• Chace Campbell
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Estate planning involves many moving parts, especially when you consider how taxes might affect what you leave behind. If you’re planning for the future and have ties to South Carolina, you might be wondering how your estate will be taxed after your death.

This question often leads to confusion, especially since tax laws vary widely from state to state.

Before you make any assumptions about what your estate or your loved ones may owe, it helps to break down how estate taxes work in general and what applies specifically to South Carolina residents.

The answer is more nuanced than a simple yes or no, and the implications for your estate plan may surprise you.

Understanding the Basics of Estate Taxes

The federal government imposes an estate tax on large estates. As of 2025, the federal estate tax exemption is $13.99 million per individual.

This means that if your total estate is worth less than that amount, your estate will not owe federal estate tax. For married couples, the exemption can effectively double with proper planning, reaching $27.98 million.

Anything above the exemption limit is subject to a progressive tax rate, starting at 18 percent and climbing to 40 percent. However, the vast majority of estates never come close to triggering the federal tax. According to the IRS, less than 0.1 percent of estates owed federal estate tax in 2022.

In addition to federal rules, some states impose their own estate taxes, inheritance taxes, or both. These state-level taxes can significantly reduce the value of what your heirs receive, depending on where you live or where your property is located.

What About South Carolina?

South Carolinians get a break because our state does not have a state estate tax. It also does not impose an inheritance tax. This can be a relief if you’re trying to preserve more of your wealth for your heirs.

Once federal estate taxes are taken into account, your estate won’t face an additional state-level tax burden in South Carolina.

This wasn’t always the case. Prior to 2005, many states, including South Carolina, imposed what was known as a “pickup” tax. This tax allowed states to collect a portion of the estate tax that would otherwise go to Uncle Sam.

The federal government phased out that credit, and South Carolina chose not to enact a replacement estate tax after it ended.

As a result, South Carolina residents benefit from a relatively favorable tax environment for estate planning. But that doesn’t mean you can ignore tax planning altogether.

When Could Taxes Still Be a Concern?

Just because South Carolina doesn’t tax estates directly doesn’t mean your estate will avoid all taxes.

If your estate exceeds the federal exemption, you will still need a strategy to deal with federal estate tax. That might involve lifetime gifts, charitable planning, or other tools to help reduce your taxable estate.

You should also consider where your property is located. If you own real estate in another state—such as a vacation home in a state with its own estate or inheritance tax—that state’s laws could still apply.

For example, states like Massachusetts and Oregon have much lower estate tax thresholds, and owning property there could trigger unexpected taxes.

Another factor to consider is income taxes on inherited retirement accounts. While these are not technically estate taxes, they can reduce the value of the inheritance.

If your estate includes a traditional IRA or 401(k), your beneficiaries will have to pay income tax on those distributions over a limited time frame under the SECURE Act.

Planning Around Tax Law Changes

Tax laws are not static. The current federal exemption is set to expire at the end of 2025 unless Congress acts to extend it. If that happens, the exemption could drop to about $6 million per person, which would bring more estates into taxable territory.

Changes in federal or state tax law can affect how your estate plan works, especially if your financial situation evolves over time. This is why periodic reviews are recommended.

We Are Here to Help!

Our doors are open if you would like to work with a Greenville, SC estate planning lawyer to put a plan in place. You can call us at 864-268-8244 to request a consultation appointment, and you can use our contact form to send us a message.