Eligible cities can seek voter approval for a local sales tax

Eligible city governments may ask voters to approve a sales and use tax of up to 1%. Cities must lie wholly or partly in a county that imposed none of the county taxes listed in the law as of January 1, 2026. Only the city’s portion within an eligible county may charge the tax. A majority of votes cast must approve the tax at a general election. The first tax lasts up to eight years, in two-year increments. Renewal lasts up to seven years, starts when the earlier tax ends, and ends on April 30. Renewal cannot push combined state and local sales and use taxes above 9% anywhere in the city. Unprepared food eligible for federal food coupons and items covered by a state maximum tax are exempt from this tax. The law took effect May 19, 2026. An approved first tax starts the May 1 following the vote. Late certification to the South Carolina Department of Revenue delays that start by 12 months.

Cities must set aside at least 20% of the tax revenue for credits against eligible homeowners’ city property taxes. Credits cover owner-occupied homes in the city area where the sales tax applies that meet the property classification named in the law. The credit cannot produce a cash refund. A home’s share of the credit money depends on its property tax value compared with the total value of eligible homes in the taxed area. Unused credit money must provide credits over the next three property tax years.

Cities may use revenue not set aside for property tax credits to pay for allowed public projects or repay borrowing for them. Allowed projects include roads, public safety buildings, and other city facilities. Projects may be inside or outside city boundaries. The city must identify project purposes and maximum costs in its tax ordinance, which is a local law. If voters are also asked to approve borrowing, the ballot must state the amount and other payment sources if sales tax revenue falls short. Excess collections first go toward finishing an approved project, if needed. If the tax is renewed, remaining money goes to projects approved in the renewal vote. Without renewal, the city must adopt an ordinance naming allowed purposes before spending remaining money.