The North and South Carolina Debate

Halfway down the eastern coastline resides two of the most historically significant states in the U.S. As part of the original thirteen colonies, Carolina was established in the mid-seventeenth century. King Charles II officially separated it into the two distinct colonies of North and South Carolina before the revolution in the early eighteenth century. The charming and historic city of Charleston, SC, became his namesake. Over 200 years later, North and South Carolina have become two of the most popular states to visit and call home. 

From the Appalachian Mountains to the Atlantic Ocean

Today, the Carolinas are famous for their rich heritage, beautiful vistas, moderate climate, and reasonable cost of living. Visitors traveling through the Appalachian Mountains and along the famed Blue Ridge Parkway can explore the vast wealth of natural beauty and culture found in country and city landscapes. And, don’t forget the Carolina coastline. With their wide beaches and fascinating barrier islands, both states offer countless places to explore and enjoy along the Atlantic coast.

Favorite Locations in the Carolinas

From beloved colleges and universities to emerging industries, the Carolinas provide limitless opportunities for higher education and employment. When the workday is done, there is no limit to the fun that can be found in these great states. Whether boating on a lake, indulging in a night of concerts and fine dining, or ball games and breweries, neither Carolina will disappoint!

For many, the lure of the Carolinas is irresistible, resulting in both states becoming home to some of the most popular retirement and family communities in the country. Among some of the most notable areas are Greenville, Hilton Head, and Beaufort in South Carolina and Wilmington, Southport, and Asheville in North Carolina.

Two of the Top Ten Relocation States

In addition to the stunning natural beauty and endless opportunities found in the Carolinas, there are several things to consider when contemplating a move to either state. Those ahead of the game will most certainly conduct a cost comparison of their preferred destinations and the two states in general. Taxes and cost of living are primary points to consider within the equation. Despite recent world events and fallout from the pandemic, the Carolinas not only maintain an acceptable level of taxation compared to the rest of the country but they were two of the top ten states people moved to in 2022.

State Taxes

State budgets are predominantly funded by collecting taxes from individuals and businesses. Property, individual income, sales, and excise taxes are among those most collected. 

Each state has its own tax laws. Some offer a lower tax rate in one area, such as personal income or personal property tax. However, be aware that this incentive is usually balanced by increasing other taxes like sales and use taxes. 

Individuals should weigh the tax options that work best for their financial needs before deciding where to live. Here are some general breakdowns of what you may expect in the current tax climate of both North Carolina, the Tar Heel State, and South Carolina, the Palmetto State.

Property Taxes

Property taxes in South Carolina remain lower than many other states, ranking 45th in the US. An average of 0.5% of a property’s assessed fair market value is collected as a property tax by counties across SC. In North Carolina, that number goes up to 0.78% bringing NC in at 34th in the country for property taxes as a percentage of median income. On average, SC residents pay fewer taxes based on their home's market value than NC residents.

Each year, residents of both states receive a vehicle tax and registration statement covering all vehicle types, from cars to boats, indicating the tax due based on mileage calculations. Rates will fluctuate depending on where you reside. 

Seniors of both states may be eligible for significant property tax exemptions and reductions, and currently, there are no estate or inheritance taxes in North or South Carolina.

Personal Income Tax

According to the Tax Foundation’s State Individual Income Tax Rates and Brackets for 2023, North Carolina has a flat individual income tax rate of 4.75%. Good news! This rate will reduce annually until it reaches 3.99% in 2027. 

South Carolina uses a graduated-rate income tax structure with three different brackets: 0%, 3% (on taxable income from $3,200 to $16,039), and 6.5% (on taxable income over $16,039). The top income tax bracket has the potential to drop to 6% based on general fund revenues.

Both states provide standard deductions with South Carolina’s being slightly higher than North Carolina’s. South Carolina also offers personal exemptions for dependents. Neither state taxes Social Security benefits, and South Carolina offers additional tax breaks for seniors.

Sales Tax

Ranking 26th in the country for combined state and average local sales tax is NC at 6.99%. South Carolina comes in at #18 with 7.43%. Prescription drugs are exempt in both states. Groceries are not taxed by either state although in NC there could be a local sales tax applied. 

Cost of Living Index in the Carolinas

While North Carolina has a larger population, they also have a slightly higher cost of living, although it remains lower than the national average. Both South and North Carolina's health costs are above the national average, possibly due to a large senior population. However, most other cost of living aspects come in below 100%. Rent levels in both states are below the national average, which is good for those not yet committed to a home purchase. Overall, South Carolina remains the best bang for your buck.

Here is a high-level cost of living comparison from World Population Review between the two states: 

North Carolina

Population… 10.8 million

Median Household Income… $56,642

Average Home Value (Zillow)…. $300,000

Homeownership Rate… 65.7%

Cost of Living… 95.7%

Grocery Expenses… 97.6%

Transportation… 92.8%

Housing… 88.6%

Utilities… 97.7%

South Carolina

Population… 5.4 million

Median Household Income… $54,864

Average Home Value (Zillow)… $268,000

Homeownership Rate… 70.1%

Cost of Living… 93.6%

Groceries… 99.5%

Transportation… 95.2%

Housing… 79.6%

Utilities… 105.2%

The North vs. South Carolina Debate

Trying to choose between the Carolinas will be difficult, as both offer unique beauty, charm, and history. Each region within each state varies, depending on what you are looking for in your future home. The decision may come down to what each offers retirees and families in terms of tax breaks and the cost of living. While South Carolina comes out ahead overall in these areas, either state is an amazing place to call home.