I will be receiving a payout from an inherited 401k. I understand I will have to withhold 20% for federal taxes. How do I calculate how much to withhold for my state?

[lukeydavis]

I live in SC and my brother (who will also receive a distribution) lives in MD.  Do we have to pay state taxes on inherited 401k distributions, and if so, how do we look up what percent we should specify on the withholding form?

[fanfare]

What is the state income tax rate for your current income?

That's how much tax you're going to pay.

Unless it is a big payout and kicks you into the next tax bracket.

[Hal_Al]

Simple answer: 7%.

South Carolina Taxable Income	Rate
$0 - $3,030	0%
$3,030 - $6,060	3%
$6,060 - $9,090	4%
$9,090 - $12,120	5%
$12,120 - $15,160	6%
$15,160+	7%

[Opus 17]

Also remember that the 20% federal withholding is simply the mandatory amount, it is not the amount of tax you will owe.  Your income tax is only calculated 1 time on your tax return.  Your tax rate might be 15%, in which case too much federal tax was withheld and you will get a refund, or your federal tax might be 22%, 24% or higher, in which case you will owe an additional payment.

Likewise with your SC tax, if you have 7% withheld and the tax turns out to be less, the extra will included in your tax refund.