Does South Carolina tax overtime pay?
Yes. South Carolina conforms to the federal OBBBA overtime deduction for 2026, so qualified overtime premium is excluded from South Carolina taxable income too. South Carolina's income tax starts from federal taxable income, so it automatically couples to the federal OBBBA overtime deduction. South Carolina taxpayers claim the same overtime deduction on their state return that they claim federally, up to $12,500 ($25,000 for joint filers), through 2028. The state top rate fell to 6% for the July 2025 to June 2026 period.
Federal rule vs South Carolina rule
| Layer | 2026 treatment of overtime premium |
|---|---|
| Federal | Up to $12,500 single / $25,000 MFJ of FLSA half-time premium deducted from taxable income, phasing out at $150k/$300k MAGI. 2025–2028. |
| South Carolina | Graduated rates from 0% to 6.00%; the top rate is 6.00% for July 2025 through June 2026 |
| Result for you | South Carolina's income tax starts from federal taxable income, so it automatically couples to the federal OBBBA overtime deduction. South Carolina taxpayers claim the same overtime deduction on their state return that they claim federally, up to $12,500 ($25,000 for joint filers), through 2028. The state top rate fell to 6% for the July 2025 to June 2026 period. |
How state overtime taxation works
Most states start from federal AGI and add back or subtract state-specific adjustments. The federal OBBBA overtime deduction lives in federal taxable income only, so a state that starts from federal AGI still taxes the overtime unless it conforms to the deduction or passes its own exemption. Three groups result: the nine no-income-tax states never taxed overtime at all; a set of states that auto-coupled or legislated conformity exclude it for 2026; the rest, including large non-conforming states like California and New York, tax overtime as ordinary wages.
Every state, one table
All 50 states and DC. Tap any state.
| State | Taxes overtime? | Top 2026 rate |
|---|---|---|
| Alabama | Yes | 5.00% |
| Alaska | No (no income tax) | n/a |
| Arizona | Yes | 2.5% |
| Arkansas | Yes | 3.9% |
| California | Yes | 13.3% |
| Colorado | Yes | 4.40% |
| Connecticut | Yes | 6.99% |
| Delaware | Yes | 6.60% |
| District of Columbia | Yes | 10.75% |
| Florida | No (no income tax) | n/a |
| Georgia | Yes | 5.19% |
| Hawaii | Yes | 11% |
| Idaho | No (conforms) | 5.3% |
| Illinois | Yes | 4.95% |
| Indiana | Yes | 2.95% |
| Iowa | No (conforms) | 3.8% |
| Kansas | Yes | 5.58% |
| Kentucky | Yes | 3.50% |
| Louisiana | Yes | 3.00% |
| Maine | Yes | 7.15% |
| Maryland | Yes | 6.25% |
| Massachusetts | Yes | 9.0% |
| Michigan | No (conforms) | 4.25% |
| Minnesota | Yes | 9.85% |
| Mississippi | Yes | 4.00% |
| Missouri | Yes | 4.7% |
| Montana | No (conforms) | 5.65% |
| Nebraska | Yes | 4.55% |
| Nevada | No (no income tax) | n/a |
| New Hampshire | No (no income tax) | n/a |
| New Jersey | Yes | 10.75% |
| New Mexico | Yes | 5.9% |
| New York | Yes | 10.9% |
| North Carolina | Yes | 3.99% |
| North Dakota | No (conforms) | 2.5% |
| Ohio | Yes | 2.75% |
| Oklahoma | Yes | 4.50% |
| Oregon | No (conforms) | 9.9% |
| Pennsylvania | Yes | 3.07% |
| Rhode Island | Yes | 5.99% |
| South Dakota | No (no income tax) | n/a |
| Tennessee | No (no income tax) | n/a |
| Texas | No (no income tax) | n/a |
| Utah | Yes | 4.45% |
| Vermont | Yes | 8.75% |
| Virginia | Yes | 5.75% |
| Washington | No (no income tax) | n/a |
| West Virginia | Yes | 4.82% |
| Wisconsin | Yes | 7.65% |
| Wyoming | No (no income tax) | n/a |
Common questions
Does South Carolina tax overtime pay in 2026?
Yes. South Carolina conforms to the federal OBBBA overtime deduction for 2026, so qualified overtime premium is excluded from South Carolina taxable income too. South Carolina's income tax starts from federal taxable income, so it automatically couples to the federal OBBBA overtime deduction. South Carolina taxpayers claim the same overtime deduction on their state return that they claim federally, up to $12,500 ($25,000 for joint filers), through 2028. The state top rate fell to 6% for the July 2025 to June 2026 period.
Why doesn't the federal overtime deduction always help on my South Carolina return?
The federal deduction applies to federal taxable income only. States that start from federal AGI and do not conform still tax the overtime premium. South Carolina's income tax starts from federal taxable income, so it automatically couples to the federal OBBBA overtime deduction. South Carolina taxpayers claim the same overtime deduction on their state return that they claim federally, up to $12,500 ($25,000 for joint filers), through 2028. The state top rate fell to 6% for the July 2025 to June 2026 period.
What federal overtime deduction applies in South Carolina?
Up to $12,500 single / $25,000 MFJ of the FLSA half-time premium, 2025–2028, phasing out at $150k/$300k MAGI. See the overtime calculator.
Is the state rate the only thing that matters?
No. State tax is computed on wages after federal AGI, so the state layer sits on top of your federal return. Local income taxes (New York City, Yonkers, Maryland counties) and state-specific addbacks can change the effective state tax on your overtime.
Related calculators
Comparing states? See which states tax overtime pay across all 50 states and DC.
Sourced to Tax Foundation, 2026 State Income Tax Rates and Brackets (Jan. 1, 2026), ITEP, Tips and Overtime Income Tax Deduction and State Budgets (Dec. 8, 2025), naming South Carolina among overtime-coupled states. Verified October 1, 2026, pending CPA sign-off.