As taxpayers begin filing 2025 tax returns, many South Carolina residents are noticing something unexpected. Their federal return may include new deductions and tax benefits, while their South Carolina return does not.
This difference is not a mistake. It is the result of how states adopt federal tax law.
Understanding tax conformity
Most states use the federal tax code as the starting point for their own tax systems. When Congress passes new tax legislation, states must decide whether and when to adopt those changes.
This process is called tax conformity.
South Carolina currently conforms to the Internal Revenue Code as it existed on December 31, 2024. That means several federal tax changes enacted in 2025 have not yet been adopted for South Carolina tax purposes.
As a result, certain deductions that apply to federal returns do not currently apply to South Carolina returns.
Federal tax changes that may not apply to South Carolina
The federal legislation passed in 2025 introduced several new tax provisions that affect individual taxpayers and businesses.
Some of the most common items that may require adjustments on South Carolina returns include:
- The increased federal standard deduction
- A new federal deduction is available to taxpayers age 65 and older
- Federal deductions related to tips and overtime income
- Interest deductions on certain personal vehicle loans
- Changes to federal bonus depreciation and other business tax provisions
Because South Carolina has not yet adopted these provisions, taxpayers may need to add these amounts back when calculating their South Carolina taxable income.
Why returns are still being filed now
The South Carolina Department of Revenue has issued guidance instructing tax professionals to prepare 2025 state returns using current South Carolina law, even while the legislature considers updating the state’s conformity date.
Waiting to file returns could delay refunds without any guarantee that the law will change or when a decision might be made.
For that reason, most taxpayers will file their South Carolina returns based on the law that exists today.
Possible legislative changes
The South Carolina legislature is currently reviewing legislation that would update the state’s conformity with the federal tax code through December 31, 2025.
If passed, the legislation could adopt many of the federal provisions enacted in 2025.
Lawmakers have also discussed the possibility of making those changes retroactive, which means they could apply to 2025 tax returns that have already been filed.
If that happens, taxpayers who are affected may need to file amended South Carolina tax returns to claim additional benefits.
What South Carolina taxpayers should expect
For the 2025 filing season, the most important thing to understand is that differences between federal and state returns are expected.
Your federal return may reflect new federal deductions, while your South Carolina return must still follow the state law currently in place.
If the legislature later adopts those federal provisions, taxpayers may have the opportunity to amend their state returns and claim additional tax savings.
Staying informed
Tax law changes can be complex, especially when federal and state rules do not align. Working with a qualified tax professional can help ensure your return is prepared correctly and that you stay informed about potential opportunities if the law changes.
As the South Carolina legislature continues reviewing tax conformity legislation, taxpayers should expect further updates throughout the year.
Helpful resources for South Carolina taxpayers
If you want to follow the issue or review the official guidance, two resources can help you stay informed.
South Carolina legislative bill tracker
You can follow the progress of the conformity legislation being considered by the state legislature here: https://www.scstatehouse.gov/billsearch.php?billnumbers=3368
This page shows where the bill currently sits in the legislative process and whether it is moving through committee or advancing toward a vote.
South Carolina Department of Revenue guidance
The South Carolina Department of Revenue released official filing guidance for tax professionals in Information Letter #26-4 (Revised): https://dor.sc.gov/sites/dor/files/policies/IL26-4(revised).pdf
This document explains how taxpayers and tax professionals should handle federal provisions that South Carolina has not yet adopted for the 2025 filing season.
These two resources provide the most current information available while the legislature continues to evaluate possible tax conformity changes.
