholar

A child on a South Carolina return is worth a dependent exemption of $4,930 (the 2025 figure; the indexed 2026 figure is to come), and a second exemption of the same amount if the child was under 6 at the end of the year. At the 5.21% rate that is about $257 of tax per dependent and about $514 for a young child. That exemption, not a credit, is the state’s main family break. Around it sit a two wage earner credit of up to $350 for working couples, a child and dependent care credit of 7% of the federal qualifying expenses (at most $210 for one child, $420 for two or more), a refundable tuition credit of up to $1,500 a year for a student at a South Carolina college, and a deduction for every dollar put into the state’s Future Scholar 529 plan. The state earned income credit, 125% of the federal one, is capped at $200 per return from 2026 and cannot produce a refund. There is no South Carolina child tax credit and no K-12 credit.

The 2026 rewrite changed the frame these sit in. The SC1040 now starts from federal adjusted gross income, so the federal standard deduction, including the larger one for a head of household, no longer reaches the state. In its place is the South Carolina Income Adjusted Deduction: $15,000 single, $22,500 head of household, $30,000 on a joint return, phasing out as federal AGI rises past $40,000, $60,000 or $80,000. The federal child tax credit never affected the state return and still does not; a credit reduces federal tax, not federal AGI. The full walk through the return is in How South Carolina income tax works.

The dependent exemption

South Carolina allows an exemption for each dependent claimed on the federal return, qualifying children and qualifying relatives alike, and the count must match the federal return. The amount is indexed each year: $4,790 for 2024, $4,930 for 2025, with the 2026 figure to be published by the Department with the 2026 forms. A parent you support who is your federal dependent is your South Carolina dependent too. Which parent claims the child follows the federal answer, covered in Who claims the child.

A dependent who had not reached age 6 by December 31 earns a second exemption of the same amount. The return asks for each young child’s date of birth and Social Security number. The year a child turns 6 the second exemption is gone; a child born in December 2026 earns both for 2026.

There is no personal exemption for the taxpayer or spouse. Act 110 of 2026 kept the dependent exemption while removing the federal standard deduction, so a family’s deductions on the 2026 return are the SCIAD plus the dependent exemptions and nothing else general.

The SCIAD by filing status

Filing status matters more on the SCIAD than anywhere else on the return, since the 1.99% bracket runs to $30,000 for everyone. A head of household deducts $22,500, half again what a single filer deducts, and the phase-out starts at $60,000 of federal AGI instead of $40,000 and ends at $142,500 instead of $95,000. The reduction inside the range is $22,500 × (AGI − $60,000) ÷ $82,500, rounded down to the next $10. For a couple the figures are $30,000, $80,000 and $190,000. Every dollar of AGI inside the phase-out costs about 27 cents of deduction, so the real marginal rate there is about 6.6% rather than 5.21%. Head of household status itself follows the federal rules; see Head of household.

The earned income credit, now $200

South Carolina’s earned income credit is 125% of the federal EITC, available to full-year residents who claimed the federal credit. Through 2025 it had no cap. Act 110 capped it at $200 per return beginning with tax year 2026. It is nonrefundable: it reduces South Carolina tax to zero and stops. A family with a $3,000 federal EITC therefore gets at most $200 from the state, and only if it owes at least $200. Because the SCIAD and the dependent exemptions already take most low-income families to zero, the credit is often worth less than $200 and sometimes nothing. The federal credit, which is refundable and far larger, is in The earned income credit. The state credit is claimed on Schedule TC-60 and carried to the SC1040TC.

The child and dependent care credit

The state credit is 7% of the expenses that qualified for the federal child and dependent care credit, the amount on which the federal credit was figured. The federal limits are $3,000 of expenses for one qualifying person and $6,000 for two or more, so the state credit tops out at $210 and $420. It is for full-year residents, cannot be claimed married filing separately, and is nonrefundable. Part-year residents and nonresidents may take 7% of the prorated expenses. Money run through a dependent care flexible spending account is better still: it never enters federal AGI, so it escapes South Carolina tax entirely at 1.99% or 5.21%, and it lowers the AGI the SCIAD phase-out is measured against. The federal credit is in The child and dependent care credit.

The two wage earner credit

A married couple filing jointly where both spouses have earned income taxed by South Carolina gets a credit of 0.7% of the lower-earning spouse’s qualified earned income, up to $50,000 of it, so the maximum is $350. Qualified earned income is South Carolina earned income less certain federal adjustments, such as that spouse’s IRA deduction. The credit is not available to single, separate, surviving spouse or head of household filers. Most software computes it automatically from the W-2s; the thing to check is that both spouses’ wages are coded to the right person.

Future Scholar: a 529 deduction with no cap

Contributions to Future Scholar, the South Carolina College Investment Program, are deductible in full on the SC1040, with no state dollar limit beyond the plan’s own contribution limits under section 529. Contributions to the South Carolina Tuition Prepayment Program are deductible in full as well. Contributions and rollovers made from January 1, 2026 through April 15, 2027 may be deducted on the 2026 return, so a family can decide after seeing the draft return how much to put in. A grandparent who is a South Carolina resident gets the same deduction on his or her own return. Earnings are not South Carolina income while they stay in the plan or come out for qualified expenses; a nonqualified withdrawal puts the earnings back in income. Out-of-state 529 plans earn no deduction. Because the federal return asks nothing about 529 deposits, this is the deduction most often left off a South Carolina return.

The tuition tax credit

South Carolina has a refundable credit for tuition at a South Carolina college or university: 50% of qualified tuition, up to $1,500 a year, for up to four consecutive years from first enrollment. The conditions are specific. The student must have enrolled within 12 months of finishing high school, be a degree-seeking undergraduate (or in a one-year-plus certificate or diploma program), qualify for in-state tuition, complete 30 credit hours in the year (15 for a one-semester year), not be in default on a student loan, and not have been found guilty of an alcohol- or drug-related misdemeanor or any felony in the year. A student who received a LIFE or Palmetto Fellows scholarship for a semester does not qualify for that semester (verify). Qualified tuition is what the school charges as a condition of enrollment, including required fees but not room, board or books, reduced by scholarships and grants used to pay it; loans do not reduce it. The credit goes to whoever paid the tuition, the student or a parent, in proportion to what each paid, on Form I-319, one per student, with a copy of the federal return attached. The federal credits are in Education credits.

What South Carolina does not have

No child tax credit. No K-12 tuition or school expense credit; 529 money may now be used for K-12 tuition federally, and the Future Scholar deduction applies to the contribution either way, but there is no separate state break for private school or homeschool costs. No deduction for medical expenses, mortgage interest or charitable gifts from 2026, since there is no itemizing. No renter credit and no property tax credit on the return. And the federal tips, overtime and senior deductions, which help some working families federally, do not reach the state return at all: the SC1040 starts from AGI and Act 110 specifically does not adopt them.