Bank Gap by State

The Bank Gap in South Carolina

South Carolina's top tax rate on savings interest is higher than most of its Southern neighbors at 6.4%, though the state is phasing that rate down over time under recently passed reform.

Big-bank average0.38%

Best available4.40%

$1,005/yrlost on a $25k balance · 4.02 pp spread

Last reviewed August 7, 2026 · SwitchWize Research Desk

Best savings APY

4.40%

high-yield

National average

0.38%

big-bank avg

APY gap

4.02 pp

spread

SC tax on interest

6.40%

top marginal rate

Before SC tax

$1,005/yr

on a $25,000 balance

After SC 6.4% tax

$941/yr

recoverable by switching

On a $25,000 balance, the gap is about $1,005 a year before tax. After South Carolina's 6.4% top income-tax rate on the additional interest, you keep about $941. Because Treasury interest is exempt from South Carolina income tax, routing that cash through a state-tax-exempt Treasury vehicle can recover most of the difference.

Estimated Bank Gap by balance

Estimated annual Bank Gap by balance at 0.38% current APY versus 4.40% better-fit APY, before and after SC state income tax
Balance	Current earnings	Better-fit earnings	Estimated Bank Gap	After SC tax
$5,000	$19	$220	$201	$188
$10,000	$38	$440	$402	$376
$25,000	$95	$1,100	$1,005	$941
$50,000	$190	$2,200	$2,010	$1,881
$100,000	$380	$4,400	$4,020	$3,763

Estimates over 12 months at 0.38% current APY and 4.40% better-fit APY. The "After SC tax" column applies SC's 6.4% top income-tax rate to the additional interest; federal tax applies on top and is not shown. Example only — your result depends on your balance, rates, and time horizon.

Why South Carolina changes the math

South Carolina taxes interest income at a top rate of 6.4%, with further reductions scheduled under a multi-year phase-down. Treasury interest remains exempt from South Carolina income tax, giving higher-income savers a real after-tax edge from T-Bills in the meantime.

Coastal South Carolina, including the Charleston and Myrtle Beach areas, carries higher living costs than the state's interior, which raises typical emergency-fund targets for savers along the coast.

Cost of living in South Carolina is near the national average, rising along the coast, which shapes how large an emergency fund needs to be and therefore how many dollars the Bank Gap quietly costs on idle cash.

After-tax tip

Because South Carolina taxes savings interest but not Treasury interest, the highest after-tax yield is not always the highest headline APY. Run your tax profile through the short-term savings tool to see whether a Treasury bill or government money market fund beats a taxable account for you.

Open the short-term savings tool

Frequently asked questions

Does South Carolina tax high-yield savings account interest?

Yes. South Carolina treats savings interest as taxable income, with a top rate of 6.4%. Interest from U.S. Treasury bills and the Treasury portion of a government money market fund is generally exempt from South Carolina income tax, which can change the after-tax winner for higher earners.

Is a high-yield savings account worth it in South Carolina?

Yes. Even after South Carolina state tax, moving cash from a national-average account to a top high-yield savings account still leaves you with substantially more interest. The Bank Gap is far larger than the state-tax drag on the additional interest.

Are T-Bills better than a HYSA for South Carolina savers?

They can be for higher earners. Because Treasury interest is exempt from South Carolina income tax, a T-Bill or government money market fund can deliver a higher after-tax yield than a fully taxable savings account at a similar headline rate. The short-term savings calculator computes the breakeven for your exact tax situation.

Your personal Bank Gap

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Educational information, not tax or financial advice. State tax rules are summarized at a high level and depend on your full situation. Rates are illustrative of current market conditions and should be confirmed with the provider. Confirm tax treatment with a qualified professional.