Severance pay in South Carolina
- 6.2% South Carolina tax on your severance, plus 22% federal and 7.65% Social Security/Medicare.
- Unemployment: up to $350 a week, for up to 20 weeks.
- File your unemployment claim right away — it protects your claim start date.
In South Carolina, a layoff creates three separate questions: how your severance is withheld, whether separation pay or unused vacation affects particular unemployment weeks, and how quickly you should file with the S.C. Department of Employment and Workforce (DEW). South Carolina’s 2026 income-tax rules changed under H.4216, so payroll withholding on a severance check is not the same as your final state tax liability.
South Carolina at a glance
What severance means in South Carolina
South Carolina does not impose a separate flat severance tax. Severance is generally wage income: federal income-tax withholding and employee Social Security and Medicare taxes generally apply, while South Carolina withholding follows the 2026 WH-1603 tables and your Form SC W-4. A worker earning about $60,000 is in South Carolina’s 5.21% top marginal bracket for 2026, so the example below models state withholding at 5.21%. Ask payroll whether the payment is treated as supplemental wages, regular wages, salary continuation, accrued vacation, or another category.
Withholding is only an advance payment. Your final federal and South Carolina liabilities depend on filing status, residency, deductions, credits, total annual income, other wages, and how the payment is structured and timed. A lump sum can be withheld at 22% federally when the supplemental-wage method applies, but that does not mean your final federal tax rate is 22%.
A worked example
- Worker earns $60,000 annual salary in South Carolina.
- Worker is laid off through no fault of their own.
- Worker receives 4 weeks of severance as a separate lump sum.
- Weekly salary is $60,000 / 52 = $1,153.85; gross severance is $4,615.38.
- Federal withholding uses the 2026 supplemental-wage assumption of 22%.
- Employee FICA uses 7.65%, assuming the Social Security wage base has not been reached.
- South Carolina state withholding modeled at the 2026 top marginal rate of 5.21% (H.4216, income at or above $30,000); actual WH-1603 table withholding may differ.
- Single filing status is stated for context but is not used to calculate final tax.
Illustrative payroll-withholding estimate - not final tax advice: $4,615.38 − $1,015.38 − $353.08 − $240.46 = $3,006.46; payroll’s actual calculation and the worker’s annual tax return may differ.
Run your own numbers →Unemployment in South Carolina
01Generally, a South Carolina claimant must be unemployed or working reduced hours, lose work through no fault of their own, be able and available for suitable work, satisfy DEW’s wage tests, and complete the required work search. DEW’s current monetary thresholds are at least $1,092 in the base-period high quarter, at least $4,455 in total base-period wages, and total wages at least 1.5 times high-quarter wages. The weekly amount is generally based on high-quarter wages divided by 26, subject to the $42-$350 range.
02File promptly: the claim generally becomes effective on the Sunday before the filing date, and the first eligible week is an unpaid waiting week. South Carolina DEW treats severance or separation pay as reportable for the period it covers; holiday, vacation, and sick pay are also included in the relevant week’s gross wages. Salary continuation or a vacation shutdown may therefore delay or reduce benefits for particular weeks, so report the payment and let DEW decide. Report gross earnings when earned, even before paid; partial work may remain eligible, with up to 25% of the weekly benefit amount allowed without a payment deduction under DEW guidance. Complete two SCWOS job searches each week and certify within 14 days after the Sunday-Saturday claim week.
Your first 72 hours
- 01DEW may need the payment type, coverage period, and earnings by Sunday-Saturday claim week.
- 02The claim generally takes effect on the Sunday before filing, and waiting can lose claim-week timing.
- 03South Carolina requires two electronically verifiable SCWOS searches each week.
- 04COBRA generally provides at least 60 days to elect after the later relevant notice or coverage-loss date; Marketplace coverage generally has a 60-day Special Enrollment Period after loss of job-based coverage.
- 05South Carolina requires gross earnings and covered separation payments to be reported; incorrect reporting can create overpayments or fraud issues.
South Carolina severance FAQ
Does South Carolina take a flat state percentage from my severance check?
No. South Carolina’s 2026 income-tax formula under H.4216 is 1.99% below $30,000 and 5.21% minus $966 at or above $30,000; it is not a flat severance tax. Payroll withholding follows the 2026 WH-1603 tables and your Form SC W-4, so a mid-income worker is generally withheld near the 5.21% top rate.
Should I wait until my severance runs out before filing for South Carolina unemployment?
Usually no. File promptly because the claim generally becomes effective on the Sunday before the filing date. Report the severance and its coverage period; DEW decides whether particular weeks are affected.
Can unused vacation or PTO stop my first South Carolina unemployment week?
It may affect the week or weeks the payment covers. DEW guidance says holiday, vacation, and sick pay are included in gross wages for the covered weeks, and an approved vacation shutdown can make a claimant ineligible for that week.
How many job searches must I complete in South Carolina?
At least two searches through SCWOS are required each week that you file a certification, unless DEW recognizes an applicable exception or waiver.
What is the largest weekly unemployment payment in South Carolina?
The current DEW maximum is $350 before taxes. Your actual weekly benefit is calculated from covered base-period wages and can be lower; the maximum does not guarantee 20 paid weeks.
Can I work part time while claiming South Carolina unemployment?
Generally yes, if you remain eligible, but report gross earnings for the Sunday-Saturday week in which you worked, even if you have not yet been paid. DEW says earnings up to 25% of the weekly benefit amount may be allowed without a deduction under its current guidance.
Sources & verification (7)
- S.C. Department of Revenue — Information about H. 4216 (2026 income-tax rates)verified 2026-04
- S.C. Department of Revenue — 2026 Withholding Tax Tables, WH-1603verified 2025-10
- S.C. Department of Employment and Workforce — How Unemployment Insurance Worksverified 2026-08
- S.C. Department of Employment and Workforce — Applying for Benefitsverified 2026-08
- S.C. Department of Employment and Workforce — Manage Your Weekly Benefitsverified 2026-08
- IRS — Publication 15 (2026), Employer’s Tax Guideverified 2026-08
- U.S. Department of Labor — COBRA FAQs for Workersverified 2026-08
Figures are payroll-withholding and benefit-maximum estimates verified 2026-08, not final tax or an eligibility decision. Rules, rates and benefit amounts change — confirm your situation with South Carolina's official agency. NextClara is not a law firm, tax preparer, employer, or government agency, and gives educational estimates only.