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:
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.
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.
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:
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.
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.
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.