Jeter, Lloyd, Benjamson & Booth CPAs, LLC

04/15/2026

This morning, Governor McMaster signed into law a new tax bill for South Carolina. A link to the text of the bill can be found here: https://www.scstatehouse.gov/sess126_2025-2026/bills/4216.htm

The law replaces the South Carolina individual income tax calculation with a new calculation that takes effect for 2026. As has been the trend with the state legislature, this bill makes changes after we are well into the new year causing new planning issues.

The law replaces the current rates with only two new rates, 1.99% on taxable income up to $30,000 and 5.21% on taxable income of income in excess of $30,000. The law also requires computing taxable income differently. In years past, the South Carolina tax calculation started with Federal taxable income. This year, it will start with adjusted gross income instead. The South Carolina law provides for a $30,000 exemption for married couples, $15,000 for single taxpayers and $22,500 for head of household filers. These amounts phase out once your Federal adjusted gross income exceeds $110,000 for married couples, $82,500 for head of household and $55,000 for single filers.

To see how this would affect you, grab your 2025 Federal return and get the amount on line 11a, this is your adjusted gross income. Apply the calculation above to see what your 2026 tax liability would have been in 2025 using the new law. Compare that to the amount on line 10 of your South Carolina tax return to see if your 2026 taxes will be higher or lower. Notably people who gave a lot to charity or had a large mortgage will not be able to benefit from those deductions on their South Carolina tax return any longer.

According to the Office of Revenue and Fiscal Affairs, 42.8% of South Carolina taxpayers will see a reduction in their taxes, which means over half of you will see a tax increase for 2026. This is on top of the tax increase from 2025. Also, the law is only one page long so we have questions about how the law will affect other provisions as they were not addressed. Also not addressed is how nonresidents and part year residents will fit into this tax structure. Presumably those things won't change since they were not addressed but we are now at the mercy of the SC Department of Revenue's guidance on a lot of these matters. We don't envy their position because there are a lot of uncertainties in the law.

The silver lining is that the law provides for the rate to be reduced starting in 2027 if income tax revenues increase by at least 5%. They will continue to drop as long as revenues increase by at least 5%. This sounds good on paper but mathematically this likely will not reduce the rate to zero as the bill intends because it would take a massive increase in taxable income to yield the rate reductions as the rate drops. Also it's not clear if the 5% increase is accounting for inflation or not.

As things become clearer, we will share updates as they are available.

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03/31/2026

Today the South Carolina Senate today voted against the conformity bill by a vote of 27-16. This is a vote to raise your taxes. The House voted to cut your taxes by passing the same bill unanimously a few weeks ago. If you are curious as to which Senators wanted to keep your taxes high, here's how each one voted: https://www.scstatehouse.gov/votehistory.php?KEY=27117

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03/28/2026

As you may have already heard, the South Carolina Department of Revenue announced yesterday that all individual income tax returns will receive an automatic extension until October 15th. The press release can be found here: https://dor.sc.gov/news/scdor-statement-income-tax-conformity-april-15-filing-deadline-extended-sc-returns

This extension, like all extensions, is only an extension of time to file. All taxes that are due must be paid by April 15th or you may be subject to interest and penalties. This is somewhat of an unnecessary announcement because if a state extension is needed, typically a Federal extension is also filed.

The reason for the extension is simply incompetence from the state legislature. South Carolina's income tax law starts calculating the state tax liability by using Federal taxable income. Because Federal tax law frequently changes, each year the state of South Carolina must vote to accept or not accept the previous year's changes, commonly referred to as the conformity bill. Normally this is a noncontroversial vote that passes unanimously in early January so as to not interrupt the filing season. This year, the legislators have failed to timely vote on this matter despite the fact that the Federal law was in place by July 2025. As a result, the South Carolina Department of Revenue began slowing down the processing of returns due to the uncertainty. When the legislature passes the conformity bill, every single return that has already been filed must be adjusted to the new law. Not only does this put more work on the South Carolina Department of Revenue, it simply wastes taxpayer money, all of which could have been easily avoided.

The conformity bill is currently in the Senate awaiting a vote. The bill moved out of the Senate Finance Committee on March 18th. The House has already passed the bill by a vote of 121-0. It is still unclear what will happen with the returns that have already been filed. We are hoping the South Carolina Department of Revenue will automatically adjust the returns and issue refunds where appropriate. However until the Senate does their job, we do not know how this will end.

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09/25/2025

In March, President Trump issued Executive Order 14247 which takes effect October 1st. This order requires the IRS to issue all refunds electronically which will largely impact the upcoming filing season. We have been waiting on further guidance from the IRS on this matter but thus far the IRS has only suggested that they will provide guidance in the near future.

We are expecting the requirement that taxes must be paid electronically to come along in the near future as well but for now this only impacts refunds. We will provide additional guidance as it is available but starting in 2026, we will have to confirm and update bank information on an annual basis for all of our clients.

A copy of the order is posted below for reference:

https://www.whitehouse.gov/presidential-actions/2025/03/modernizing-payments-to-and-from-americas-bank-account/