South Carolina’s governor’s race has already zeroed in on one hot topic: the state's income tax.
In their platforms, Republicans Lt. Gov. Pamela Evette, Attorney General Alan Wilson, Spartanburg Sen. Josh Kimbrell and U.S. Rep. Ralph Norman have each made tax policy a focus of their campaigns.
Congresswoman Nancy Mace, set to announce her candidacy Monday, has said the same.
No Democrats have yet announced their plans.
What is SC's income tax plan?
South Carolina’s income tax follows federal income tax laws.
The state determines a filer's individual state income tax by confirming the adjustments and deductions from a taxpayer’s federal income tax return, with potential modifications.
Nearly half of South Carolina tax filers do not pay state income tax, which accounts for about 44% to 45% of state general fund budget revenue.
On July 1, the new state budget took effect and cut the top marginal rate down to 6%.
The General Assembly, which decides tax policy in South Carolina, is expected to return to the income tax debate next year after the S.C. House passed a bill to further cut the rate.
Under the House plan, starting in 2026, the top rate would drop to 5.39%.
Taxpayers with taxable income less than $30,000 would pay 1.99%, and filers with income of $30,000 or more would pay a top rate of 5.39%.
If the state records strong enough revenue growth, the House plan would collapse the two rates into one and eventually phase out the tax completely.
Senate budget writers plan to discuss the proposal when the Legislature returns in January.
How many states have an income tax?
As of this year, 41 states have an income tax.
The nine states without the tax are Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming.
Some of these states rely on higher sales, property and business taxes to make up for the lack of income tax.
What do gov candidates say?
In her announcement, Evette said she would continue Gov. Henry McMaster’s push for tax relief.
“We can and we will eliminate state income tax. If Florida, Texas and Tennessee can do it, so can we," said Evette, who did not add details about how she would like the state to achieve that goal.
At his launch in June, Wilson also called for the Legislature to eliminate the income tax and also did not add additional details.
“It’s the right thing to do for workers, businesses, and families," Wilson said, adding that removing the tax will allow South Carolina to increase its competitive advantage for businesses against its neighboring states.
At his launch last week, Norman did not explicitly mention the income tax. He did, however, say he wants to do right by South Carolina taxpayers.
“When it comes to defending South Carolina values and protecting your hard earned tax dollars, I drive a hard bargain, and I don't apologize for that,” Norman said. “It's your money. Those of you in Congress ... a lot of politicians think it's their money."
And Kimbrell at his launch said he too wants to slash the tax.
But, unlike his challengers, he proposed getting rid of sales tax exemptions to make it more uniform.
“If you pay sales taxes, you pay sales taxes. Just close the loopholes,” Kimbrell said at his June 29 Inman announcement.
Kimbrell said that proposal could help create a surplus in government spending, which in turn, he said, would help pay for infrastructure, law enforcement and teacher pay raises.
For years, lawmakers have tried unsuccessfully to shrink the state’s 6% sales tax and cut back on exemptions, which costs the state nearly $4 billion in lost revenue every year.
These exemptions range from residential electricity, to farming machinery, prescription medication, groceries and feminine hygiene products.
Mace is expected to announce her race plans Monday at The Citadel.
She recently announced a town hall tour starting next month across the state.
The top issue mentioned on that list?
Eliminating the state income tax.
