Waving signs and banging drums, the protesters urged state leaders to find other ways to close a budget gap than by cutting services to the state's most vulnerable citizens.
Teachers, state workers, and religious, civil rights and union group members gathered at the Statehouse steps.
On Monday, the House will begin debating a $5.2 billion budget that closes a $700 million deficit by not replacing federal bailout cash, reducing payments to Medicaid providers and cutting welfare payments.
State police did not provide crowd estimates. Event organizers estimated that 2,500 people had participated in the rally.
More than 70 groups carried the message Saturday that South Carolina legislators could find other ways to close the budget gap, including ending tax breaks and closing loopholes, as the state's Tax Realignment Commission had recommended.
The Republicans who control the Legislature and new Gov. Nikki Haley, also a Republican, have shown no interest in raising taxes to address revenue problems such as the evaporation of federal stimulus money. With public schools facing the loss of $174 million in federal bailout cash under the House plan, though, legislators tapped a $100 million reserve fund to avert teacher job losses.
Jackie Hicks, the president of the South Carolina Education Association, said she was tired of hearing the state doesn't have the money.
"We need tax reform that will allow us to create a moral budget," Hicks said. That includes ending breaks that cap sales taxes at $300 for boats, planes and vehicles.
"For too long, the sales tax has taken a huge bite out of the budgets of middle-class families, but we've capped the sales tax so the rich pay proportionately little for their Mercedes and their yachts."
Mingled with the budget protesters were a few members of the Columbia Tea Party and the South Carolina Taxpayers Association, a group that pushes anti-tax pledges in the Statehouse.
Don Weaver, the association's president, said the wealthy need the breaks or the state loses business to competing states.
"If I'm a yacht owner, if I'm a plane owner, I don't have to title it in South Carolina," Weaver said. "If we run all the yachts and the planes off, we lose all the fuel taxes."
Columbia Tea Party founder Allen Olson said tax increases would saddle children with debt.
"We need to make the cuts now and the people who spend the money are the ones that need to take the hit," Olson said.