South Carolina Payroll: Employer Tax Guide

South Carolina rewrote its income tax in the middle of this year, and that is the smaller of the two things an employer here needs to understand.

The larger one is that South Carolina front-loads its compliance burden into hiring. Every private employer, with no headcount threshold at all, must verify each new employee through E-Verify within three business days. Every employee must receive a written notice of hours, wages, payment timing, and deductions at the point of hire. And when anyone leaves, for any reason, final wages are due within 48 hours or the next regular payday.

None of that runs through a payroll platform. The tax side, by contrast, is genuinely simple: two rates, no local income tax anywhere, no disability program, no paid leave contribution, and unemployment insurance that fell to its lowest level in over a decade. This guide covers what the state requires, what changed in 2026, and how 10 payroll providers price the work.

What South Carolina requires from employers

The stack here is short on the tax side and unusually demanding on the hiring side, which is the opposite of how most state payroll guides are organized.

Read the middle three rows together. All of them attach to the act of hiring rather than to running payroll, all carry deadlines measured in days rather than pay periods, and none of them is something a payroll platform performs on your behalf.

Unemployment insurance

The Department of Employment and Workforce reported the trust fund fully solvent at $1.8 billion and cut rates for classes 2 through 19 by an average of 34.7 percent, the largest percentage reduction since 2011. Rates have decreased or held flat for twelve consecutive years.

The income tax was rewritten mid-year

Governor McMaster signed House Bill 4216 on March 30, 2026, and it applies retroactively to tax year 2026.

The $966 figure is a computation adjustment rather than a credit. It exists because the first $30,000 is taxed at 1.99 percent, so filers above the threshold do not pay 5.21 percent on their entire income, only on the portion above it. The subtraction operationalizes the two-tier structure in a single formula.

The Board of Economic Advisors now determines each year, by February 15, whether revenue projections support a further cut to the top rate, capped so that any reduction cannot decrease revenue by more than $200 million.

There is no local income tax anywhere in South Carolina, so once state withholding is set there is no municipal or county layer to resolve. Our overview of payroll taxes by state covers how this compares elsewhere.

E-Verify, the wage notice, and new hire reporting

Three obligations attach to hiring in South Carolina, with three different deadlines, and together they are what actually distinguishes payroll compliance here.

E-Verify with no headcount threshold

Section 41-8-20 requires every private employer in South Carolina to register with and participate in E-Verify, verifying the work authorization of every new employee within three business days of employing them. There is no minimum size, so a business with a single employee is covered exactly as a business with five hundred is. The statute also requires submission even where the employee is terminated in under three business days.

The enforcement mechanism is unusual. All private employers hold an imputed South Carolina employment license under Section 41-8-20, and a private employer that does not comply violates that license. The Department of Labor, Licensing and Regulation investigates complaints and conducts random audits. E-Verify is separate from the federal I-9 process, not a substitute for it, and both must be completed. Our guide to work authorization covers how the two interact.

The written wage notice

Section 41-10-30 requires written notice to each employee at the time of hiring covering the normal hours and wages agreed, the time and place of payment, and the deductions that will be made including insurance program payments. An employer may satisfy this by posting the terms conspicuously at or near the workplace instead of giving individual notices.

Two details matter operationally. Changes to those terms require written notice at least seven calendar days before taking effect, except for wage increases, which are exempt. And the deduction disclosure has teeth: an employer may not withhold or divert any portion of wages unless required by law or unless it gave the written notification of amount and terms that Section 41-10-30 requires. Our guide to payroll deductions covers what is generally permitted.

Records of names, addresses, wages paid, and deductions must be kept for three years, and every employee must receive an itemized statement of gross pay and deductions for each pay period.

New hire reporting

Section 43-5-598 requires reporting a new hire to the state directory within twenty calendar days. Employers reporting electronically may instead file twice monthly, with submissions between twelve and sixteen days apart. Penalties run to $25 for a second and subsequent offense and $500 per offense where the failure results from a conspiracy between employer and employee. Our guide to new hire reporting covers what each report must contain.

Final pay in 48 hours

Section 41-10-50 states that when an employer separates an employee from the payroll for any reason, all wages due must be paid within forty-eight hours of the separation or by the next regular payday, which may not exceed thirty days.

The treble damages provision is what changes the risk calculation. South Carolina has a light regulatory touch in most respects, no state minimum wage above the federal floor, no mandated pay frequency, no paid leave programs, but an employee paid late on separation can recover three times the unpaid amount plus costs, with a three-year statute of limitations.

Paid time off deserves separate attention. Accrued leave is not automatically payable, but where a written policy or contract promises payout, that accrual becomes wages under Section 41-10-10 and falls inside the same 48-hour deadline. A policy written loosely can convert a discretionary benefit into a hard obligation with treble damages attached. Our guide to the final paycheck for a terminated employee covers how these rules differ across states.

Wage floor and workers compensation

South Carolina has no state minimum wage, so the federal $7.25 applies, and municipalities cannot set their own rate. Workers compensation is required at four or more employees, or where annual payroll reaches $3,000. Our guide to workers compensation insurance covers how state thresholds compare.

10 payroll providers for South Carolina employers compared

Every provider below files South Carolina state withholding and unemployment insurance. Because there is no local tax layer and the withholding calculation is simple, the differentiators here sit upstream: whether the platform has an onboarding workflow that can carry the three-day E-Verify deadline and the written wage notice, and whether it filed the new rates once revised tables appeared.

OnPay

One plan at $49 per month plus $6 per employee, everything included, no tiers to climb. Tax filing covers all 50 states with no multi-state surcharge, and year-end W-2 and 1099 filing sits in the base price. OnPay maintains a South Carolina tax rates resource, a reasonable proxy for whether a vendor keeps state tables current in a year when the rates changed in March.

Gusto

The most common first payroll purchase for US small businesses, and in South Carolina its onboarding depth matters more than usual, because the state front-loads compliance into hiring. Simple runs $49 per month plus $6 per employee after a base increase in early 2026.

The constraint is the single-state limit on Simple. One hire in North Carolina or Georgia moves you to Plus at $80 plus $12 per employee.

Patriot Software

The cheapest legitimate full-service payroll on the market. Full Service is $37 per month plus $5 per employee and includes federal and state tax filing plus new hire reporting. Basic is $17 plus $4 if you file taxes yourself, which in South Carolina means handling the quarterly UCE-101 and the withholding returns by hand.

Square Payroll

At $35 per month plus $6 per person, Square is the cheapest full-service option with published pricing, and the full-service plan covers state tax filing and new hire reports. For a Charleston or Greenville restaurant already running Square point of sale, timecard data flows straight into payroll with no integration work.

SurePayroll

Owned by Paychex and built for very small employers and household employers. Full Service is $29 per month plus $7 per employee, with a flat $9.99 monthly multi-state fee rather than a per-state charge, which suits an employer with staff over the North Carolina or Georgia line.

QuickBooks Workforce Payroll

Core is $50 per month plus $6.50 per employee, and the argument for it is unchanged: if your books live in QuickBooks Online, payroll reaches the general ledger without an export.

ADP RUN

ADP has the deepest tax compliance engine in the category and offers E-Verify handling as part of its hiring services, which is worth weighing in a state with an all-employer mandate. Its scale also meant the March rate change reached its tables without customer intervention.

The cost is opacity. ADP does not publish RUN pricing; third-party estimates put Essential near $79 per month plus $4 per employee, but every quote is individual. Contracts typically run a year with automatic renewal and a 30 to 60 day cancellation window.

Paychex Flex

Paychex competes on service rather than software, and unusually among quote-driven vendors it publishes an entry rate: Essentials at $39 per month plus $5 per employee, with higher tiers quoted individually. Its hiring services include employment verification support, which is directly relevant here.

Paylocity

Paylocity sits between small-business payroll and full HCM, aimed at companies that have outgrown basic payroll. It publishes detailed per-state tax facts including South Carolina, and onboarding and document workflows are native rather than add-ons. Pricing is quote-based and implementation is a project rather than a signup.

Rippling

Rippling unifies payroll, HR, and IT provisioning on one employee record, and its hiring workflows include verification steps, which suits the South Carolina mandate. The core platform is $35 per month plus $8 per employee, with payroll as a separate module. Real-world all-in costs land between $25 and $45 per employee per month.

What each provider actually costs a South Carolina employer

The table below models published rates at three headcounts. South Carolina is one of the states where these figures approximate the whole software cost, since there is no disability carrier, no paid leave remittance, and no local filings.

Square is the cheapest published option at every headcount, with Patriot and Paychex Essentials close behind. The comparison that matters here is not purely price, though: the cheapest platforms have no onboarding workflow, and South Carolina puts its hardest deadlines in onboarding rather than in payroll processing.

Choosing a payroll provider for South Carolina

Before you choose

FirstHR does not process payroll, file payroll taxes, or administer benefits. Every provider above does something we do not, and if running payroll is the problem in front of you, one of them is the answer.

What we handle is the layer where South Carolina actually puts its deadlines: onboarding workflows with owners and dates, e-signature on the SC W-4, I-9s, and offer letters, document management for the Section 41-10-30 wage notice, and employee records for the three-year retention requirement, at a flat $98 to $198 per month for teams of 5 to 50. Three of the obligations above are workflow problems rather than payroll problems, namely completing E-Verify inside three business days, issuing the written wage notice at hire, and filing the new hire report within twenty days. Our South Carolina HR compliance guide covers the wider set of state obligations.

Frequently Asked Questions

What are the South Carolina payroll taxes an employer has to handle?

Two at state level plus federal: income tax withholding at 1.99 percent below $30,000 and 5.21 percent above, minus a $966 adjustment, and unemployment insurance on the first $14,000 of wages at 1.0 percent for new employers. There is no local income tax, no state disability program, and no paid family leave contribution.

What is the South Carolina income tax rate?

Two rates under House Bill 4216, signed March 30, 2026 and effective for tax year 2026: 1.99 percent on taxable income below $30,000 and 5.21 percent above, less $966. The top rate came down from 6.0 percent. The law also replaces federal standard and itemized deductions with a state-specific deduction and sets an automatic trigger for further cuts where revenue grows 5 percent or more.

Do the current withholding tables reflect the new rates?

Not initially. The Department of Revenue published the 2026 tables and SC W-4 on November 6, 2025, effective January 1, months before the law was signed on March 30. Revised tables are expected, so withholding during part of 2026 may not match final liability. Verify current tables at dor.sc.gov rather than assuming your platform applied the change.

Does South Carolina require E-Verify?

Yes, for every private employer with no headcount threshold, within three business days of employing a new person, under Section 41-8-20. Submission is required even if the employee is terminated inside that window. Enforcement runs through the imputed South Carolina employment license, with the Department of Labor, Licensing and Regulation conducting random audits. E-Verify is separate from the federal I-9 and both are required.

When must a final paycheck be paid in South Carolina?

Within 48 hours of separation or by the next regular payday, not exceeding thirty days, under Section 41-10-50, with no distinction between discharge and resignation. Wages include vacation, holiday, and sick pay due under any policy or contract. Late payment carries a $100 civil penalty and lets the employee recover treble the unpaid amount plus attorney fees.

What written notice does South Carolina require at hire?

Under Section 41-10-30, written notice of normal hours, agreed wages, time and place of payment, and deductions to be made. Employers may post the terms conspicuously instead. Changes need seven calendar days written notice except for wage increases, records must be kept three years, and every pay period requires an itemized statement of gross pay and deductions.

What is the South Carolina unemployment insurance wage base and rate?

$14,000 per employee, with 2026 rates from 0.06 to 5.46 percent and no solvency surcharge. New businesses with under twelve months of liability pay 1.0 percent; employers with no benefit charges since July 2022 sit in tax class 1 at 0.06 percent. Rates for classes 2 through 19 fell an average of 34.7 percent. Our guide to state unemployment tax covers experience rating.

How often must South Carolina employers pay employees?

The state does not mandate a pay frequency for private employers, so weekly, biweekly, semimonthly, and monthly are all permitted. What is required is consistency and disclosure: the time and place of payment must appear in the written notice at hire, changes need seven days notice, and each pay period requires an itemized statement.

How long do South Carolina employers have to report a new hire?

Twenty calendar days from the hire date under Section 43-5-598, or twice monthly for electronic filers with submissions twelve to sixteen days apart. Penalties reach $25 for second and subsequent offenses and $500 per offense where employer and employee conspire to avoid reporting. See our guide to tax forms for new employees for the full first-day document set.