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22 April 2026

South Carolina law lowers state income tax rate retroactive to January 1, 2026

South Carolina Governor Henry McMaster approved H. 4216 which, retroactive to January 1, 2026, simplifies the state personal income tax rate structure and lowers the top tax rate from 6.0% to 5.21%. If revenue goals are met, the law also allows for rate reductions in future years until the top marginal income tax rate is 1.99%.

This marks the fifth consecutive year that South Carolina lawmakers have enacted retroactive cuts to the individual income tax rates. Last year, H. 4025 lowered the personal income tax rate from 6.2% to 6.0% retroactive to January 1, 2025. (See Tax Alert 2025-1396.)

The updated withholding formula and tables once available will be published here.

Ernst & Young LLP insights

Employers should consider notifying employees living and/or working in South Carolina of the decrease in the top marginal personal income tax rate and suggest they review their Form SC W-4 , Employee's Withholding Allowance Certificate.

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Contact Information

For additional information concerning this Alert, please contact:

Workforce Tax Services - Employment Tax Advisory Services

Published by NTD’s Tax Technical Knowledge Services group; Andrea Ben-Yosef, legal editor

Document ID: 2026-0919

 

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