SC GOP Tax Plan Brings 2026 Tax Increases

South Carolina is considering implementing a flat income tax rate of 3.99% by 2026, which would initially result in tax increases for nearly 60% of residents, particularly affecting middle-income earners. The GOP-backed plan, aimed at making the state's tax code more competitive, would reduce state revenues by $216.6 million overall. It includes a gradual reduction of the flat rate to 2.49% over time, though no specific timeline is provided. Analysis from the Revenue and Fiscal Affairs Office shows that while higher-income earners may benefit, low to middle-income taxpayers will face increased burdens. A new personal income deduction is included to alleviate the burden on the lowest earners, though its overall impact is contentious. The proposal has drawn criticism for its potential impact on income distribution and taxpayer burdens.