South Carolina House Advances Two Tax Measures After Approving $15.4 Billion Budget
After approving a $15.4 billion state budget, South Carolina House lawmakers advanced two tax measures this week that could reshape how much residents pay in income taxes beginning this year.
A Path Toward Eliminating the State Income Tax
The income tax bill is now headed to Gov. Henry McMaster’s desk, would gradually eliminate the state income tax and restructure how income is taxed in the interim.
Under the proposal, earners making less than $30,000 a year would pay an income tax rate of 1.9930,000 percent.
People making over $30,000 would pay 5.21%.
The bill would also decouple South Carolina from the federal tax system and its standard deduction, replacing it with a new South Carolina Income Adjusted Deduction.
According to the South Carolina Revenue and Fiscal Affairs Office, the impact would be uneven:
| Taxpayer Impact | Share of Filers |
|---|---|
| Would pay less | ~43% |
| Would see no change | ~34% |
| Would pay more | ~22% |
Supporters: A Long-Term Win for Most Earners
Rep. Steven Long, a Spartanburg Republican, acknowledged that some filers would face higher bills in the short term but argued the plan delivers meaningful relief for most households.
It does potentially adversely impact some filers. But really, it’s an average tax cut for those who make 50,000 a year, for people who make75,000 a year, $100,000 — an average tax cut.”
Long said the long-term goal is to drive down rates for everyone as state revenues grow.
Critics on the Left: Lower-Income Families Could Be Hurt
Some Democrats warned the restructuring could amount to a tax increase for lower-income families at the worst possible time. House Minority Leader Todd Rutherford, a Richland County Democrat, urged caution amid rising living costs.
“Charging someone more on their taxes right now could be costlier than ever before. We need to make sure we are not raising people’s taxes and get a better bill in place.
Rutherford also cautioned that continued tax cuts could strain the state’s ability to fund core services.
People are worried about roads, complain about prisons, we complain about our schools, economic development — we can’t complain about all that and continue to cut taxes the way we are.
Critics on the Right: The Math Doesn’t Add Up
Concerns were not limited to Democrats. Freedom Caucus Chair Rep. Jordan Pace of Berkeley County said he supports eliminating the income tax in principle but criticized the mechanism for getting there.
It does lower the rate, but when it lowers the rate by getting rid of the federal system, it actually taxes more of your money.”
A Second Bill: Federal Conformity and $288 Million in Savings passes House
The House also passed a separate bill to bring state tax law into conformity with the federal tax code — a move Representative Steven Wayne Long said would deliver substantial relief.
It’s going to be $288 million in savings for the taxpayers of South Carolina, so I’m really excited about it.
However, despite clearing the House, Senate leaders have given no indication they plan to take up the conformity bill this session, leaving its fate uncertain.
