2025-2026 Bill 4216: Income tax

(c) The Board of Economic Advisors shall make the determination regarding income tax projections beginning with the initial forecast required pursuant to Section 11-9-1130.

(3) If the five percent threshold set forth in item (2) is met, the income tax rate shall be permanently and cumulatively reduced by a percentage that the Board of Economic Advisors projects to result in a reduction in individual income tax revenues collected pursuant to this chapter equal to two hundred million dollars in the fiscal year that begins during the tax year or twenty-five percent of the recurring income tax revenue surplus for the fiscal year that begins during the tax year, whichever is greater. The surplus amount must be calculated in the same manner as increases in income tax collections are calculated pursuant to item (2)(a). However, if the five percent threshold set forth in item (2) is met and is not projected to result in increased collections of at least two hundred million dollars in the fiscal year that begins during the tax year, then the reduction is limited to the projected amount of increased collections. Any reduction made pursuant to this subsection must be rounded up to the nearest hundredth of a percent.

(4) Upon the issuance of the initial forecast, the Executive Director of the Revenue and Fiscal Affairs Office, or his designee, shall notify the Department of Revenue of the projected percentage adjustment. The executive director, or his designee, shall provide similar notice if subsequent modifications to the forecast change the projected percentage adjustment. However, the forecast in effect on February fifteenth of the current fiscal year is the final forecast for which the percentage adjustment is determined, and no subsequent forecast modifications may have any effect on that determination.

(D) The department may prescribe tax tables consistent with the rates set pursuant to this section.

Internal Revenue Code sections not adopted

SECTION 2. Section 12-6-50 of the S.C. Code is amended by adding:

(21) Section 63(b) through (g) relating to standard deductions and the itemized deduction and any other relevant provision of Section 63 that would otherwise allow for standard deductions and the itemized deduction which are hereby specifically not allowed or adopted.

South Carolina Income Adjusted Deduction

SECTION 3. Section 12-6-1140 of the S.C. Code is amended by adding:

(15)(a) Subject to subitem (b), a South Carolina Income Adjusted Deduction (SCIAD) equal to:

(i) fifteen thousand dollars for taxpayers who file as single or married filing separately;

(ii) twenty-two thousand five hundred dollars for taxpayers who file as head of household; and

(iii) thirty thousand dollars for taxpayers who file as married filing jointly or as a surviving spouse.

(b)(i) The deduction set forth in subitem (a)(i) is subject to being reduced by a fraction whereby the numerator is the amount the taxpayer's federal adjusted gross income exceeds forty thousand dollars and the denominator is fifty-five thousand.

(ii) The deduction set forth in subitem (a)(ii) is subject to being reduced by a fraction whereby the numerator is the amount the taxpayer's federal adjusted gross income exceeds sixty thousand dollars and the denominator is eighty-two thousand five hundred.

(iii) The deduction set forth in subitem (a)(iii) is subject to being reduced by a fraction whereby the numerator is the amount the taxpayer's federal adjusted gross income exceeds eighty thousand dollars and the denominator is one hundred ten thousand.

(iv) If the fraction calculated by this subitem is equal to or exceeds one, then the deduction is not allowed. If the fraction is zero, then the deduction is not subject to being reduced. If the fraction is between zero and one, then the deduction must be reduced by the corresponding fraction.

(c) Any reduction amount which is not a multiplier of ten dollars must be rounded to the next lowest ten dollars.

Income tax filing

SECTION 4. Section 12-6-4910(1) of the S.C. Code is amended to read:

(1)(a) an individual whose filing status is single, surviving spouse, head of household, or married filing separately and whose South Carolina gross income for the taxable year is more than the sum of the deduction amount pursuant to Section 12-6-1140(15)(a) in accordance with the taxpayer's filing status plus the deduction amount the taxpayer qualifies for pursuant to Section 12-6-1170(B), without regard to a reduction for the retirement income deduction.

(b) an individual who files a joint return and whose combined South Carolina gross income for the taxable year is more than the sum of the deduction amount pursuant to Section 12-6-1140(15)(a) plus the deduction amount the taxpayer qualifies for pursuant to Section 12-6-1170(B), without regard to a reduction for the retirement income deduction.

Nonresident income tax filing

SECTION 5. Section 12-6-1720(2)(a)(i) of the S.C. Code is amended to read:

(i) For a nonresident individual, the South Carolina Income Adjusted Deduction (SCIAD) must be reduced to an amount which is the same proportion as South Carolina adjusted gross income is to federal adjusted gross income.

Withholding tables

SECTION 6. Pursuant to the powers granted to the Department of Revenue in Chapter 8, Title 12 of the S.C. Code, the department, in consultation with the Revenue and Fiscal Affairs Office, and in accordance with fiscal responsibility, shall adjust the withholding tables to reflect the amendments made in this act.

Earned income tax credit

SECTION 7. Section 12-6-3632 of the S.C. Code is amended to read:

Section 12-6-3632. There is allowed as a nonrefundable credit against the tax imposed pursuant to Section 12-6-510 on a full-year resident individual taxpayer an amount equal to one hundred twenty-five percent of the federal earned income tax credit (EITC) allowed the taxpayer pursuant to Internal Revenue Code Section 32, but not to exceed two hundred dollars.

Time effective

SECTION 8. This act takes effect upon approval by the Governor and first applies to tax years beginning after 2025.

Ratified the 25th day of March, 2026.

Approved the 30th day of March, 2026.

This web page was last updated on April 29, 2026 at 3:08 PM