The South Carolina Department of Revenue announced that for the first time in 25 years, the employer income tax withholding tables will be updated effective for calendar year 2017 and like the Internal Revenue Service, will issues updates every year thereafter.

According to the announcement, outdated withholding tax tables have led to over-withholding of $1.5 billion in 2015. In other words, the South Carolina government took more money than it should have and must return it each year to taxpayers through individual income tax refunds.

The $1.5 billion in over-withholding in 2015 created these issues for the state:

1. Unreliable general fund budgeting: A big portion of the money collected throughout the year ($1.5 billion) has to be refunded back to taxpayers.
2. Unnecessary administrative costs: Generating, regulating, and protecting refunds is expensive.
3. Undeniable risk: Big tax refunds make South Carolina a target for income tax refund fraud and theft.

The Department plans to release the revised withholding tables for 2017 in August 2016 and each August thereafter to its website.

Employers will need to update their payroll systems with these revised tables by January 1, 2017.

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