A bill

 

TO AMEND THE SOUTH CAROLINA CODE OF LAWS SO AS TO ENACT THE "STATE OF SOUTH CAROLINA SMALL BUSINESS TAX CUT OF 2026"; 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 TO BE RETURNED TO THE DEPARTMENT OF REVENUE; 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; AND BY AMENDING SECTION 33-44-409, RELATING TO STANDARDS OF CONDUCT OF A CORPORATE OFFICER, SO AS TO PROVIDE AN EXCEPTION TO REFRAINING FROM COMPETING.

 

Be it enacted by the General Assembly of the State of South Carolina:

 

SECTION 1.  This act may be cited as the "State of South Carolina Small Business Tax Cut of 2026."

 

SECTION 2.A.  Section 12-37-220(B) of the S.C. Code is amended by adding:

 

    (54) the first ten thousand dollars of the net depreciated value of business personal property owned by a small business.  For purposes of this item, "small business" means a commercial retail service, industry entity, or nonprofit corporation, including affiliates, that: (a) the business' ownership is comprised of taxpayers who pay income taxes in this State; (b) is independently owned and operated; and (c) employs fewer than one hundred full-time employees or has gross annual sales of less than ten million dollars.

 

B. This SECTION takes effect upon approval by the Governor and first applies to property tax years beginning after 2026.

 

SECTION 3.A.  Section 12-37-900 of the S.C. Code is amended to read:

 

    Section 12-37-900. (A) Every person required by law to list property shall, annually, between the first day of January and the first day of March, make out and deliver to the assessor of the county in which the property is by law to be returned for taxation a statement, verified by his oath, of all the real estate which has been sold or transferred since the last listing of property for which he was responsible and to whom, and of all real property possessed by him, or under his control, on the thirty-first day of December next preceding, either as owner, agent, parent, spouse, guardian, executor, administrator, trustee, receiver, officer, partner, factor, or holder with the value thereof, on such thirty-first day of December, at the place of return, estimating according to the rules prescribed by law.

    (B) A manufacturer not under a fee agreement is not required to return personal property for ad valorem tax purposes if the property remains in this State at a manufacturing facility that has not been operational for one fiscal year and the personal property has not been used in operations for one fiscal year. The personal property is not required to be returned until the personal property becomes operational in a manufacturing process or until the property has not been returned for ad valorem tax purposes for four years, whichever is earlier. A manufacturer must continue to list the personal property annually and designate on the listing that the personal property is not subject to tax pursuant to this section.

    (C)(1) Notwithstanding any other provision of this section, a taxpayer that meets the application requirements of item (2) is not required to pay business personal property taxes if the taxpayer has less than ten thousand dollars of net depreciated value of business personal property.

       (2) To claim the exemption allowed by item (1), a taxpayer must annually certify, under penalty of perjury, to the department in a manner prescribed by the department that the taxpayer has less than ten thousand dollars of net depreciated value of business personal property. The form prescribed by the department must contain a conspicuous notation citing the State of South Carolina Small Business Tax Cut of 2026 as the source of the exemption.

 

B. This SECTION takes effect upon approval by the Governor and first applies to property tax years beginning after 2026.

 

SECTION 4.A.  Article 5, Chapter 37, Title 12 of the S.C. Code is amended by adding:

 

    Section 12-37-980. Notwithstanding any other provision of law, all business personal property required to be returned for ad valorem taxation must be returned to the Department of Revenue. The property is subject to the tax imposed by the taxing jurisdiction in which the property is situated.

 

B. This SECTION takes effect upon approval by the Governor and first applies to property tax years beginning after 2026.

 

SECTION 5.A.  Section 12-20-50 of the S.C. Code is amended by adding:

 

    (D)(1) A corporation subject to the provisions of this section may exclude the first fifty million dollars of equity contributions from a qualifying entity from its paid-in or capital surplus subject to the annual license fee. The fee on any equity contribution above fifty million dollars is limited to no more than twenty-five thousand dollars annually, and such fee is payable only for the two taxable years immediately following the taxable year in which the equity contribution is received. To qualify for the exemption set forth in this subsection, the corporation meets at least one of the following conditions within South Carolina:

           (a) the corporation employs at least ten South Carolina residents whose wages are subject to South Carolina income tax and who are engaged in research and development activities within the State;

           (b) the corporation incurs at least two hundred fifty thousand dollars in research and development expenditures within South Carolina during the taxable year; or

           (c) the corporation maintains its headquarters, as defined in Section 12-6-3410, in South Carolina.

       (2) To qualify for this exclusion, the corporation must obtain a certificate from the South Carolina Research Authority certifying that the exclusions result from equity contributions from a qualifying entity.

 

B. Section 33-44-409(b)(3) of the S.C. Code is amended to read:

 

    (3) to refrain from competing with the company in the conduct of the company's business before the dissolution of the company. This item does not apply when a member is also a member of another LLC and there is not an enforceable noncompete provision in the operating agreement.

 

C. This SECTION takes effect upon approval by the Governor and first applies to the tax year beginning after July 1, 2026.

 

SECTION 6.  This act takes effect upon approval by the Governor.

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