Military retirees who served at least 20 years in uniform could deduct thousands of dollars from their income taxes each year if they settle in South Carolina, under a bill that passed the Statehouse with just minutes remaining in the year’s session.
Gov. Nikki Haley is expected to sign the measure, which cleared both the House and Senate unanimously on Thursday. The House’s last vote came within an hour of the regular legislative session’s required 5 pm finish.
The act phases in the deductions steadily over the next five years. Eventually those military retirees younger than 65 and employed could exempt up to $17,500, while those over 65 could deduct up to $30,000 per year. State budget officials predict the measure will cost the state $18 million in lost tax revenue each year. But supporters say they want to encourage military retirees to live in South Carolina.
“We want people to relocate here when they retire from the military and they’re at an age where they can contribute to our economy,” lead sponsor State Rep. Murrell Smith, R-Sumter, said on the House floor shortly before the final vote.
The bill had been held up in the Senate for weeks by State Sen. Gerald Malloy, D-Darlington, who said he was worried military retirees already receive other benefits and that the lost revenue would impact others who need the state’s services. He agreed to drop his block on the bill when supporters agreed to phase in the cuts over the next five years.
South Carolina legislators are hoping the lower taxes make the state more appealing to military members when the next round of base closures occurs, although no date has been set for the next Base Realignment And Closure (BRAC) round. State lawmakers have recently