“Pathway to zero”- McMaster announces new 5.21% state income tax rate, gubernatorial candidates respond

COLUMBIA, SC (WOLO) — Governor McMaster and fellow lawmakers announced the new state income tax top rate of 5.21% in a ceremonial signing Wednesday morning.

“We were at seven percent, now we’re at six. And we’re getting ready to go down to 5.21% right away, and we’re doing our best to keep on going down as conditions allow,” says McMaster.

A number of legislators and local leaders were there for the ceremonial signing — including SC House Ways and Means Committee Chair Rep. Bruce Bannister, SC Manufacturers and Commerce CEO Sara Hazzard, and SC House Speaker Murrell Smith — who says the new state income tax will provide $308 million in immediate relief to South Carolina citizens.

“A lower flatter tax structure encourages investment, entrepreneurship, and economic opportunity all over our state. It’s about encouraging opportunity and continuing to build a state where families and businesses can thrive,” says Smith.

Bannister says any claim that this will raise state income taxes for poorer South Carolinians, or raise any other tax to offset the new amount — is not true.

“Everybody pays a lower flatter tax and is treated more fairly. For those lower income folks, we still have the graduated rate where you have the lower rate for the low income folks but even with that the majority of South Carolinians are paying substantially less on their state income tax,” says Bannister.

As SC elects another governor this November, McMaster and other leaders say this could offer the next person to take his place a path to 0% state income tax.

ABC Columbia’s  Lee Williams reached out to all of the candidates for governor and received the following responses, however some candidates’ responses were not received by the time the story aired or this article was posted. The article will be updated as they’re received.

“This is a huge win, and a great step forward, for families and small businesses across South Carolina, delivering real relief and letting them keep more of their hard-earned money. I’m fully committed to finishing the job by eliminating the state income tax as your next governor,” says Lt. Gov. Pamela Evette.

“Governor McMaster deserves credit for putting more money back in the pockets of South Carolinians. But a reduction is not elimination. South Carolina can do better, and we have a detailed plan to prove it,” says Congresswoman Nancy Mace.

“Families across our state are being squeezed from every direction. People feel like they’re running harder but falling further behind. No one should be taking a victory lap when families are struggling just to make ends meet. South Carolina should be a place where opportunity is real and within reach. We can build a future where our state is more affordable for families and more profitable for businesses. As Governor, we will cut waste and spending and ensure every decision is made with families in mind,” says Attorney General Alan Wilson.

“This income tax bill is nothing but a redistribution.  Income tax needs to be eliminated by eliminating the uncontrolled doubling of spending over the last 10 years.  Instead this approximate 300 million dollar cut is a redistribution of six billion dollars of income taxes, best described as a tax hoax,” says Businessman Rom Reddy.

“The House passed a budget earlier this year that increased spending, showing a continued refusal to cut government waste. Until there is real spending discipline, there will be no real tax relief — especially while legislators vote to give themselves pay raises. Let’s be clear: NO ONE DESERVES A RAISE under these conditions!” says Congressman Ralph Norman.

And speaking of taxes — Wednesday, April 15th marks the deadline to file your federal taxes — with the state tax deadline being moved to October 15th.

According to the SC Department of Revenue:

On March 30, 2026, Governor Henry McMaster signed H. 4216 into law. The bill:

-Modifies South Carolina’s Individual Income Tax rates:

-The tax rate for income less than $30,000 is 1.99%.

-The tax rate for income from $30,000 and above is 5.21%, minus $966.

-Mandates that the top Individual Income Tax rate will be further reduced if the Board of Economic Advisors (BEA) projects that revenue collections will increase by 5% or greater from the previous fiscal year.

-The rate reduction cannot decrease revenue by more than $200 million.

-The BEA will make the determination of the new Individual Income Tax rate no later than February 15 of each year.