SC State Addback Tax Calculation 2025 Error?

[user17700787501]

My federal tax return (single) has itemized deductions.  In reviewing the SC state addback worksheet, TurboTax is adding back the difference between my itemized deduction and the standard federal deduction (which is correct and appears on line 1a on my SC1040 form), but also appears to be adding "State and local tax addback" on line 1e "Other additions to income" which appears to be the difference between my itemized deduction amount in my federal return and $10,000.  I don't know why it is doing this and I think it is wrong.

If I change my federal return to the standard deduction, on my SC1040 form,  line 1a goes to zero, which is correct, but line 1e now populates as $750.  I don't know where this number comes from.  I can not change what TurboTax puts on line 1e in either situation.

I think this is an error and needs to be corrected.  I filed with the standard deduction in 2024 and my SC state return had nothing populated on line 1a or 1e. 

[SusanY1 · Accepted solution]

South Carolina generally conforms to federal tax law and uses federal taxable income as the starting point for state tax calculations. However, provisions within the "One, Big, Beautiful, Bill Act," enacted federally in mid-2025, were finalized after the South Carolina legislative session had concluded. Consequently, these changes have not yet been incorporated into state law.

Until the legislature votes to conform to this Act, specific federal deductions are not recognized by the state and must be added back to your taxable income. 

This currently impacts your return in two ways:

• Itemized Deductions: Certain deductions allowed on your federal return (such as the additional SALT deduction) are currently disallowed under South Carolina law and must be added back.
• Standard Deduction: The increased standard deduction amounts passed in OBBBA must also be added back (that is the $750 you see when you switch to standard deduction.)  

Taxpayers claiming deductions for overtime, tips, and the additional deduction for taxpayers over age 65 will also see add-backs for these amounts.

A comprehensive list of affected items can be found in this recent SC Information Letter.

It is currently unknown if or when the legislature will address conformity. Given this uncertainty, you have two options:

• File your federal return now and wait to file your South Carolina return until more information is available.
• File both returns now. Please be aware that if the state legislature passes conformity retroactively, you may need to file an amended state return.

While there is a possibility that the South Carolina Department of Revenue (DOR) could automatically adjust returns filed prior to conformity, the timing and mechanics of such a resolution are currently unknown.

[user17700787501]

@SusanY1 Thank you for the quick reply and explanation Susan. I now understand the $750 addback for standard deduction.

What I don’t understand is with an itemized deduction ($18,550, which is compromised of SC income tax, and property tax on my home and cars) why turbo tax is adding back both:

1- the difference between my itemized deduction and the standard deduction, $2800

and

2- the difference between my itemized deduction and the $10,000 SALT cap, $8500

Shouldn’t it either be:

1- $2800 plus the $750 deduction increase for a total of $3550 

or

2- $8500

and not both?

[SusanY1]

It's hard to say for certain just by those numbers, but it sounds like there is some other itemized deduction that is not conforming.

If you'd like, you can share with us a redacted secure copy of the numbers in your return and I can take a closer look. 

In TurboTax online you do this by going to the menu on the left from any page in your return and selecting "Tax Tools" and then "Tools".  In the pop up box that comes up select "Share my file with an agent". 

This will produce a token/code.  Return here and paste that token so I can then pull up the data.  

If you're in TurboTax desktop this option will be under the "Online" menu.  

 

[user17700787501]

@SusanY1  Thank you.  Here is my token ID for my return

[phone number removed][phone number removed]6

There should only be three things contributing to my itemized deduction, State Income Tax Paid, Property Tax on my home and property tax on my vehicles. 

I am curious as to what you find.  Thank you.

[SusanY1]

The additional $2800  is a mandatory add-back stemming from 2019 state legislation enacted following the federal Tax Cuts and Jobs Act (TCJA). As this law has not been repealed or replaced, it remains a requirement in addition to other new statutory add-backs related to OBBBA. 

Specifically, this is pursuant to SC Code Section 12-6-1130(2).

This statute requires taxpayers to add back state and local taxes deducted, but is limited to the difference between the itemized and standard deduction. (See SC Revenue Ruling #19-1.)   If you itemized in 2024, you likely saw a similar calculation on that return.

South Carolina historically conforms to the federal tax laws with only minor deviations, but it does require the Legislature to act first. 

While there is anticipation that they will pass conformity legislation retroactive to 2025, currently, the return must be calculated under existing law.

Logically, I agree with you that it should be either or - but unfortunately the law and the guidance from the SC DOR require that it be both at this time.

I suggest filing your federal return now but holding your South Carolina return to see if favorable legislation is enacted soon. As more taxpayers identify these add-backs, there is increased attention on the issue.  

Thank you for providing the diagnostic token. It was very helpful in confirming the calculations and ensuring the program is operating exactly as intended.

[user17700787501]

@SusanY1  Thank you very much for all your help!  I will file my federal and hold the state as you suggested.  I will also harass my local state representatives to accept the OBBB for SC.  Thank you again!

[SusanY1]

You're most welcome. I'm reaching out to my representative's office as well.