Military Retiree Pay Exemption

With the signature of Governor Henry McMaster on May 13th, South Carolina became the most recent state to entirely exempt military retiree pay from taxation.

This bill, officially named the Workforce Enhancement and Military Recognition Act (H.3247), will benefit over 62,000 military retirees who call South Carolina home, and its proponents hope its effects will attract additional military retirees to the Palmetto State. Governor McMaster expressed those hopes in a statement, saying: “we’re doing everything we can to incentivize our nation’s heroic veterans to live, work, and raise their families here in S.C. This is just one more way we can thank our Veterans for their sacrifice, and it adds to the long list of things that makes South Carolina the most military-friendly state in the country.”

Before this bill, South Carolina law taxed a portion of military retiree income with very limited exemptions. With this act in place, South Carolina joins 25 other states which have state income tax but exempt military retirement pay. Multiple other states have various taxation exemptions for military pay or do not have state income tax at all, but South Carolina will become the only state in the coastal southeast besides its neighbor, North Carolina, to exempt all military pay from tax. Bills concerning military retiree pay have also recently passed in Virginia and Georgia but neither of those states passed full exemptions in the same manner as H.3247. Additionally, H.3247 also protects benefits of surviving military family members from taxation.

Multiple veteran advocacy organizations were heavily involved in the bill’s long journey to Governor McMaster’s desk. The effort was championed by the South Carolina VFW, S.C. Disabled American Veterans, S.C. Association of the US Army, S.C. Marine Corps League, S.C. Reserve Officer’s Association, S.C. Navy League, S.C. American Veterans, and S.C. Council Military Officer’s Association of America (MOAA). In some cases, these organizations were engaged in the push for H.3247 for eight years. Tom Robillard, COL, USAF (Ret), the local MOAA Vice President for legislative affairs calls the bill signing “a hallelujah day” for all involved.

The law is effective beginning tax years after 2021. The Office of the Governor is currently working to schedule a ceremonial bill signing for the Workforce Enhancement & Military Recognition Act (H.3247). Details on the time and date of the ceremonial bill signing will be released by the Governor’s Press Office. South Carolina Department of Veterans’ Affairs Secretary Will Grimsley, other SCDVA staffers and supporters of the legislation will be present during the ceremonial bill signing.

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The Military Enhancement Committee (MEC) of Beaufort County Support Fund is a charitable fund administered by the Community Foundation of the Lowcountry. Its mission is to enhance the quality and value of the military installations of Beaufort County, namely, Marine Corps Recruit Depot Parris Island, Naval Air Station Beaufort, and Beaufort Naval Hospital. The MEC seeks to defend these installations against any threats like closure or natural disaster, while also positioning them for enhancement through personnel, resources, and other opportunities that both benefit the Department of Defense and our region.