SOUTH CAROLINA REVENUE AND FISCAL AFFAIRS OFFICE
S
TATEMENT OF ESTIMATED FISCAL IMPACT
WWW.RFA.SC.GOV • (803)734-3793
This fiscal impact statement is produced in compliance with the South Carolina Code of Laws and House and Senate rules. The focus of
the analysis is on governmental expenditure and revenue impacts and may not provide a comprehensive summary of the legislation.
Page 1 of 7
H. 4216
Fiscal Impact Summary
This bill amends South Carolina’s individual income tax structure beginning in tax year 2026.
The bill imposes a flat tax rate of 3.99 percent, eliminates the federal standard and itemized
deductions, and allows taxpayers to claim a South Carolina Income Adjusted Deduction
(SCIAD) for taxpayers with lower incomes. The bill also provides that the tax rate will be
reduced annually beginning in tax year 2027 if individual income tax revenue, less amounts
credited to the Trust Fund for Tax Relief, is projected to grow by at least 5 percent in the
following fiscal year until the rate reaches 2.49 percent. The rate will be reduced annually such
that the adjustment to the tax rate is projected to reduce individual income tax revenue by
approximately $200,000,000. If the projected growth in individual income tax revenue is
projected to be less than $200,000,000, then the tax rate adjustment must be limited to the
projected increase in individual income tax revenue. The determination of the tax rate will be
made annually based on the revenue forecast for the current and upcoming fiscal years as of
February fifteenth. Finally, the Department of Revenue (DOR), in consultation with Revenue
and Fiscal Affairs (RFA), is directed to adjust the withholdings tables to reflect the tax changes
in the act in accordance with fiscal responsibility.
Currently, South Carolina has a marginal tax rate structure of 0 percent, 3 percent, and 6.2
percent for tax year 2025 that applies to state taxable income. The state starts with federal
taxable income, which is essentially federal adjusted gross income (AGI) less the federal
standard and itemized deductions. The state then allows other deductions and adjustments to
determine state taxable income. The bill eliminates the federal standard or itemized deductions.
Instead, taxpayers with lower incomes will be allowed to deduct the new SCIAD. All other
current state deductions, exemptions, adjustments, and tax credits are retained. The new flat tax
rate imposed for tax year 2026 will be 3.99 percent.
DOR indicates that the changes to the tax structure will require significant revisions to the
current tax return processing system as well as many forms and guidance. Further, the agency
will need to maintain separate systems for processing returns unde r the current tax structure and
the new tax structure until the full period for any amendments to prior year returns expires. The
total cost is expected to be approximately $3,000,000, of which approximately $1,500,000 is for
vendor programming costs for changes to tax processing systems, and the remaining $1,500,000
is for development and implementation of training and communications to inform the public
regarding the changes. The timing of the expenditure impact is under review but is expected to
Bill Number: H. 4216 Introduced on March 25, 2025
Subject: Income Tax
Requestor: House
Wa
ys and Means
RFA Analyst(s): Jolliff
Impact Date: March 31, 2025
Page 2 of 7
H. 4216
occur over FY 2025-26 and FY 2026-27 as the agency implements the changes necessary to
prepare for tax year 2026. The agency will request additional General Fund appropriations for
these expenses.
Individual Income Tax Liability
The bill will reduce individual income tax liability by approximately $216,600,000 in tax year
2026. The attached Table 1 outlines the impact by federal AGI ranges. The impact on individual
taxpayers varies widely within each range depending on the specific tax situation of each tax
filer. As shown, approximately 21.2 percent of returns will not experience a change in their tax
liability, 19.4 percent of returns will experience lower tax liabilities of $1,155,300,000, and 59.4
percent will see an increase in tax liability of $938,700,000.
On a fiscal year basis, we assume taxpayers will adjust their estimated tax payments for the tax
change. As such, 5.25 percent of the total tax year impact is recognized in the prior fiscal year,
FY 2025-26, for the reduced payments. Total revenue in FY 2026-27 will experience the full
decrease in tax liability including the remaining reduction in tax liability for tax year 2026 and
the decreased taxes for tax year 2027. The impact by fiscal year is shown in the table below.
Estimated Fiscal Year Impact of Individual Income Tax Change at 3.99%
Fiscal Year General Fund Impact
FY 2025-26 ($11,372,000)
FY 2026-27 ($216,600,000)
The impact of the tax rate changes in future years will depend on projected revenue growth and
the changes in the tax rate that result from the projected growth. For illustration, we have also
projected the cumulative impact of reducing the rate from 3.99 percent to 2.49 percent based on
tax year 2026. The attached Table 2 provides the estimated impact of this future change by
federal AGI ranges for individual income tax filers. In this scenario, tax liabilities would be
reduced by an estimated additional $2.50 billion based on tax year 2026 estimates. After the
initial tax change when the rate is reduced to 2.49 percent, approximately 77.2 percent of
taxpayers will experience a decrease in their tax liabilities in future years, with the remaining
22.8 percent experiencing no change. When the rate is lowered below 3 percent, taxpayers who
file a combined return for pass-through businesses at the active trade or business tax rate of 3
percent currently may elect to file at the lower rate, which would further reduce tax liabilities by
an estimated $10,800,000 for these taxpayers based on tax year 2026 dollars and is in addition to
the estimates provided in Table 2.
In total, including the estimated $10,800,000 for active trade or business taxes reported
separately, the reduction to 2.49 percent would lower tax liabilities by an additional $2.51
billion, for a total tax reduction of $2.73 billion compared to the current tax structure. The actual
reduction will depend on how quickly the rate is reduced to 2.49 percent and income growth in
future years.
Page 3 of 7
H. 4216
Withholdings
The bill also directs DOR, in consultation with RFA, to adjust the withholdings tax tables to
reflect the tax changes in the bill. In the calendar year in which the adjustment to the
withholdings tables begins, withholdings would be lowered in January through June (the final
half of the fiscal year), but the offsetting adjustment to refunds or tax payments will not occur
until the following fiscal year when taxes are filed in April. At this time, DOR intends to work
with RFA to determine timing for this adjustment such that the state’s financial position is not
negatively affected, and the adjustment can be accommodated with available revenue. The
impact on taxpayers will depend on how and when the withholdings tables are adjusted. Based
on an initial analysis of proposed adjustments to withholdings tables, the changes may total $1.4
billion and may decrease taxpayers’ withholdings by an average of 20 percent when fully
implemented. However, the actual adjustment may vary when the tables are finalized.
Other Considerations
Please note, this bill represents a significant shift from our current tax structure. While the
estimated impact is based upon the information reported on tax returns, there may be unforeseen
issues due to taxpayer decisions resulting from this new tax structure. Further, this analysis is
based on tax year 2022 tax returns, which are the latest currently available, and current
expectations for income growth and tax return changes over the next 4 years. These issues and
assumptions influence the analysis of the impact the tax rate change will have, and any
differences could impact the potential revenue and budget. As noted in the State Revenue
Section below, this impact is based on the SCIAD being calculated on income before other state
deductions and exemptions are applied, which is not clearly referenced in the bill. Without
clarification or amendment to specify the order of deductions, the fiscal impact would be
significantly higher.
Explanation of Fiscal Impact
Introduced on March 25, 2025
State Expenditure
This bill amends South Carolina’s individual income tax structure beginning in tax year 2026.
The bill imposes a flat tax rate of 3.99 percent, eliminates the federal standard and itemized
deductions, and allows taxpayers with lower incomes to claim a new SCIAD. The bill also
provides that the tax rate will be reduced annually beginning in tax year 2027 until it reaches
2.49 percent if projected individual income tax revenue, less amounts credited to the Trust Fund
for Tax Relief, is projected to grow by at least 5 percent in the following fiscal year. The rate
will be reduced annually such that the adjustment to the tax rate is projected to reduce individual
income tax revenue by approximately $200,000,000. If the projected growth in individual
income tax revenue is projected to be less than $200,000,000, then the tax rate adjustment must
be limited to the projected increase in individual income tax revenue. The determination of the
tax rate will be made annually based on the revenue forecast for the current and upcoming fiscal
years as of February fifteenth. Finally, DOR, in consultation with RFA, is directed to adjust the
withholdings tables to reflect the tax changes in the act in accordance with fiscal responsibility.
Page 4 of 7
H. 4216
Currently, South Carolina has a marginal tax rate structure of 0 percent, 3 percent, and 6.2
percent for tax year 2025 that applies to state taxable income. The state starts with federal
taxable income, which is essentially federal AGI less the federal standard and itemized
deductions. The state then allows other deductions and adjustments to determine state taxable
income. The bill eliminates the federal standard or itemized deductions. Instead, taxpayers with
lower incomes will be allowed to deduct the new SCIAD. All other current state deductions,
exemptions, adjustments, and tax credits are retained. The new flat tax rate imposed for tax year
2026 will be 3.99 percent.
DOR indicates that the changes to the tax structure will require significant revisions to the
current tax return processing system as well as many forms and guidance. Further, the agency
will need to maintain separate systems for processing returns under the current tax structure and
the new tax structure until the full period for any amendments to prior year returns expires. The
total cost is expected to be approximately $3,000,000, of which approximately $1,500,000 is for
vendor programming costs for changes to tax processing systems, and the remaining $1,500,000
is for development and implementation of training and communications to inform the public
regarding the changes. The timing of the expenditure impact is under review but is expected to
occur over FY 2025-26 and FY 2026-27 as the agency implements the changes necessary to
prepare for tax year 2026. The agency will request additional General Fund appropriations for
these expenses.
State Revenue
This bill amends South Carolina’s individual income tax structure beginning in tax year 2026.
The bill imposes a flat tax rate of 3.99 percent, eliminates the federal standard and itemized
deductions, and allows taxpayers with lower incomes to claim the new SCIAD. Additionally, the
bill provides that the tax rate will be reduced annually beginning in tax year 2027 until it reaches
2.49 percent if individual income tax revenue, less amounts credited to the Trust Fund for Tax
Relief, is projected to grow by at least 5 percent in the following fiscal year. The rate will be
reduced annually such that the adjustment to the tax rate is projected to reduce individual income
tax revenue by approximately $200,000,000. If the projected growth in individual income tax
revenue of at least 5 percent is projected to be less than $200,000,000, then the tax rate
adjustment must be limited to the projected increase in individual income tax revenue. The
determination of the tax rate will be made annually based on the revenue forecast for the current
and upcoming fiscal years as of February fifteenth. Lastly, the bill specifies that DOR, in
consultation with RFA, is directed to adjust the withholdings tables to reflect the tax changes in
the act in accordance with fiscal responsibility.
Currently, South Carolina has a marginal tax rate structure of 0 percent, 3 percent, and 6.2
percent for tax year 2025 that applies to state taxable income. The state starts with federal
taxable income, which is essentially federal AGI less the federal standard and itemized
deductions. The state then allows other deductions and adjustments to determine state taxable
income. The bill eliminates the federal standard or itemized deductions. Instead, taxpayers with
lower incomes will be allowed to deduct the new SCIAD. All other current state deductions,
exemptions, adjustments, and tax credits are retained. The new flat tax rate imposed for tax year
2026 will be 3.99 percent.
Page 5 of 7
H. 4216
Taxpayers within the provided income limits are allowed to deduct the new SCIAD. The SCIAD
is $6,000 for single filers and is phased out for filers with income between $30,000 and $40,000.
The SCIAD is increased to $12,000 for married joint filers with a phase-out from $60,000 and
$80,000 of income and $9,000 for head of household filers with a phase-out from $45,000 to
$60,000. For non-residents, the SCIAD is reduced to an amount that is the same proportion as
South Carolina AGI is to federal AGI. The impact is based on the SCIAD being calculated on
income before other state deductions and exemptions are applied, which coincides with the
proration for non-residents but is not clearly outlined in the bill. Without clarification or
amendment to specify the order of deductions, the fiscal impact would be significantly higher.
While the logical and consistent treatment would be for this deduction to apply based on federal
AGI, the current language in the bill would allow a different interpretation, which would result in
a significantly larger impact if the phase-out occurred after other deductions are applied.
Individual Income Tax Liability
The bill will reduce individual income tax liability by approximately $216,600,000 in tax year
2026. The attached Table 1 outlines the impact by federal AGI ranges. The impact on individual
taxpayers varies widely within each range depending on the specific tax situation of each tax
filer. As shown, approximately 21.2 percent of returns will not experience a change in their tax
liability, 19.4 percent of returns will experience lower tax liabilities of $1,155,300,000, and 59.4
percent will see an increase in tax liability of $938,700,000.
On a fiscal year basis, we assume taxpayers will adjust their estimated tax payments for the tax
change. As such, 5.25 percent of the total tax year impact is recognized in the prior fiscal year,
FY 2025-26, for the reduced payments. Total revenue in FY 2026-27 will experience the full
decrease in tax liability including the remaining reduction in tax liability for tax year 2026 and
the decreased taxes for tax year 2027. The impact by fiscal year is shown in the table below.
Estimated Fiscal Year Impact of Individual Income Tax Change at 3.99%
Fiscal Year General Fund Impact
FY 2025-26 ($11,372,000)
FY 2026-27 ($216,600,000)
For this analysis, our estimates of the impact are based on the current income growth
assumptions applied to the sample of tax returns with federal tax data from tax year 2022. We
have based our analysis on the impact that the proposed change would have on tax revenue
compared to the current tax rates of 0 percent, 3 percent, and 6.3 percent, which coincide with
the assumptions included in the revenue forecast by the Board of Economic Advisors (BEA) on
February 13, 2025. While the top marginal tax rate will be reduced to 6.2 percent for tax year
2025, and the impact of the rate change will be included in the budget, it is not included in the
BEA revenue forecast.
The impact of the tax rate changes in future years and when the rate will be lowered to 2.49
percent will depend on revenue growth and how quickly the tax rate is lowered. For illustration,
Page 6 of 7
H. 4216
we have projected the impact of reducing the rate from 3.99 percent to 2.49 percent based on tax
year 2026. The attached Table 2 provides the estimated impact of this future change by federal
AGI ranges for individual income tax filers. In this scenario, tax liabilities would be reduced by
an additional approximately $2.50 billion based on tax year 2026 estimates. After the initial tax
change when the rate is reduced to 2.49 percent, approximately 77.2 percent of taxpayers will see
a decrease in their tax liabilities in future years.
Additionally, taxpayers with income from pass-through businesses are allowed currently to elect
to have active trade or business income taxed at 3 percent as opposed to the individual income
tax rates. When the individual income tax rate is lowered below 3 percent, we anticipate active
trade or business taxpayers may elect the lower individual income tax rate instead of the 3
percent active trade or business tax rate. Currently, approximately 85 percent of active trade or
business income for pass-through businesses is reported at the individual level, and 15 percent is
reported on a combined return at the entity level. Active trade or business income reported at the
individual level is included in estimates of the tax change by federal AGI ranges reported on the
attached tables, and the impact for these taxpayers is included in the table estimates. The
remaining 15 percent of active trade or business income that is reported on a combined return is
not included in the tables as the federal AGI of these taxpayers is unknown. If in the future
taxpayers who file a combined return at the entity level elect to file at the lower individual
income tax rate as opposed to the 3 percent active trade or business tax rate, this change would
reduce tax liability and revenue for these taxpayers as well. When the rate is lowered to 2.49
percent, active trade or business taxpayers filing at the entity level may experience a tax liability
reduction of up to $10,800,000 based on tax year 2026 dollars if they elect to file at the
individual income tax rate. The change in tax liability may vary depending on whether entities
elect to forgo any tax benefit of filing at the entity level to claim the lower rate.
In total, including the estimated $10,800,000 for active trade or business taxes reported at the
entity level, the reduction to 2.49 percent would lower tax liabilities by an additional $2.51
billion, for a total tax reduction of approximately $2.73 billion compared to the current tax
structure. The actual reduction will depend on how quickly the rate is reduced to 2.49 percent
and income growth in future years.
Withholdings
The bill directs DOR, in consultation with RFA, to adjust the withholdings tax tables to reflect
the tax changes in the bill. In the calendar year in which the adjustment to the withholdings
tables begins, withholdings would be lowered in January through June (the final half of the fiscal
year), but the offsetting adjustment to refunds or tax payments will not occur until the following
fiscal year when taxes are filed in April. At this time, DOR intends to work with RFA to
determine timing for this adjustment such that the state’s financial position is not negatively
affected, and the adjustment can be accommodated with available revenue. The impact on
taxpayers will depend on how and when the withholdings tables are adjusted. Based on an initial
analysis of proposed adjustments to withholdings tables, the changes may total $1.4 billion and
may decrease taxpayers’ withholdings by an average of 20 percent when fully implemented.
However, the actual adjustments may vary when the tables are finalized.
__________________________________
Frank A. Rainwater, Executive Director
DISCLAIMER: THIS FISCAL IMPACT STATEMENT REPRESENTS THE OPINION AND INTERPRETATION OF THE
AGENCY OFFICIAL WHO APPROVED AND SIGNED THIS DOCUMENT. IT IS PROVIDED AS INFORMATION TO
THE GENERAL ASSEMBLY AND IS NOT TO BE CONSIDERED AS AN EXPRESSION OF LEGISLATIVE INTENT.
Page 7 of 7
H. 4216
Other Considerations
Please note, this bill represents a significant shift from our current tax structure. While the
estimated impact is based upon the information reported on tax returns, there may be unforeseen
issues due to taxpayer decisions resulting from this new tax structure. Further, this analysis is
based on tax year 2022 tax returns, which are the latest currently available, and current
expectations for income growth and tax return changes over the next 4 years. These issues and
assumptions influence the analysis of the impact the tax rate change will have, and any
differences could impact the potential revenue and budget.
Local Expenditure
N/A
Local Revenue
N/A
Impact: With this tax structure, 19.4% of taxpayers have a lower tax liability, 59.4% have a higher tax liability, and 21.2% are unchanged. The General Fund impact is ($ 216,600,000).
Estimated Federal
Adjusted Gross Income
Range 2022
Estimated # of
Returns
Estimated % of
Returns
Old Avg. Tax
Liability
New Avg. Tax
Liability
Returns with
Tax Change
% of
Returns in
Range
Old Avg.
Tax
Liability
New Avg.
Tax
Liability
Average Tax
Change
Total Dollar
Increase/
(Decrease)
Tax Decrease
# of Returns
Tax Decrease
% of Returns
in Range
Total Decrease
Amount
Average
Decrease
Amount
Tax
Increase #
of Returns
Tax
Increase %
of Returns
in Range
Total Increase
Amount
Average
Increase
Amount
No Tax
Change #
of Returns
No
Change %
of
Returns
Zero Tax #
of Returns
Zero Tax
% of
Returns
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23
$0 * 90,171 3.2% $65 $51 1,703 1.9%$3,449 $2,722 ($726) ($1,237,000) 405 0.4% ($1,500,000)($3,706) 1,298 1.4% $263,000 $203 88,46898.1% 88,35598.0%
$1 to $10,000 316,550 11.2% $4 $31 90,225 28.5% $13 $110 $97 $8,735,000 535 0.2% ($43,000)($80) 89,690 28.3% $8,779,000 $98 226,32471.5%226,39571.5%
$10,001 to $20,000 322,475 11.4% $16 $191 187,653 58.2% $27 $328 $300 $56,336,000 286 0.1% ($68,000)($238)187,366 58.1% $56,404,000$301 134,82241.8%134,82441.8%
$20,001 to $30,000 277,959 9.8% $104 $459 220,407 79.3% $131 $578 $447 $98,536,000 1,240 0.4% ($92,000)($74)219,167 78.8% $98,628,000$450 57,55220.7% 58,31821.0%
$30,001 to $40,000 270,592 9.6% $285 $734 233,471 86.3% $330 $851 $521 $121,574,000 16,614 6.1% ($429,000)($26)216,857 80.1%$122,003,000$563 37,12113.7% 52,84419.5%
$40,001 to $50,000 238,162 8.4% $590 $1,087 214,176 89.9% $656 $1,208 $552 $118,190,000 21,236 8.9% ($799,000)($38)192,940 81.0%$118,989,000$617 23,98610.1% 42,79018.0%
$50,001 to $75,000 407,589 14.4% $1,248 $1,744 387,802 95.1%$1,312 $1,833 $521 $201,981,000 23,561 5.8% ($2,952,000)($125)364,241 89.4%$204,933,000$563 19,787 4.9% 23,914 5.9%
$75,001 to $100,000 253,297 9.0% $2,175 $2,619 250,818 99.0%$2,196 $2,645 $449 $112,612,000 78,378 30.9% ($24,218,000)($309)172,440 68.1%$136,830,000$793 2,479 1.0% 2,260 0.9%
$100,001 to $150,000 300,002 10.6% $3,538 $3,743 297,382 99.1%$3,569 $3,775 $207 $61,453,000 116,881 39.0% ($73,075,000)($625)180,501 60.2%$134,527,000$745 2,621 0.9% 2,911 1.0%
$150,001 to $200,000 145,000 5.1% $5,947 $5,361 143,734 99.1%$5,999 $5,408 ($591)($84,968,000)109,101 75.2%($112,171,000)($1,028)34,634 23.9% $27,204,000$785 1,265 0.9% 2,141 1.5%
$200,001 to $300,000 109,079 3.9% $9,317 $7,500 107,588 98.6%$9,447 $7,604 ($1,842)($198,192,000) 96,735 88.7%($208,189,000)($2,152)10,854 10.0% $9,997,000$921 1,490 1.4% 2,738 2.5%
$300,001 to $500,000 55,593 2.0% $15,594 $11,567 54,207 97.5%$15,992$11,863 ($4,129)($223,832,000) 50,448 90.7%($228,982,000)($4,539) 3,759 6.8% $5,150,000$1,370 1,385 2.5% 2,396 4.3%
$500,001 to $1,000,000 25,468 0.9% $26,791 $19,133 24,306 95.4%$28,071$20,047 ($8,024)($195,026,000) 22,338 87.7%($199,554,000)($8,934) 1,969 7.7% $4,528,000$2,300 1,161 4.6% 1,626 6.4%
Over $1,000,000 12,102 0.4% $78,357 $54,168 10,907 90.1%$86,944$60,104 ($26,841)($292,746,000) 9,858 81.5%($303,262,000)($30,763) 1,049 8.7% $10,515,000$10,025 1,195 9.9% 1,42511.8%
Total 2,824,038 100.0% $2,392 $2,316 2,224,380 78.8%$3,037 $2,940 ($97)($216,600,000)547,615 19.4%($1,155,300,000)($2,110)1,676,765 59.4%$938,700,000$560 599,65821.2%642,93722.8%
Figures may not add to totals due to rounding. For non-residents, federal AGI is only the amount applicable to South Carolina.
*Returns may have $0 federal AGI but positive state taxable income due to provisions not adopted by South Carolina or out-of-state income adjustments.
Proposed Flat Tax Rate : 3.99% Other Notes:
SC Income Adj. Deduction: Single $6,000 No standard or itemized deductions.
Start Phase out$30,000 All other current state adjustments to income (federal conformity provisions), deductions, exemptions, and credits are maintained.
End Phase out$40,000 Active trade or business rate at 3% is maintained.
Married Filing Joint - amounts x 2, Head of Household amounts x 1.5
Amount pro-rated for non-residents
Disclaimer: Estimates are based on current assumptions at the time of the analysis. Changes in growth rates, base year tax data, or other assumptions may have a positive or negative impact on these estimates and the budget.
Current 2026 Marginal Tax Rates: Taxable Income Range:
Estimated Tax Return Distribution
H. 4216 - ESTIMATED SOUTH CAROLINA INDIVIDUAL INCOME TAX IMPACT
Tax Year 2026
Proposal: Apply a flat tax rate of 3.99%, eliminate the standard or itemized deduction, allow the new SC income adjusted deduction, and maintain all state adjustments, exemptions, and credits.
Estimated Tax Change (Returns with a Change) Tax Returns with a Decrease in Liability Tax Returns with an Increase in Liability
Tax Returns with No
Change
Tax Returns with Zero
Tax Liability
(Rates are based on BEA forecast assumptions. Actual rate is 6.2% for tax year 2025 and after as accounted for in the budget.)
0%
3%
6.3%
up to $3,640
$3,640-$18,220
over $18,220
Table 1
Data Source: SC Department of Revenue 2022 federal and state matched individual income tax return 93% sample; Inflated to 100% by RFA 3/31/2025 Impact: With this tax structure, 77.2% of taxpayers have a lower tax liability, 0.0% have a higher tax liability, and 22.8% are unchanged. The General Fund impact is ($ 2,497,900,000).
Estimated Federal
Adjusted Gross Income
Range 2022
Estimated # of
Returns
Estimated % of
Returns
Avg. Tax
Liability
New Avg. Tax
Liability
Returns with
Tax Change
% of
Returns in
Range
Avg. Tax
Liability
New Avg.
Tax
Liability
Average Tax
Change
Total Dollar
Increase/
(Decrease)
Tax Decrease
# of Returns
Tax Decrease
% of Returns
in Range
Total Decrease
Amount
Average
Decrease
Amount
Tax
Increase #
of Returns
Tax
Increase %
of Returns
in Range
Total Increase
Amount
Average
Increase
Amount
No Tax
Change #
of Returns
No
Change %
of
Returns
Zero Tax #
of Returns
Zero Tax
% of
Returns
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23
$0 * 90,171 3.2% $51 $34 1,793 2.0%$2,585 $1,693 ($892) ($1,600,000) 1,793 2.0% ($1,600,000)($892) 0 0.0% $0 $0 88,37898.0% 88,37898.0%
$1 to $10,000 316,550 11.2% $31 $20 89,376 28.2% $111 $69 ($41) ($3,697,000) 89,376 28.2% ($3,697,000)($41) 0 0.0% $0 $0 227,17371.8%226,85571.7%
$10,001 to $20,000 322,475 11.4% $191 $119 187,492 58.1% $328 $204 ($124)($23,261,000)187,492 58.1% ($23,261,000)($124) 0 0.0% $0 $0 134,98341.9%135,54942.0%
$20,001 to $30,000 277,959 9.8% $459 $285 219,492 79.0% $581 $361 ($220)($48,288,000)219,492 79.0% ($48,288,000)($220) 0 0.0% $0 $0 58,46721.0% 58,83321.2%
$30,001 to $40,000 270,592 9.6% $734 $455 217,717 80.5% $912 $565 ($347)($75,530,000)217,717 80.5% ($75,530,000)($347) 0 0.0% $0 $0 52,87519.5% 53,22819.7%
$40,001 to $50,000 238,162 8.4% $1,087 $659 195,366 82.0%$1,325 $803 ($521)($101,855,000)195,366 82.0%($101,855,000)($521) 0 0.0% $0 $0 42,79718.0% 51,01121.4%
$50,001 to $75,000 407,589 14.4% $1,744 $1,068 383,647 94.1%$1,853 $1,135 ($718)($275,416,000)383,647 94.1%($275,416,000)($718) 0 0.0% $0 $0 23,942 5.9% 37,084 9.1%
$75,001 to $100,000 253,297 9.0% $2,619 $1,612 251,033 99.1%$2,643 $1,627 ($1,016)($255,021,000)251,033 99.1%($255,021,000)($1,016) 0 0.0% $0 $0 2,264 0.9% 9,479 3.7%
$100,001 to $150,000 300,002 10.6% $3,743 $2,298 297,088 99.0%$3,779 $2,320 ($1,459)($433,456,000)297,088 99.0%($433,456,000)($1,459) 0 0.0% $0 $0 2,914 1.0% 13,054 4.4%
$150,001 to $200,000 145,000 5.1% $5,361 $3,287 142,858 98.5%$5,441 $3,337 ($2,105)($300,696,000)142,858 98.5%($300,696,000)($2,105) 0 0.0% $0 $0 2,142 1.5% 7,899 5.4%
$200,001 to $300,000 109,079 3.9% $7,500 $4,612 106,340 97.5%$7,694 $4,731 ($2,963)($315,087,000)106,340 97.5%($315,087,000)($2,963) 0 0.0% $0 $0 2,739 2.5% 7,793 7.1%
$300,001 to $500,000 55,593 2.0% $11,567 $7,186 53,195 95.7%$12,089 $7,509 ($4,579)($243,600,000) 53,195 95.7%($243,600,000)($4,579) 0 0.0% $0 $0 2,397 4.3% 4,757 8.6%
$500,001 to $1,000,000 25,468 0.9% $19,133 $12,050 23,836 93.6%$20,443$12,875 ($7,568)($180,388,000) 23,836 93.6%($180,388,000)($7,568) 0 0.0% $0 $0 1,632 6.4% 2,531 9.9%
Over $1,000,000 12,102 0.4% $54,168 $34,336 10,677 88.2%$61,398$38,919 ($22,479)($240,006,000) 10,677 88.2%($240,006,000)($22,479) 0 0.0% $0 $0 1,42511.8% 1,89115.6%
Total 2,824,038 100.0% $2,316 $1,431 2,179,908 77.2%$3,000 $1,854 ($1,146)($2,497,900,000)2,179,908 77.2%($2,497,900,000)($1,146) 0 0.0% $0 $0 644,13022.8%698,34324.7%
Figures may not add to totals due to rounding. For non-residents, federal AGI is only the amount applicable to South Carolina.
*Returns may have $0 federal AGI but positive state taxable income due to provisions not adopted by South Carolina or out-of-state income adjustments.
Active trade or business rate taxpayers may elect lower rate, and potential impact for combined entity-level returns is not shown in this table.
SC Income Adj. Deduction:
3.99% Single $6,000 Other Notes:
2.49% Start Phase out$30,000 No standard or itemized deductions.
End Phase out$40,000 All other current state adjustments to income (federal conformity provisions), deductions, exemptions, and credits are maintained.
Married Filing Joint - amounts x 2, Head of Household amounts x 1.5Active trade or business rate at 3% is maintained.
Amount pro-rated for non-residents
Disclaimer: Estimates are based on current assumptions at the time of the analysis. Changes in growth rates, base year tax data, or other assumptions may have a positive or negative impact on these estimates and the budget.
Final Proposed Tax Rate :
Estimated Tax Return Distribution
H. 4216 - ESTIMATED SOUTH CAROLINA INDIVIDUAL INCOME TAX IMPACT - 3.99% REDUCED TO 2.49%
Illustration for Tax Year 2026
Proposal: Reduce proposed flat tax rate of 3.99% to 2.49%.
Estimated Tax Change (Returns with a Change) Tax Returns with a Decrease in Liability Tax Returns with an Increase in Liability
Tax Returns with No
Change
Tax Returns with Zero
Tax Liability
2026 Proposed Flat Tax Rate :
Table 2
Data Source: SC Department of Revenue 2022 federal and state matched individual income tax return 93% sample; Inflated to 100% by RFA 3/31/2025