COLUMBIA, S.C. — In recent years, South Carolina's personal income tax rate has been reduced from 7% in 2022 to 6.5% in 2023.
As the new year approaches, so do changes to the tax rates.
In 2018, Governor McMaster began calling for an income tax cut. The state has the highest personal income tax rate in the Southeast and the 12th highest in the nation, at 7%.
Since then, McMaster has signed what he says is the largest income tax cut in state history, immediately reducing the top income tax rate from 7% to 6.5%.
"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 of 2023, Governor McMaster signed the FY 2023-2024 state budget into law, which includes $96.2 million for a .1% income tax cut.
In a statement to News19, the Governor said:
“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.”
According to a spokesperson for the Governor's office, the goal is to reduce personal income tax by .1% every year until it reaches 6%, which, according to King, is still on the higher side.
"It's still going to be high when you look at the United States as a whole but 6 percent is still fair. I think there are other things too that help bring that marginal rate down like tax credits that are available."
Knowing there is room in the budget to make the .1% reduction this year, King says to stay proactive year-round until tax season approaches when paying those taxes.
With 6% being the goal come 2028, whether or not funding is available in the coming years will determine whether the personal income tax rate continues to drop by .1 percent yearly.