South CarolinaS 0688126th General Assembly (2025-2026)SenateWALLET

AN ACT TO AMEND THE SOUTH CAROLINA CODE OF LAWS BY AMENDING SECTION 41-31-5, RELATING TO CONTRIBUTIONS AND PAYMENTS TO THE UNEMPLOYMENT TRUST FUND DEFINITIONS, SO AS TO CHANGE THE LOOKBACK PERIOD FOR THE BENEFIT RATIO; BY AMENDING SECTION 41-31-45, RELATING TO DEBT STATUS ESTIMATES, SO AS TO PROVIDE FOR A SOLVENCY TARGET FOR THE FUND; BY AMENDING SECTION 41-31-60, RELATING TO THE TAX RATE WHEN A DELINQUENT REPORT IS RECEIVED, SO AS TO CHANGE THE PENALTY FOR AN OUTSTANDING LIEN; BY AMENDING SECTION 41-31-350, RELATING TO THE PENALTY FOR FAILURE TO FILE A REPORT, SO AS TO REMOVE THE CAP ON THE PENALTY FOR FAILING TO FILE A REPORT; BY AMENDING SECTION 41-31-370, RELATING TO INTEREST ON UNPAID CONTRIBUTIONS, SO AS TO REMOVE THE CAP ON THE PENALTY FOR FAILURE TO PAY CONTRIBUTIONS; BY AMENDING SECTION 12-37-220, RELATING TO PROPERTY TAX EXEMPTIONS, SO AS TO EXEMPT THE FIRST TEN THOUSAND DOLLARS OF NET DEPRECIATED VALUE OF BUSINESS PERSONAL PROPERTY OWNED BY A SMALL BUSINESS; BY AMENDING SECTION 12-37-900, RELATING TO PROPERTY TAX RETURNS, SO AS TO PROVIDE THAT A TAXPAYER IS NOT REQUIRED TO RETURN BUSINESS PERSONAL PROPERTY FOR TAXATION IF THE TAXPAYER HAS LESS THAN TEN THOUSAND DOLLARS OF NET DEPRECIATED VALUE OF BUSINESS PERSONAL PROPERTY; BY ADDING SECTION 12-37-980 SO AS TO REQUIRE THAT ALL BUSINESS PERSONAL PROPERTY REQUIRED TO BE RETURNED FOR TAXATION BE RETURNED TO THE DEPARTMENT OF REVENUE; AND BY AMENDING SECTION 12-20-50, RELATING TO THE LICENSE TAX ON CORPORATIONS, SO AS TO PROVIDE THAT, UNDER CERTAIN CIRCUMSTANCES, THE FEE DOES NOT APPLY TO ANY PORTION OF THE FIRST FIFTY MILLION DOLLARS OF CERTAIN CAPITAL STOCK AND PAID-IN OR CAPITAL SURPLUS.

Sponsored By: A. Shane Massey (Republican)

Signed by Governor

Summary

DEW UI Tax Code

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Bill Overview

Analyzed Economic Effects

4 provisions identified: 1 benefits, 1 costs, 2 mixed.

Small business property tax break and filing

Starting with property tax years beginning after 2026, the first $10,000 of net depreciated business personal property is exempt for qualifying small businesses. A small business is independently owned, pays South Carolina taxes, and has fewer than 100 full-time employees or under $10 million in annual sales. If your total net depreciated value is under $10,000, you do not file a return for that year. You must submit a short annual certification under penalty of perjury on a Department of Revenue form that cites the State of South Carolina Small Business Tax Cut of 2026. All required business personal property returns now go to the Department of Revenue, but the tax is still owed where the property sits.

Lower license fee for South Carolina headquarters

For corporations with headquarters in South Carolina, up to $50 million of qualifying equity contributions is excluded from paid-in or capital surplus when computing the annual corporate license fee. Qualifying investors include venture capital funds, accredited angel investors, and certain private investment firms. You must get a certificate from the South Carolina Research Authority, file an annual report with the Department of Revenue, and keep separate books and records. This applies to tax years beginning after July 1, 2026.

Stronger penalties on late unemployment taxes

Any quarter with an unpaid tax execution from before January 1, 2027 puts you in tax class 20 until it is paid. For executions issued on or after January 1, 2027, your rate increases by 2 percentage points unless you are in a compliant department-approved installment plan. If both old and new executions are unpaid, the class 20 rate applies until the older one is cleared. Late contributions accrue interest at 1% per month, and 0.5% per month on amounts that built up before liability was established unless willful negligence caused the delay. A 10% penalty applies if you do not pay within 10 days of an assessment or debit memorandum. If you fail to file after a demand, the penalty is 10% of contributions due, at least $25. Interest still accrues during any approved extensions.

Unemployment tax rates and fund target

Employer unemployment tax rates now use longer lookbacks: 12 quarters through 2026, 16 in 2027, and 20 from 2028. Employers in rate class one in 2026 keep the 12-quarter lookback until they leave that class. The department calculates rates each year using data through June 30. The law also sets a solvency target equal to 0.08 times the state labor force, the maximum weekly benefit, and the maximum weeks. If the fund is below the target on June 30, a solvency surcharge applies to rebuild the fund, generally within five years and subject to caps. If the fund is above the target, the surplus may reduce next year’s taxes. Rebuild periods are shorter when the shortfall is small and up to four years for larger gaps.

Sponsors & Cosponsors

Sponsor

A. Shane Massey
Republican • Senate

Cosponsors

Josh Kimbrell
Republican • Senate

Roll Call Votes

All Roll Calls

Yes: 482 • No: 114

House vote • 5/14/2026

(DEW UI Tax Code)Concur in Senate Amendments

Yes: 0 • No: 114

Senate vote • 5/14/2026

(DEW UI Tax Code)to adopt the conference report

Yes: 40 • No: 0

House vote • 5/14/2026

(DEW UI Tax Code)Adopt Conference Report

Yes: 107 • No: 0

Senate vote • 5/13/2026

(DEW UI Tax Code)to adopt amendment

Yes: 44 • No: 0

House vote • 5/12/2026

(DEW UI Tax Code)Passage of Bill

Yes: 115 • No: 0

Senate vote • 4/1/2026

(DEW UI Tax Code)3rd Reading

Yes: 45 • No: 0