What Makes the Cost of Living So Low in South Carolina?
Moving to a new state can be very challenging. There are so many pieces involved, and it is easy to lose track of what has already been done and what still needs to be done. In fact, sometimes it is easy to focus in on only the granular details of the move, simply losing sight of the bigger picture. Moving is exciting, and you can only be so patient when it comes to moving into your new home that you have spent so much time finding and purchasing.
There are so many important things that play into the bigger picture, though, and sometimes it is good to sit back and think about the rest of the moving parts in your move. One big one is budgeting. What will your budget be like in your new home? Is your income going up or down? What lifestyle changes, for better or for worse, will you need to adopt? When it comes to budgeting, you really can’t go wrong when it comes to getting detailed. The more detailed a budget is, the better. For help building your budget, be sure to check out this post on budgeting to buy a home.
Money is not everything, but it is undoubtedly very important. After all, you want to do all that you can to make sure that you are safe, secure, and protected, right? One major component of your move to consider is the cost of living in the place that you are moving. We have written many times about the low cost of living in South Carolina, but we have never gone into such granular detail about what exactly makes South Carolina so cheap compared to the rest of the country. For example, it is often said that South Carolina is a cheap place to live because of its low taxes, but are the taxes really that low? If so, how low are they? This post will offer up some specific, numerical information about South Carolina while also comparing it in some respects to its two neighbors, North Carolina and Georgia, as well as the country as a whole.
The Gas Tax
The United States has one of the highest car ownership rates in the world, meaning that Americans use up quite a bit of gas. The United States is a country of about 370 million, and there are just under 300 million cars on the road. That figure is striking! As a result of these high car ownership rates, the United States uses a disproportionately high amount of gasoline per capita. The governments are aware that you can’t get anywhere in your car without gas, and they have learned that charging a gas tax is one of the most surefire ways to increase tax revenue. Every state has its own gas tax, and it is a value charged on each gallon that you buy. You do not necessarily know that you are paying this gas tax, as it doesn’t show up broken out in the pricing. You will notice, though, that gas costs a different price per gallon in different states. This is the result of the gas tax.
South Carolina has a below average gas tax, meaning that gas is more affordable in the Palmetto state than it is in most of the rest of the country. In South Carolina, you pay $0.26 per gallon in gas tax. To put that into perspective, some states charge as high as $0.40, and Georgia and North Carolina charge $0.29 and $0.36, respectively. If you go to Charlotte, which is right on the border of North Carolina and South Carolina, you may notice people driving across the border into South Carolina to get their gas. This is a real thing, and it is because gas is usually at least $0.10 cheaper per gallon in South Carolina. This equals a savings of over a dollar every time you fill up your tank, which can lead to around $50 per year depending on how much you drive! $50 may not sound like a big deal, but with South Carolina’s low cost of living, that is a nice meal out with a loved one that you get as a result of natural savings on the gas tax.
Personal Income Tax
In the United States, you pay personal income tax to your municipality, state, and to the federal government. Everyone follows the same federal taxation system, but each state and municipality make up their own rules for their own personal income tax. In South Carolina, the personal income tax is pretty average when compared to the rest of the country. South Carolina uses a tax bracket system to determine your personal income tax rate, and the highest rate that they charge is 7%. As a result, everyone’s tax burden looks a little bit different, and the real effects of the tax rate cannot be estimated on an aggregate level. Still, the personal income tax is at or below the national average in South Carolina.
The personal income tax is one place where residents of Georgia and North Carolina do better than residents of South Carolina. Georgia also uses a bracket system, but their maximum chargeable rate is 5.75%. North Carolina uses a flat income tax rate of 5.25% that does not change regardless of total income. While Georgia’s tax rate may appear lower than South Carolina’s, it will not always mean a better tax bill as a resident. As the two states use brackets, there is the possibility that their brackets use different thresholds. It may only take a few thousand dollars of income to place into the highest tax bracket in Georgia while in South Carolina it could be double that amount until you start paying the full 7%.
Sales Tax
Sales tax is another tax that affects nearly every person in the entire country. Sales tax is what you pay every time you make a purchase. Isn’t it funny how a trip to the dollar store winds up costing more like $1.06 instead of $1? This is because you are charged an additional tax on every dollar that you spend. The sales tax rate varies by state, and some large cities add a couple of cents to it to charge their own sales tax. South Carolina charges a sales tax rate of 6%, which is right on par with the national average. Georgia and North Carolina, on the other hand, come in a little bit lower at 4% and 4.75%, respectively. Sales tax is a really big deal, because it applies to every single purchase that you make, whether while dining out, shopping online, or going to the movies. While South Carolina is higher than its neighbors in this category, it is still average or below average on a national level.
To put this into perspective, the average American spends over $60,000 per year. If we assume that half of that is rent and utilities, we can estimate that the average American spends around $30,000 per year on items eligible for sales tax. At a 6% tax rate, that person would be paying $1800 in sales tax every year. This is no small amount of money to bat an eye at and living in a state that is closer to (or below) the national average of 6.35% can save you a nice chunk of change.
Property Tax
The Property tax is one of the hardest hitting taxes on this list, and it is one where South Carolinians get off especially easy. Property tax is assessed per the fair market value of any land that you own, and it gets paid to your local municipality each year. This is the major source of funding for the public school system. The property tax varies by county, meaning that some metropolitan counties are going to have different property tax rates from more rural counties. Still, the property tax rate in South Carolina is one of its claims to fame when it comes to having a low cost of living.
The average South Carolina resident pays 0.57% in property tax, while residents of North Carolina and Georgia pay 0.77% and 0.87%, respectively. The national average property tax rate is 1.07%, meaning that residents of South Carolina pay just over half of what the rest of the country pays on average. If your property is worth $300,000, for example, you’d pay $1,710 in tax each year while the national average would be $3,210. That is an annual savings of $1,500!
You might sit there and say, “if the property tax is what funds the schools, shouldn’t it be higher to provide the schools with better funding?” Or on the flip side, “if the property tax is so low, does that mean the schools are of poor quality?” While both of these questions are valid to ask, the truth is that South Carolina has some of the best schools in the country, so its property tax value seems to be doing just fine!
Median Home Price
The taxes play a big role in your monthly budgeting, for sure. However, what will your mortgage look like? We all know how a mortgage can make your paychecks look pretty small when it’s all said and done, right? In South Carolina, you will be happy to know that the median home price is $223,400. The national median home price is $374,900, meaning that on average, homes are over $150,000 cheaper in South Carolina than in the rest of the country. This amount of savings is equal to over double the national median household income.
Mathematically speaking, the housing market of South Carolina is around 40% cheaper on average than the rest of the country. So, if you were worried about money being tight because of your mortgage payment, take a deep breath! Or maybe even consider opting for a shorter-term mortgage so that you can wrap it all up sooner than you ever thought possible. For more information on the advantages and disadvantages of longer-term and shorter-term mortgages, check out this post.
Urban Cost of Living in South Carolina
Traditionally, it is more expensive to live in the city than it is to live in the countryside. In most cases, a state’s largest city is also its most expensive place to live. Some examples of this are New York City, Philadelphia, Atlanta, and Chicago. If you have ever been to New York City or Chicago, you know exactly what we mean here. They’ll charge you $100 just to park your car for the day! In South Carolina, there is no real booming metropolis. The state’s capital of Columbia is the biggest city with only around 130,000 inhabitants. This means that even the biggest city in South Carolina is generally very affordable. In fact, Columbia, South Carolina, is about 16% cheaper than the national average in overall cost of living. This is mind blowing, as those numbers are not even only representative of cities. Columbia is cheaper than many states’ rural areas!
It must be mentioned, though, that South Carolina is a bit unique in terms of its population density and cost of living. While there are some cities inland with larger populations and lower costs of living, there are some cities along the coast that drive up the statewide figures a bit. Places like Charleston and Myrtle Beach receive a large amount of tourists, and as a result the cost of living and overall price index nudges upward a bit compared to the rest of the state. Still, Myrtle Beach and Charleston are wildly affordable when compared to other cities in the country! You may be paying a small premium for the nice beach, but who would complain about that?
So, is South Carolina Really Cheaper Than the Rest of the Country?
In the end, South Carolina really is a much cheaper state to live in than most of the rest of the country. In fact, it often falls into the bottom 10 in terms of overall cost of living. While some taxes and costs that we explained aren’t shockingly low, every item on this list is below the national average. Further, the taxes that are shockingly low can save you literally thousands of dollars every year compared to tax rates in other states. South Carolina is really a very affordable state to live in when it comes to taxes.
Furthermore, the housing market is especially accessible. With a median home price over 40% cheaper than the national level, buying a house in South Carolina is an incredibly attainable goal for anyone in any stage of life. Trust us – we help people like you to find the perfect place to live around here for a living, and we have been doing it for a long time! The low home prices make short-term mortgages more attainable, too, meaning less total interest that you need to pay and less years of having a bank hang a mortgage over your head.
That wraps up all that we have for you about the low taxes and cost of living here in South Carolina! Thank you for reading our blog, Catch the Wave. Hopefully this post helped you to understand what is going on with home prices around the country and whether or not now is a good time to buy or sell a home. Again, property values fluctuate a lot, and we do not ever advise buying a home just for the sake of watching its value increase. However, if you need a place to live (which most people do) buying a home can be a much wiser financial decision than renting one!
If you visit Myrtle Beach or any other place in South Carolina and fall in love, reach out to us for help. We at The Boyd Team are always here to help you figure out whether Myrtle Beach is your next home or not, and we are committed to helping you find the right property for your needs and dreams. Any question that you have about moving to the area and finding your dream home by the beach is our pleasure to answer. Feel free to send us an email at eddie@boydteam.com or text or call us at (843) 222-8566, and we will get back to you as soon as we can. Being true natives of the Grand Strand and Horry County and with over 25 years of experience in the local real estate market, whether buying or selling, we can help you make your dreams a reality.
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