S0131, the “South Carolina Job Creation and Competitiveness Act of 2025,” would substantially rewrite South Carolina’s income tax structure and make a number of changes to the sales tax code. The bill repeals the existing income tax chapters and corporate license fee provisions in Title 12 and replaces them with a new income tax chapter that generally imposes a 3.5% tax on South Carolina taxable income. For individuals, estates, and trusts, taxable income would be based on federal taxable income minus a state standard deduction of $12,000 for single filers and $24,000 for joint filers, with additional provisions for filing thresholds, estimated taxes, withholding, extensions, and Department of Revenue administration.
The bill also creates or preserves several targeted tax provisions, including a nonrefundable earned income tax credit tied to the federal EITC, a credit for income taxes paid to another state, and rules for residents, nonresidents, part-year residents, estates, trusts, and pass-through entities. It includes technical conformity provisions tying South Carolina tax administration to federal tax concepts such as taxable year, accounting methods, and IRS documentation. In addition, the bill amends the sales tax exemption statute to repeal certain exemptions while also adding, revising, or expanding many others, including exemptions for specific manufacturing, technology, research, datacenter, hydrogen/fuel cell, amusement park, medical, agricultural, and consumer items.
The bill’s impact on state law would be broad and structural. It would replace major portions of South Carolina’s current income tax framework, alter who must file and how income is calculated, and shift the Department of Revenue’s enforcement and rulemaking responsibilities to the new chapter. On the sales tax side, it would change Section 12-36-2120 by removing some exemptions and adding numerous new or expanded ones, including exemptions tied to large capital investments and job-creation thresholds. The bill is also designed to apply prospectively to tax years beginning after 2026, giving the state time to implement the new system if enacted.
Because no committee transcripts or votes were provided, there is no recorded legislative debate or vote history to measure support or opposition. Based on the bill text alone, the overall tone is pro-growth and tax-cut oriented, emphasizing competitiveness, job creation, and simplification. The title and structure suggest a policy goal of lowering or restructuring taxes to attract investment and encourage economic development.
The main points of contention likely would be the scale of the tax rewrite, the fiscal impact on state revenue, and the complexity of the new sales tax exemption structure. Potential supporters would likely include business interests, manufacturers, technology firms, and taxpayers favoring lower rates or broader credits, while critics could focus on revenue loss, the elimination of existing exemptions, and the use of large, targeted incentives that may benefit specific industries more than the general public.
This bill would repeal the existing South Carolina income tax act and corporate license fee chapter, replace them with a new Title 12 income tax chapter, and revise the sales tax exemption statute in Section 12-36-2120. It would change the tax base for individuals, estates, and trusts to federal taxable income adjusted by a state standard deduction, establish a flat 3.5% rate, create an EITC-based credit and a credit for taxes paid to other states, and set out detailed filing, payment, and administrative rules. It would also modify sales tax exemptions by repealing some current exemptions and adding or expanding others, especially for manufacturing, technology, research, energy, agriculture, health care, and other targeted activities and purchases, with effect for tax years beginning after 2026.
No committee discussion or vote history was provided, so there is no documented legislative sentiment from hearings or roll calls. The bill’s text and title indicate a generally favorable, pro-business and pro-tax-reform posture centered on job creation, competitiveness, and economic development. Its structure suggests an intent to reduce or reshape tax burdens while using targeted exemptions and credits to encourage investment and employment.
The likely areas of contention are the bill’s broad overhaul of the income tax system, the potential loss of state revenue, and the large number of targeted sales tax exemptions and investment-based incentives. Supporters would likely argue that the bill improves competitiveness, simplifies taxation, and encourages job creation, while opponents may question whether the revenue reductions are sustainable and whether the targeted exemptions unfairly favor certain industries or large firms over general taxpayers. The absence of committee testimony means these are inferred policy fault lines rather than recorded objections.