Does South Carolina have an estate tax? The answer is no, currently South Carolina does not collect a state estate tax, although things were different a few years ago before major changes took effect with regard to federal estate tax laws. Prior to January 1, 2005, South Carolina, like many other states, collected a separate state estate tax, called a "pick up tax," that was actually equal to a portion of the overall federal estate tax bill.
On January 1, 2005, the pick up tax was officially phased out under the provisions of the Economic Growth and Tax Relief Reconciliation Act ("EGTRRA"). Since then 18 states and the District of Columbia chose to enact laws that allow the assessment of a state estate tax (of those 18 states only 15 currently collect a state estate tax), but the South Carolina legislature did nothing and as a result the state no longer collects a state estate tax.
One thing to keep in mind is that the federal estate tax and the pick up tax (and therefore the South Carolina estate tax) are scheduled to come back on January 1, 2011, due to the sunset of EGTRRA, but at this point no one really knows what will happen with the federal estate tax in 2010 let alone in 2011 and beyond.
2011 Update: On December 17, 2010, President Obama signed the Taxpayer Relief Act of 2010 (TRA 2010) into law, which overrode the provisions of EGTRRA with regard to estate taxes. As a result of this new law, the pick up tax was not reinstated, and so South Carolina will not collect a state estate tax for the 2011 and 2012 tax years. Nonetheless, the provisions of TRA 2010 are set to sunset on December 31, 2012, in which case the pick up tax, as well as the South Carolina estate tax, will return on January 1, 2013. Stay tuned for updates as they become available.
- Information from the South Carolina Department of Revenue - Estate Tax Procedures for Decedents
- Understanding Death, Estate and Inheritance Taxes
- What is the Pick Up Tax?
- Which States Do Not Collect a State Estate Tax?
- State Estate Tax and Exemption Chart
- Federal Estate Taxes Will Die on January 1!
- What is the Future of the Federal Estate Tax?