The South Carolina Department of Revenue’s Information Letter #23-11 provides an overview of tax law changes enacted during the 2023 legislative session in South Carolina. The main updates include:
Income Taxes
- The top marginal income tax rate will continue to be gradually reduced from 6.5% in 2022 to 6% by 2027.
- Income tax brackets collapsed from 6 to 3 brackets beginning in tax year 2022.
- The earned income tax credit phases up to 125% of the federal credit by 2023.
Property Taxes
- Changes to school district consolidation and millage rates in Barnwell and Clarendon counties.
- Temporary provisions related to taxpaying ability calculations, catastrophic weather damage, and tax protests.
Sales and Use Taxes
- New sales tax exemption for farm fuels.
- Temporary provisions suspending certain sales taxes and providing other exemptions.
Miscellaneous
- Local accommodations tax can be used for workforce housing development.
- Tobacco licensing and enforcement provisions updated.
- Temporary provisions related to tax refund interest rates, fuel fee exemptions, and more.
The letter also lists all new and re-enacted temporary budget provisos impacting taxes in South Carolina for fiscal year 2023-2024:
Income Taxes
- Increased teacher supply reimbursement to $350, not taxable income.
- Awards for teachers and law enforcement officers of the year not taxable income.
- Extended placed in service date for renewable fuel credit to 1/1/2023.
- Allowed income tax deduction for identity theft protection services.
Property Taxes
- Calculation provisions for owner-occupied property and school district millage rates.
- Extended time period for improvements due to catastrophic weather damage.
Sales and Use Taxes
- Authorized $24 fee for SC Agriculture Tax Exemption (SCATE) Card.
- Extended or suspended certain sales tax exemptions.
Miscellaneous
- Reduced interest rate on tax refunds to increase funding for certain programs.
- Allowed electronic filing of certain license/permit applications.
- Motor fuel user fee exemption for local government school buses.
- Suspension of nursing home bed franchise fee continued.
These temporary provisos only apply for the 2023-2024 fiscal year unless reenacted. They cover a wide range of tax-related provisions and exemptions in South Carolina. Reviewing the summary provisos can help CPAs understand short-term tax changes impacting filings and planning for clients.
