Why is my state (SC) taxable income so much lower than my federal?

[DanielV01 · Accepted solution]

This is how South Carolina calculates their taxable income.  Whereas the Federal Return begins with "Adjusted Gross Income" (all of the income minus certain deductions), South Carolina starts its return with Federally Taxable Income.  Then, on top of that, it subtracts it's allowable deductions, lowering the amount further.  You may see a rather extensive list of these subtractions on the tax form:  SC1040 (click on link), and look through lines f-v.  If any of those deductions apply to you, that will be why South Carolina's taxable income is lower than the Federal.