Tax rates for individuals, estates, and trusts for taxable years after 1994

(A) Subject to the provisions of subsection (B), for taxable years beginning after 1994, a tax is imposed on the South Carolina taxable income of individuals, estates, and trusts and any other entity except those taxed or exempted from taxation under Sections 12-6-530 through 12-6-550 computed at the following rates with the income brackets indexed in accordance with Section 12-6-520: Not over $2,220 2.5 percent of taxable income; Over $2,220 but not over $4,440 $56 plus 3 percent of the excess over $2,220; Over $4,440 but not over $6,660 $123 plus 4 percent of the excess over $4,440; Over $6,660 but not over $8,880 $212 plus 5 percent of the excess of $6,660; Over $8,880 but not over $11,100 $323 plus 6 percent of the excess over $8,880; Over $11,100 $456 plus 7 percent of the excess over $11,100. (B)(1) Notwithstanding subsection (A), for taxable years beginning after 2021, a tax is imposed on the South Carolina taxable income of individuals, estates, and trusts and any other entity except those taxed or exempted from taxation under Sections 12-6-530 through 12-6-550 computed at the following rates with the income brackets indexed in accordance with Section 12-6-520: At Least But less than Compute the tax as follows $0 $3,200 0% times the amount $3,200 $16,040 3% times the amount minus $96 $16,040 or more 6% times the amount minus $577 (2) Notwithstanding the provisions of item (1), the reduction in the top marginal rate contained in this item, as compared to the same in subsection (A), must be phased-in as provided in item (3). Until the top marginal rate is fully phased-in, the bracket to which this reduced top marginal rate applies must be the same as the bracket for the top marginal rate provided in subsection (A). All reductions are permanent and cumulative. During the phase-in and after, the department shall continue to adjust the brackets as provided in Section 12-6-520. Other than the top marginal rate, no other component of this item is phased-in. (3) For Tax Year 2022, the top marginal rate shall equal 6.5%. Beginning with Tax Year 2023, and each year thereafter until the top marginal rate equals 6%, the top marginal rate must decrease by one-tenth of one percent if general fund revenues are projected to increase by at least five percent in the fiscal year that begins during the tax year. For purposes of this subsection, beginning with the initial forecast required pursuant to Section 11-9-1130, the general fund revenues projection must be determined by the Revenue and Fiscal Affairs Office by comparing the current fiscal year's recurring general fund expenditure base with the Board of Economic Advisors' most recent projection of recurring general fund revenue for the upcoming fiscal year. Upon the issuance of the initial forecast, the Executive Director of the Revenue and Fiscal Affairs Office, or his designee, shall notify the Department of Revenue of the projected percentage adjustment. The executive director, or his designee, shall provide similar notice if subsequent modifications to the forecast change the projected percentage adjustment. However, the forecast in effect on February fifteenth of the current fiscal year is the final forecast for which the percentage adjustment is determined, and no subsequent forecast modifications may have any effect on that determination. For purposes of this section, "recurring general fund revenue" and "recurring general fund expenditure base" have the same meaning as provided in Section 6-27-30. (C)(1) Notwithstanding subsections (A) and (B), for taxable years beginning after 2025, a tax is imposed on the South Carolina taxable income of individuals, estates, and trusts and any other entity except those taxed or exempted from taxation under Sections 12-6-530 through 12-6-550 computed at the following rates with the income brackets indexed in accordance with Section 12-6-520: At least But less than Compute tax as follows $0 $30,000 1.99% times the amount $30,000 or more 5.21% times the amount minus $966 (2)(a) Notwithstanding the provisions of item (1), beginning with Tax Year 2027 and each year thereafter, the top marginal income tax rate set forth in item (1) must be decreased if individual income tax revenues collected pursuant to this chapter, minus amounts credited to the Trust Fund for Tax Relief, are projected to increase by at least five percent in the fiscal year that begins during the tax year in comparison to projected individual income tax revenues collected pursuant to this chapter, minus amounts credited to the Trust Fund for Tax Relief, for the current fiscal year. The reduction required by this item shall continue until the top marginal income tax rate equals 1.99 percent. (b) Beginning with the first tax year after the reduction required by subitem (a) is fully complete, the 1.99 percent must be decreased in the same manner as provided in subitem (a) until the income tax rate equals zero percent. Additionally, once the reduction required by subitem (a) is fully complete, notwithstanding item (1), the 1.99 percent, or further reduced rate, shall apply to all South Carolina taxable income. (c) The Board of Economic Advisors shall make the determination regarding income tax projections beginning with the initial forecast required pursuant to Section 11-9-1130. (3) If the five percent threshold set forth in item (2) is met, the income tax rate shall be permanently and cumulatively reduced by a percentage that the Board of Economic Advisors projects to result in a reduction in individual income tax revenues collected pursuant to this chapter equal to two hundred million dollars in the fiscal year that begins during the tax year or twenty-five percent of the recurring income tax revenue surplus for the fiscal year that begins during the tax year, whichever is greater. The surplus amount must be calculated in the same manner as increases in income tax collections are calculated pursuant to item (2)(a). However, if the five percent threshold set forth in item (2) is met and is not projected to result in increased collections of at least two hundred million dollars in the fiscal year that begins during the tax year, then the reduction is limited to the projected amount of increased collections. Any reduction made pursuant to this subsection must be rounded up to the nearest hundredth of a percent. (4) Upon the issuance of the initial forecast, the Executive Director of the Revenue and Fiscal Affairs Office, or his designee, shall notify the Department of Revenue of the projected percentage adjustment. The executive director, or his designee, shall provide similar notice if subsequent modifications to the forecast change the projected percentage adjustment. However, the forecast in effect on February fifteenth of the current fiscal year is the final forecast for which the percentage adjustment is determined, and no subsequent forecast modifications may have any effect on that determination. (D) The department may prescribe tax tables consistent with the rates set pursuant to this section.