South Carolina to end “orphan tax” on foster children

Governor Henry McMaster announced that South Carolina will end the practice of using Social Security survivor benefits belonging to children in foster care to cover state foster care expenses. This practice, often called the “orphan tax,” involves using benefits intended for children who have lost a parent to reimburse the state for care costs.

To implement this change, the South Carolina Department of Social Services (SCDSS) will request $1.6 million in its upcoming fiscal year budget to replace the benefits currently used to offset costs for 301 children. The decision follows a nationwide effort to reform the practice, with 30 states having already ended or substantially reformed it as of July 2026.