South Carolina – Governor Henry McMaster and William Floyd, the Executive Director of the South Carolina Department of Employment and Workforce (DEW), have confirmed that state unemployment insurance (UI) tax rates would either decline or stay the same for 2026.
This means that businesses in South Carolina will save a lot of money next year. The drop is predicted to save employers about $40 million compared to 2025, making it the biggest drop in UI tax payments since the current administration took office.
Governor McMaster said that keeping a business-friendly environment remains a top focus.
“During every year of my administration, we have lowered or maintained UI business taxes, and 2026 will bring the largest reduction yet,” said Governor Henry McMaster. “South Carolina continues to attract jobs and investment because we focus on creating the most competitive and business-friendly climate in the country. These tax cuts give employers more room to hire, expand, and invest, which strengthens our economy and creates new opportunities for our people.”
This is the eleventh year in a row that UI tax rates haven’t gone up, which means that employers have saved a total of $355 million since the trend started. Rates will be between 0.06% and 5.46% for the next year, depending on how many jobless claims each business has had in the past. The 2026 rate change is the biggest percentage drop since 2011, according to officials.
Businesses that don’t charge for benefits between July 2022 and June 2025 are in tax class 1 and will pay the lowest rate of 0.06%. Starting employers, or those who have been in business for less than a year, will pay a 1% starting rate. Companies in tax classes 2 through 19 will also have to pay less in UI taxes. The average savings are expected to be around 35%.
Executive Director Floyd highlighted several points of progress, including record workforce participation, rising wages, and major growth in real GDP.
“South Carolina has hit historic levels of people working, become fourth in the nation for real GDP growth, increased job and wage growth across many sectors this year, and has steadily grown our UI Trust Fund,” said DEW Executive Director William Floyd.
The process of setting rates each year includes making predictions about the economy, evaluating trust funds, predicting unemployment, and looking at benefits. While many employers would see lower tax rates, experts warn that how much you pay still depends on how long you’ve been using the UI system.
Businesses that have to pay unemployment taxes can look over their quarterly statements and dispute all errors within 30 days.
Businesses can already see their 2026 rate through the State Unemployment Insurance Tax System (SUITS), but tax letters will be sent out soon. DEW has also put up a full rate chart.
State authorities see 2026 as another step in making South Carolina a better place for businesses to develop, stay stable, and give workers long-term opportunities.
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