S0688 is a broad unemployment insurance and business tax bill. On the unemployment side, it changes how South Carolina calculates employer benefit ratios by extending the lookback period over time, beginning with 12 quarters through tax year 2026, then 16 quarters in 2027, and 20 quarters beginning in 2028. It also revises the Department of Employment and Workforce’s funding formulas by replacing the prior “fund adequacy” concept with a solvency target, requiring annual calculations of the income needed to pay benefits and restore the trust fund to that target, and creating a solvency surcharge when the fund falls short. The bill also changes how delinquent employers are treated, including a new higher contribution rate for certain tax executions issued on or after January 1, 2027, while preserving stricter treatment for older outstanding executions.
The bill also makes several tax relief and administrative changes for businesses. It exempts the first $10,000 of net depreciated value of business personal property owned by qualifying small businesses, and it relieves taxpayers with less than that amount from having to pay business personal property taxes, subject to annual certification. It further requires business personal property required to be taxed to be returned to the Department of Revenue, rather than only to local assessors, for property tax years beginning after 2026. In addition, it creates a corporate license fee exclusion for the first $50 million of certain equity contributions to South Carolina-headquartered corporations from qualifying investors such as venture capital funds, angel or accredited investors, and certain private investment firms.
The bill’s impact on state law is significant because it rewrites parts of the unemployment insurance financing framework and adds new property tax and corporate fee exemptions. It affects the Department of Employment and Workforce, the Department of Revenue, county tax administration, employers subject to unemployment contributions, small businesses with limited business personal property, and South Carolina-headquartered corporations receiving outside equity. Most of the changes take effect on July 1, 2026, or apply to tax years beginning after 2026, giving agencies and taxpayers a transition period.
The overall sentiment around the bill appears strongly favorable and bipartisan. It passed the Senate and House with overwhelming support at each major stage, including unanimous or near-unanimous votes in the recorded history and final conference report adoption in both chambers. The lack of recorded opposition in the final votes suggests broad agreement on the bill’s mix of unemployment trust fund stabilization and tax relief measures.
The main points of contention, based on the text of the bill, are likely to have centered on the balance between employer tax relief and trust fund solvency. The bill imposes a new solvency surcharge framework and removes caps on certain penalties for failure to file reports or pay contributions, which could concern employers and business groups. At the same time, it provides targeted tax relief for small businesses and incentives for capitalized corporations, which likely made the package more acceptable to supporters. The conference report adoption indicates the chambers resolved any differences before final passage.
The bill amends multiple sections of the South Carolina Code governing unemployment insurance financing, delinquency penalties, business personal property taxation, and the corporate license fee. It changes the unemployment benefit-ratio lookback period, establishes a solvency-target-based funding formula for the unemployment trust fund, and revises penalty and rate provisions for delinquent employers. It also creates a small-business property tax exemption for the first $10,000 of net depreciated business personal property, requires business personal property returns to be filed with the Department of Revenue, and allows certain South Carolina-headquartered corporations to exclude up to $50 million in qualifying equity contributions from paid-in or capital surplus subject to the annual license fee. These changes generally apply beginning in 2026 or to tax years after 2026.
The bill appears to have enjoyed very strong support throughout the legislative process. Recorded votes show unanimous or near-unanimous approval in both chambers at multiple stages, including Senate readings, House passage, conference report adoption, and final Senate adoption of the conference report. That voting pattern suggests broad bipartisan agreement on the bill’s overall policy direction, including both unemployment trust fund reforms and business tax relief.
The likely areas of disagreement were the bill’s competing fiscal effects and enforcement provisions. Employers and business advocates may have objected to the new solvency surcharge, the extended lookback period for unemployment tax rates, and the removal of caps on penalties for failure to file reports or pay contributions. By contrast, small business and investment interests likely supported the property tax exemption and the corporate surplus exclusion. The final conference report and overwhelmingly favorable votes indicate those issues were resolved without leaving significant public opposition in the recorded legislative history.