by Robert Borges on January 13, 2025
Planning for retirement can be equal parts exciting and stressful. When you’re looking for fifty-five-plus communities in North Carolina and South Carolina, it’s important to consider much more than the cost of living. For example, property taxes are higher in North Carolina (0.63%) than in South Carolina (0.46%).
Many individuals want to find an active adult community that allows them to live out their retirement years in comfort. This time of your life shouldn’t be focused on penny-pinching to only pay for the essentials–you can follow senior housing market trends to know where the best places to live are without sacrificing your retirement dreams. You should also consider the tax laws and regulations that impact retirees the most in each state.
In this blog post, we’ll compare what you can financially expect when you retire in either North Carolina or South Carolina.
Comparing the Taxes Between North Carolina and South Carolina
Both North and South Carolina are listed as two of the top states to retire in for numerous reasons, but how do they stack up against each other when it comes to tax season? Let’s take a closer look:
State Taxes
State taxes are taxes that are funded by individuals and businesses, namely property, individual income, sales, and excise taxes. Remember that each state has its own tax laws; some may offer lower rates in one area, but it’s balanced by higher taxes in another. For example, North Carolina has a flat individual state income tax rate of 4.5% and South Carolina’s ranges from 0.00% to 6.4%.
Property Taxes
South Carolina currently has the 45th highest property tax rate, which means it’s extremely low compared to the majority of the country. The state averages at 0.5% of a property’s assessed fair market value. However, the North Carolina property tax rate is much higher, going as high as 0.78%.
Property tax can also include vehicle tax and a registration statement covering all vehicle types (including cars and boats). This figure is based on the mileage calculations of the vehicle, and the exact rates will vary depending on where in the state you live.
In both states, seniors may be eligible for significant property tax exemptions and reductions. There are currently no estate or inheritance taxes in either state.
Personal Income Tax
North Carolina has a flat individual tax rate of 4.75%, but it is expected to reduce annually until it reaches 3.99% by the year 2027. South Carolina uses a graduated-rate income tax structure. This structure has three different brackets:
- 0%
- 3% on taxable income from $3,200 to $16,039
- 6.5% on taxable income over $16,039
Luckily, both states provide standard deductions. South Carolina provides slightly higher deductions than North Carolina, as well as personal exemptions for dependents. Neither state taxes Social Security benefits.
Sales Tax
North Carolina ranks at 26th in the US for combined state and average local sales tax, while South Carolina averages at 7.43%. Prescription medications and groceries are exempt from these taxes in both states.
Other Financial Considerations
Before you make a decision about whether Raleigh, North Carolina is a good place to retire, you need to consider other factors that will have an impact on your financial health. This is because taxes aren’t the only thing that will impact how you spend (or don’t spend) your retirement funds. For example, take a look at the cost of living index in both states.
North Carolina has a larger population than South Carolina, but it also has a higher cost of living. Keep in mind that North Carolina has a cost of living that is 4% lower than the national average. Additionally, both states have higher health costs than the national average, but this is mainly attributed to a larger senior population when compared to other states. Aside from that, the cost of living in both states is lower than the national average, including rent costs if you aren’t committed to purchasing property just yet.
Explore Retirement Communities on Private Communities
South Carolina may be a more financially sound option for retirees than North Carolina due to a low cost of living and overall lower taxes. If you’re interested in exploring high-quality fifty-five-plus communities in South Carolina, try the Private Communities search tool today! We make finding your dream home for retirement as easy as clicking a button.
