South Carolina proposes flat 3.99% income tax by 2026

South Carolina leaders have unveiled a proposal to reduce the state income tax rate from 6.2% to a flat 3.99% by 2026, marking a significant tax reform aimed at enhancing the state's economic competitiveness. The plan, endorsed by Governor Henry McMaster and legislative leaders, aims to simplify the tax system and is expected to cost the state around $200 million in reduced revenue. House Ways and Means Chairman Bruce Bannister indicated that this reform would also lay the groundwork for a future goal of lowering the tax rate to 2.49%. While the proposal is praised for potentially benefiting families and businesses, concerns have been raised about how it will affect low-income taxpayers, particularly since 44% of residents currently do not pay income tax. Democratic leaders express support for tax cuts but emphasize the need for responsible implementation to ensure no harm comes to lower-income individuals. The initiative builds on previous tax reductions made in 2022, reflecting an ongoing trend towards lowering taxes in South Carolina.