Income tax

South Carolina Legislature Passes Competing Income Tax Bills | Caroline from the south

(The Center Square) – South Carolina taxpayers could get an income tax reduction or an income tax reduction and refund, but the details will depend on how his two legislative bodies are negotiating after the state House and Senate passed various income tax reduction bills. these last weeks.

The South Carolina Senate approved S.1087 by a 40-0 vote at second reading this week. The bill will be moved to the South Carolina House.

The Senate bill includes a $1 billion rebate on 2021 state taxes, with rebates between $100 and $700 per state tax return. The 43% of South Carolina residents who do not file state taxes will still receive $100 in tax refund payments this year when they file taxes, which will amount to $116 million in payments . Anyone willing to pay up to $100 in taxes will receive the $100 rebate and this rebate will increase with tax liability to a cap of $700 per tax return.

“What it does is it really provides proportional benefits to middle-income taxpayers as opposed to high-income earners,” said Senate Finance Committee Chairman Tom Davis.

The Senate plan features $2 billion in tax relief due to $1 billion in one-time rebates and $1 billion in recurring tax cuts. These reductions include a 33% reduction in property taxes in the manufacturing sector and would eliminate income tax on military retirement income.

The bill would also reduce the state’s two main tax levels (7% and 6%) to 5.7% for the 2022 tax year, a plan that would cost $887 million a year.

Senate bill would eliminate income tax on first $3,200 of income, then phase out to 3% minus $96 up to $6,410, 4% minus $160 up to $9,620 , 5% minus $256 up to $12,820 and 5.7% thereafter.

The South Carolina House unanimously approved the plan, billed as a $1 billion tax cut, it would reduce the top state tax rate to 6.5% from 7% for the 2022 tax year. The House bill would also lower that top rate by 0.1 percentage points each year, starting in 2023, until it reaches 6%.

South Carolina should have $4.6 billion surplus over the next two fiscal years, based on South Carolina Council of Economic Advisors (BE A).

H.4880 was sent to the Senate Finance Committee but was not picked up. Lawmakers are seeking to put the income tax bills in place before this year’s filing date and before the state budget for next fiscal year makes its way through legislative bodies.

“It is absolutely essential that the legislature pass meaningful state income tax reform this session,” National Federation of Independent Business National Director Ben Homeyer said. “There are substantial differences between the House and Senate versions of the bill, but H.4880 and S.1087 would have a huge impact on families and small businesses in South Carolina, especially now, when the ‘state operates with a budget surplus.’

Homeyer pointed out in a statement that 26% of small business owners nationwide said inflation was the most important problem running their business, the highest reading since the third quarter of 1981. , according to the NFIB. Small Business Optimism Index.

Homeyer said most small businesses are flow-through entities where owners pay taxes at individual rates rather than corporate rates.

“We hope House and Senate leaders can come together and pass state income tax reforms that have a lasting impact on South Carolina’s future,” Homeyer said.