New bill aims to drop SC income tax rate from 6.2% to 3.99%, then to 2.49% in time
COLUMBIA, SC (WOLO) — Should a new bipartisan bill succeed, South Carolinians could see lower income taxes in 2026.
South Carolina’s current income tax rate is 6.2% — considered the highest in the Southeast.
“That’s a burden on families, on workers, and on businesses looking to grow here in the Palmetto State,” says Chairman of the House Ways and Means Committee, Rep. Bruce Bannister.
Lawmakers say a proposed income tax reform bill will change that — dropping income tax to a flat rate of 3.99% and then overtime as economic conditions are met, it will drop to 2.49%.
“What does it mean for you? For starters, SC will have a lower income tax rate than many of our neighboring states, lower than NC, Georgia, Alabama and Virginia. That makes us not only more competitive but also more attractive to new businesses and more affordable for new families to call SC home,” Bannister says.
Leaders say that also means less money going to the government and more money for citizens’ pockets.
“You’ll have more to spend during your monthly paychecks, you’ll have more money to invest, more money to save. To summarize, a lower tax rate, a simpler tax system, and more money in your pocket,” Bannister says.
The bill maintains existing deductions and credits, including those for military families, senior citizens, and families with dependents.”
“These deductions will continue to help the people that need them the most,” he says.
While the reform would come at a cost of about $200 million, lawmakers say the burden of income tax will be reduced without shifting it to other areas like property or sales tax.
Currently bannister says 44% of South Carolinians from very low to very high income, don’t pay income tax. The new flat rate means everyone receiving a paycheck will contribute.
“And I look forward to having a tax reform package, with lower taxes that I can have on my desk before this session ends, so we can take another great step forward in the history of our state, thank you,” says Governor Henry McMaster.
