HomeSouth CarolinaPalmetto State residents will see more changes to personal income tax rates...

Palmetto State residents will see more changes to personal income tax rates next year

Columbia, South Carolina — In the past few years, South Carolina has lowered its personal income tax rates. In 2022, it was 7%, but by 2023, it dropped to 6.5%. More changes are expected as we enter 2024.

Back in 2018, Governor McMaster started pushing for a reduction in income tax. At that time, South Carolina’s tax rate was the highest in the Southeast and ranked 12th in the whole country at 7%.

Following this, McMaster signed a significant tax reduction bill. This bill reduced the highest personal income tax rate from 7% to 6.5%, marking a notable change in the state’s tax policy.

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“Obviously, tax rates moving downward is going to provide taxpayers with a little relief,” said Rory King, a certified public accountant (CPA) in Columbia. “The hope is that they continue to make cuts, as long as the revenue is where it needs to be and we hit that 6% target, which is heading in the right direction to be in line with other states because we are a little higher than in relation to our surroundings.”

In June 2023, Governor McMaster approved the state budget for the fiscal year 2023-2024. This budget includes a plan to reduce income tax by 0.1%, using $96.2 million.

“Until recently, South Carolina had the highest personal income tax rate in the Southeast and the 12th highest in the nation. No more. I was honored to sign into law the largest income tax cut in state history in 2022. This year taxpayers will keep an additional $96.2 million of their hard-earned money instead of sending it to the state government,” South Carolina Governor McMaster said in a statement.

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According to a representative from the Governor’s office, the plan is to lower personal income tax by 0.1% each year until it reaches 6%. King believes that even at 6%, it’s a bit high compared to other states.

King explained that it’s still high compared to the whole of the U.S., but 6% is reasonable and there are also tax credits that can help reduce the effective rate.

The decision to reduce the tax by 0.1% this year was made knowing the budget could accommodate it. King advises people to be proactive about their taxes throughout the year.

The target is to get to 6% by 2028. Whether this annual 0.1% reduction continues will depend on future budget availability.



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