South Carolina House working on revised tax bill after backlash

COLUMBIA, S.C. (WSPA) – The South Carolina House is revising a bill that would raise income taxes for nearly 60% of earners, and lawmakers are going back to the drawing board.

State leaders introduced a new bill in March that would set a flat tax rate of 3.99% for all earners, but there was backlash. Representatives are now devising a new plan.

“I’ve heard loud and clear from members of the of the house, members of this committee, that there are some things in the bill they would like to adjust, or they don’t like, or they would like to hear other options, ” said Representative Bruce Bannister, Chairman of the House Ways and Means Committee (R – Greenville).

Bannister met with experts who presented three new plans, all of which still raise taxes for at least 25% of taxpayers.

Plan number one would have the same 3.99% flat tax rate. 58.7% of South Carolinians, who file their taxes, would have an increase in how much they need to pay in 2026.

Plan number two has a 4.74% flat tax and only 38.6% of people would see the increase in 2026.

Plan number three would have a top rate of 5.49% and a bottom rate 1.99%. 28% of South Carolina earners would see the increase.

Frank Rainwater is the Executive Director of South Carolina Revenue and Fiscal Affairs, and he was an expert chosen to explain the alternatives. He said the original bill, which was the flat rate of 3.99%, would have a $216 million revenue loss.

“Basically, you got the same challenge here. I don’t think you can lower the rate enough under a flat tax,” Rainwater said. “Not for someone to have an increased liability or you’re going to have significant impact on the budget.”

Bannister said a final solution is still unclear, but expert input is helping. He asked for opinions from lawmakers on both sides of the aisle.

“Not where we hurt one group to favor another, but where it’s good for everybody, and we’re going to keep working on that. So, with that, we’re not, we’re not done by any means. We’ve got a lot more work to do,” Bannister said.

Representative Gilda Cobb-Hunter (D – Orangeburg) said she supports tax relief, but the plans must benefit most South Carolinians.

“Myself included, would benefit from this, but for me, it’s not about whether I’m going to benefit or not,” Cobb-Hunter said. “It’s about the majority of the wage earners, taxpayers, not just in my district but in the state.”

According to Rainwater, currently at least 44% of South Carolinians don’t pay income tax.

Lawmakers must act fast if they want to lower South Carolina’s tax rate, with just six session days left in the first year of a two-year legislative session.