What payroll deductions are employers required to withhold?

Payroll Tax Deductions Employers Must Withhold in South Carolina

In South Carolina, employers are required to withhold specific payroll taxes and deductions from employees' wages to ensure compliance with state and federal regulations. Understanding these requirements is essential for accurate payroll processing and reporting.

Mandatory Payroll Deductions

• Federal Income Tax Withholding: Employers must withhold federal income taxes based on the employee’s Form W-4 and IRS tax tables.
• Social Security Tax: Employers must withhold 6.2% of wages up to the annual wage base limit for Social Security tax.
• Medicare Tax: Employers must withhold 1.45% of all wages for Medicare tax. Additional Medicare tax withholding of 0.9% applies on wages above the IRS threshold for high earners.
• South Carolina State Income Tax: Employers are required to withhold South Carolina state income tax according to the employee’s withholding allowance certificate (Form SC W-4) and state tax tables.
• State Unemployment Insurance (SUI): While employers pay SUI taxes, these are typically not withheld from employee wages but are an employer expense.

Additional Considerations

• Local Taxes: South Carolina does not impose local income taxes, so no local tax withholding is required.
• Voluntary Deductions: Employers may also withhold voluntary deductions such as retirement plan contributions, health insurance premiums, or wage garnishments based on employee authorization or legal orders.
• Recordkeeping and Reporting: Maintain accurate payroll records reflecting all withholdings and submit required reports to the IRS and South Carolina Department of Revenue on time.
• Payroll Automation: Consider using payroll software or services to automate calculations, ensure compliance, and streamline tax filings.

As of 2026, stay updated on any changes to withholding rates or reporting requirements by consulting the South Carolina Department of Revenue and IRS resources regularly.