South Carolina law sets business tax rates and property exclusions

The Department of Employment and Workforce calculates employers’ benefit ratios using specified past quarters of unemployment benefits and taxable payroll. The department uses the benefits charged to an employer and that employer’s taxable payroll for the stated quarters. Employers in rate class one in tax year 2026 keep using the 12-quarter calculation until they no longer qualify for that class. The 12-quarter period applies through tax year 2026, the 16-quarter period applies in tax year 2027, and the 20-quarter period begins in tax year 2028.

The department calculates the unemployment fund’s income needs and sets employer surcharges under the stated rules. These rules concern South Carolina’s unemployment insurance trust fund and taxes paid by contributing employers. A surcharge applies when the fund reserve is below its target; specified limits depend on benefit payments and tax collections, and surplus funds may be used to reduce taxes. While the fund is in debt, the department estimates income needed for benefits, to avoid automatic federal tax-credit reductions, and to repay federal loans within five years. The department calculates needed income each year. Surcharge rules use the reserve balance as of June 30 or the end of the most recently completed fiscal year, as specified.

Employers with delinquent reports, unpaid tax executions, or unpaid contributions face the stated tax rates, penalties, and interest. These rules apply to employers with delinquent unemployment tax reports, unpaid tax executions, or unpaid contributions. For an unpaid tax execution issued on or after January 1, 2027, the employer pays its otherwise determined rate plus two percent. Older unpaid executions can require tax class twenty. An approved installment plan allows the regular rate, but a missed payment or late wage report restores the applicable increased rate. A report filed more than 15 days after the department mails a demand brings a penalty of 10% of contributions due, with a $25 minimum. Contributions unpaid 10 days after an assessment or debit memorandum bring a 10% penalty, plus applicable interest. The two-percent rate applies to tax executions issued on or after January 1, 2027. The report penalty applies after 15 days from the mailed demand; the unpaid-contribution penalty applies 10 days after an assessment or debit memorandum.

Qualifying small businesses may exclude business property value from property tax, and eligible taxpayers may avoid the tax by certifying their property value each year. The provisions concern qualifying small businesses and taxpayers with business personal property subject to tax. The first $10,000 of net depreciated value is exempt for an independently owned and operated business with owners who pay state income tax and that either employs fewer than 100 full-time workers or has less than $10 million in annual sales. A taxpayer with less than $10,000 in net depreciated business personal property must certify that value to the department each year under penalty of perjury. Both provisions first apply to property tax years beginning after 2026.

A corporation with its headquarters in South Carolina may exclude qualifying investment contributions from the amount subject to its annual license fee. The exclusion is for corporations with South Carolina headquarters and contributions from the qualifying investment sources listed in the text. The exclusion covers up to $50 million in equity contributions from a qualifying entity, and the South Carolina Research Authority must certify that the contributions qualify. The corporation must report each qualifying entity and contribution annually and keep detailed records. The exclusion first applies to the tax year beginning after July 1, 2026.