South Carolina Infrastructure and Economic Development Reform Act

Overriding Governor Henry McMaster’s veto, the South Carolina Legislature has passed the South Carolina Infrastructure and Economic Development Reform Act. This Act affects numerous tax credits and fees, including an increased gas tax and state earned income tax credit (EITC). Here are highlights of some key provisions:

Tax Increases:

· Beginning July 1, 2017, the gas tax will be raised 2 cents per year for 6 years. At the end of 6 years, the new rate will be 28.75 cents per gallon.

· Motor vehicle registration fee will increase by $16 bi-annually.

· The motor vehicle sales tax cap will increase from $300 to $500.

· A fee of $60 bi-annually will be enacted on hybrid vehicles, and a fee of $120 bi-annually will be enacted on electric vehicles.

· A new infrastructure maintenance fee is imposed upon first registering a vehicle, trailer, semi-trailer or similar item. The fee is 5% not to exceed $500 of the sale price. This fee will be $250 when registering an out of state vehicle in South Carolina.

This fee does not apply if the owner is an active duty service member or spouse/dependent of an active duty service member.

Tax Relief:

· SC residents will receive a temporary state income tax credit/rebate (for 6 years) for gas purchases or preventative maintenance equal to 100% of the amount paid in new gas taxes based on gallons of gas purchased in a tax year.

· Maximum available tuition tax credits for two-year and four-year institutions will increase to 50%, not to exceed $1,500.Starting in 2018, the maximum cap will be increased annually equal to the lesser of 3% or the percentage increase in the Higher Education Price Index.

· Starting in 2018, there will be an earned income tax credit (EITC) equal to 125% of the federal EITC.

· The maximum two-wage earner credit base has been increased from $30,000 to $50,000 to be phased-in in 6 equal installments from 2018-2023. So, the maximum credit will rise incrementally from $210 to $350 if the tax rate remains at 7%.

· The industrial property tax rate will drop from 10.5% to 9.0% through a 6-year phase.

The South Carolina Infrastructure and Economic Development Reform Act has several provisions affecting not only individual taxpayers but businesses. Be sure to contact us to help should you need further details.