The South Carolina Senate on Tuesday approved legislation which will align the state’s tax code with the new federal tax cuts approved by Congress late last year.
State Sen. Thomas Alexander, R-Oconee, said if nothing is done, then income tax filing time could be difficult next year.
“By not conforming, South Carolina’s tax system would go from one of the simplest in the country to one of the most complex in the nation,” he said before the Senate approved the changes during a 37-4 vote.
When Congress passed the Tax Cuts and Jobs Act in December, it removed the personal exemption and eliminated dozens of other deductions in order to lower the overall rate. But the changes meant South Carolina’s system — based on the old law — was no longer in line with the federal changes and residents faced potentially higher state taxes to the tune of about $200 million, as a result (although their taxes would have still declined overall when combined with federal).
Senators voted to create a $4,110 exemption for each dependent to help offset the potential tax increase.
“Standard deductions, we have mirrored those to the federal level,” Alexander said.
The measure now goes back to the House, which passed a similar version in May.
After the vote in the Senate Gov. McMaster tweeted out “SC business and taxpayers have been well served by action taken today by the Senate, and the leadership shown by the House earlier this year on tax conformity. I ask the House to concur with the Senate so that I can sign this bill into law before the end of the week.”