As a member of both the Beaufort and Jasper County Legislative Delegations, I am pleased with the significant repatriation of tax dollars to the Lowcountry. In so many instances historically, local dollars went to Columbia, but fair and equitable amounts were not returned to the Lowcountry. That disparity, or inequity, in large part no longer exists due to the strength, tenure and cohesiveness of your legislative delegations.
Significant funding for Lowcountry roads, colleges, environmental and/or historical sites, as well as our airports, was included in this year’s budget. As important as it is for us to work together to fight for our fair share of state tax dollars, as stewards of your money it is just as important that we fight to be fiscally conservative and responsible.
The changes to South Carolina’s tax law are some of the most substantial legislative actions this year. The Comprehensive Tax Cut Act of 2022 adjusts tax brackets to provide $1 billion of income tax relief, authorizes $1 billion in one-time income tax rebates, allows for the complete deduction of all military retirement income, and increases the tax exemption for manufacturing property.
The legislation immediately reduces the rate for the highest tax bracket from 7% to 6.5% in Tax Year 2022 and then gradually phases in (by 1/10th of 1%) the tax relief in years when the state experiences sufficient revenue growth to a permanent top marginal rate of 6%. Further, the legislation sets a lowest individual income tax bracket that taxes at 0% and collapses several tax brackets. Brackets currently subject to rates of 3%, 4%, 5% and 6% collapse into a single tax bracket so that incomes falling in this middle range are all taxed at 3%.
The General Assembly appropriated $1 billion from the Contingency Reserve Fund to provide a one-time rebate for individual income taxpayers that filed a return for tax year 2021. Each return filed for 2021 shall receive a rebate equal to the amount of tax liability on the return up to a maximum of $700. However, if there are sufficient funds, the Department of Revenue increases the maximum amount of the rebate. DOR must issue these refunds by Dec. 31.
The tax exemption for manufacturing property is increased from 14.2857% to 42.8571%. Additionally, the Workforce Enhancement and Military Recognition Act was approved to allow all military retirement income to be deducted from an individual’s South Carolina income taxes, regardless of the individual’s age.
The legislature expanded eligibility for the 1% senior sales tax exemption on accommodations by lowering the age from 85 or older to 78 or older, for individuals exempt from paying 1% of the total 7% sales tax on accommodations.
During my tenure as chairman of the Beaufort County Council, I often commented that our establishment of the Rural and Critical Lands Preservation program was – and for future generations would be – one of the most significant things we could do to protect the majesty and beauty of the Lowcountry. The program has been an enormous success but is limited as a pay-as-you-go program.
This year in Columbia we passed the County Green Space Sales Tax Act to give counties another tool to protect and preserve lands within a county by allowing a county to impose a sales and use tax of up to 1% with revenue that is collected used to defray debt service on bonds issued to pay for procuring open lands or green space for preservation.
Finally, the General Assembly approved legislation revising the South Carolina housing tax credits that supplement federal tax incentives for the development of affordable housing (with provisions that place greater emphasis on rural areas to allow credits to be more evenly distributed across the state). And in a housekeeping action, the General Assembly passed annual tax conformity legislation which updates references to provide for coordination between state and federal income tax law provisions.
Weston Newton is the representative for District 120 in the State House of Representatives. WestonNewton@schouse.gov