South Carolina legislators return to Columbia this week for a special session, where they are expected to take up a law aligning the state’s tax code with new federal tax cuts.
State Sen. Tom Alexander, R-Oconee, said that legislators have updated the state tax code to be on par with any new federal rules since 1985. “So that forms folks fill out from the federal level can be utilized at the state level,” he noted during a Senate Finance Committee last week.
The committee advanced the conformity legislation out to the full Senate floor last week. A similar version passed the House this spring.
South Carolina’s tax code is based on the federal system, but that requires updates when the federal system changes. The state Department of Revenue warns, without the change, South Carolinians would no longer be able to use their federal taxable income to calculate their state taxes. The agency warns it would have to create entirely new forms and filers would need to use different numbers for their state and federal returns.
“(We’re trying) not to be a burden on the citizens of this state as they go to file their tax returns next year,” Alexander said.
Legislators have spent much of the year debating how conformity would impact South Carolina taxpayers, since simple conformity would mean a collective $204 million net increase in state taxes due to deductions and exemptions eliminated in last year’s tax law (however the overall amount would still be lower than last year when federal and state totals are combined).
The Senate could take up the conformity legislation when they return on Tuesday. The House is scheduled to meet Wednesday and could act on the legislation if the Senate passes it out after only a day of debate.