South Carolina Benefits From Major Tax Cuts
March has been a beneficial month for South Carolina taxpayers as your SC House and Senate delivered key legislation to restructure our tax code, invest in our economy, and provide real results for hardworking taxpayers.
Following a lengthy budget debate, the (H.4216) bill, which includes historic income tax cuts, was sent to Governor Henry McMaster for his signature.
The key provision of this major tax reform lowers the rate while spreading it across a larger share of taxpayers. It is a fairer approach to income taxation in our State.
Here is a highlighted summary of the new income tax reform:
- Lowers the state’s top marginal income tax rate from 6.0% to 5.21% in the first year.
- Sets up a two-bracket system with income up to $30,000 taxed at 1.99% and income above $30,000 taxed at 5.21%.
- Establishes a long-term plan to gradually reduce the rate to a flat 1.99% and eventually ZERO if state revenue benchmarks are met.
- Modernizes our SC system by replacing outdated federal deductions with a simpler state-based income-adjusted deduction (SCIAD). Overall, it is intended to protect lower-income taxpayers while ultimately supporting lower tax rates for all.
- Directs the SC Department of Revenue to adjust withholding tables, potentially increasing workers’ take-home pay sooner by reducing over-collection.
Advocates of this legislation believe these cuts will make South Carolina one of the lowest-tax states in the Southeast, thereby giving our state a competitive edge over neighboring states for business and economic growth. The reform protects all existing individual tax exemptions and encourages job creation.
Additionally, the House also passed legislation ensuring that South Carolina taxpayers receive the full benefits of President Trump’s “One Big Beautiful Bill” by updating our state tax code so residents can take care of pro-worker tax provisions such as: no tax on tips, no tax on overtime pay, tax deductions for car loan interest, increased standard deductions for families, and additional tax deductions for seniors.
Lowcountry Boat Owners Get Tax Break Too!
In addition to the above tax reforms, another new tax deduction for boats in South Carolina was also passed.
As a boat owner myself, I was especially pleased with this legislation. Once signed into law, the rate at which South Carolina taxes watercraft – which had been among the highest in the nation – will drop from 10.5% to 6%.
This new bill also eliminates a separate tax on outboard motors, which boat owners have been criticizing as double taxation. The House passed the measure unanimously this past week following a nearly unanimous Senate vote earlier in March.
Because property taxes are the domain of local governments, some counties are concerned that the potential revenue losses will affect their funding. To soften the tax hit, the bill calls for a three-year phase-in for the changes to help local governments adjust.
Supporters of this tax cut believe it could stimulate boat sales and bolster our state’s boat construction industry, which once was active on Hilton Head Island at Palmetto Bay Marina and other locations.
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If you need assistance navigating State Government, or have any thoughts concerning what we are doing, please do not hesitate to contact me.
– Jeff Bradley
