Indicates Matter Stricken

Indicates New Matter

 

Committee Report

May 6, 2026

 

S. 436

 

Introduced by Senators Grooms, Fernandez and Leber

 

S. Printed 5/6/26--H.

Read the first time April 30, 2026

 

________

 

The committee on House Ways and Means

To whom was referred a Bill (S. 436) to amend the South Carolina Code of Laws by amending Section 12-37-220, relating to property tax exemptions, so as to add an exemption for a portion of the value, etc., respectfully

Report:

That they have duly and carefully considered the same, and recommend that the same do pass:

 

B.W. BANNISTER for Committee.

 

 

statement of estimated fiscal impact

Explanation of Fiscal Impact

State Expenditure

This bill creates an exemption for 36.8421 percent of the fair market value of all aircraft of each airline company for the purposes of property taxes. The bill also changes the way time on the ground is determined for the purposes of calculating the ratio of time that an aircraft is in this state compared to total time in and out of state for the purposes of determining the value subject to property tax. The tax is administered and collected by DOR.

This bill will have a minimal impact for DOR to administer the changes as this can be accomplished with existing staff and resources.  

 

State Revenue

This bill exempts 36.8421 percent of the fair market value of all aircraft of each airline company for the purposes of property taxes. For reference, reducing the fair market value by 36.8421 percent would have the same effect as reducing the assessment ratio from 9.5 percent to 6 percent. The bill also changes the way time on the ground is determined for the purposes of calculating the ratio of time that an aircraft is in this state compared to total time in and out of state for the purposes of determining the value subject to property tax.

Currently, all airline companies operating in the state must pay property taxes on aircraft operated in the state. These aircraft are assessed at 9.5 percent of the fair market value allocated to the state and taxed at the statewide average millage rate. The fair market value of the aircraft allocated to the state is based on the average of two ratios:

The ratio which the total time scheduled on the ground within this state of such aircraft during the preceding calendar or fiscal year bears to the total time scheduled on the ground within and without this state of such aircraft during the preceding calendar or fiscal year.

The ratio which the total mileage scheduled within this state of such aircraft operated in this state during the preceding calendar or fiscal year bears to the total mileage scheduled within and without this state of such aircraft during the preceding calendar or fiscal year.

Beginning with FY 2022-23, total aircraft property taxes are distributed to the State Aviation Fund. The table below shows the recent history of collections and the estimated collections for FY 2026-27. The estimate is based on historical growth in fair market value of 5.06percent and an expected statewide average millage rate of 357.2.

 

Aircraft Tax Revenue

	FY 2022-23	FY 2023-24	FY 2024-25*	FY 2025-26 YTD*	FY 2026-27 (estimate)
State Aviation Fund	$6,473,620	$6,660,807	$6,870,479	$8,070,906	$8,035,000

*FY 2025-26 includes a delayed payment from FY 2024-25

 

Based on the figures above, exempting 36.8421 percent of the fair market value of the aircraft of airline companies from property taxes is expected to reduce aircraft tax revenue by approximately $2,960,000 beginning in FY 2026-27.

The bill also changes the calculation of the ratio for total time on the ground. The bill specifies that for determining time on the ground, each landing equals 30 minutes, and each overnight stay or maintenance day equals 2 hours. Currently, DOR reports that the ratio of time on the ground is computed to be approximately 0.0072122, and the ratio of total mileage is computed to be 0.0021662, for an average of 0.0046892. Assuming that it takes approximately 60 minutes on average to turnaround a plane, reducing the time for each landing to 30 minutes would reduce the time by 50 percent. Further, we assume that an overnight stay or maintenance day averages approximately 8 hours. Reducing an overnight stay from 8 hours to 2 hours would reduce this time by 75 percent. Based on these assumptions, we allocated 16 hours per day, or 66.7 percent, to landings, and the remaining 33.3 percent to overnight stays. This change would reduce the time allocation on the ground to 41.67 percent of the current allocation. Using this figure, the ratio for time on the ground would be reduced to 0.0030051. The new ratio from averaging  0.00300521 and 0.0021662 would be 0.0025856, or 44.9 percent less than original average ratio. This reduction in value would lower the aircraft tax collected by $3,604,000 beginning in FY 2026-27.

Combining the effects of both the value exemption and the change in the ratio, the bill will reduce aircraft tax revenue to the State Aviation Fund by approximately $5,237,000 beginning in FY 2026-27 when accounting for the interaction of the two changes.

 

 

Frank A. Rainwater, Executive Director

Revenue and Fiscal Affairs Office

 

_______

 

 

 

 

 

 

 

 

A bill

 

TO AMEND THE SOUTH CAROLINA CODE OF LAWS BY AMENDING SECTION 12-37-220, RELATING TO PROPERTY TAX EXEMPTIONS, SO AS TO ADD AN EXEMPTION FOR A PORTION OF THE VALUE OF AIRCRAFT OF AN AIRLINE COMPANY; AND BY AMENDING SECTION 12-37-2440, RELATING TO THE VALUATION OF AIRCRAFT, SO AS TO SPECIFY THE MANNER IN WHICH TIME ON THE GROUND IS CALCULATED.

 

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

 

SECTION 1.  Section 12-43-220(g) of the S.C. Code is amended to read:

 

    (g) All real and personal property owned by or leased to companies primarily engaged in the transportation for hire of persons or property and used by such companies in the conduct of such business and required by law to be assessed by the department shall be taxed on an assessment equal to nine and one-half percent of the fair market value of such property.  Notwithstanding this provision, until June 30, 2027, fee in lieu of tax agreements may include commercial aircraft as part of a qualifying project in support of economic development, subject to all other statutory requirements for fee in lieu of tax agreements, as approved by the Coordinating Council for Economic Development.

    The department shall apply an equalization factor to real and personal property owned by or leased to transportation companies for hire as mandated by federal legislation.

    Notwithstanding any other provision of this article, on June 3, 1975, if it is found that there is a variation between the ratios being used and those stated in this section, the county may provide for a gradual transition to the ratios as herein provided for over a period not to exceed seven years;  provided, however, that all property within a particular classification shall be assessed at the same ratio, provided, further, however, that all property enumerated in subsection (a) shall be assessed at the ratio provided in such subsection and the property enumerated in subsections (b), (c), (d), (e), (f), and (g) shall be increased or decreased to the ratios set forth in this article by a change in the ratio of not less than one-half of one percent per year nor more than one percent per year.  Provided, however, that notwithstanding the provisions of this section, a county may, at its discretion, immediately implement the assessment ratios contained in subsections (b), (c), (d), (e), and (f).  Provided, however, that livestock shall not be subject to ad valorem taxation unless such livestock is physically located within the State for a period in excess of nine months.  Provided, that this section shall not apply to farm animals and farm equipment in use on a farm in those counties which do not tax such property as of June 3, 1975.

    Provided, however, all agricultural or forest land within easements granted to public bodies, agencies, railroads, or utilities for rights of way of thirty feet in width or greater shall be assessed at the same cropland value per acre as soil class 7 in schedule 1 of R 117-126 of the State Department of Revenue.  In order to receive such assessment the landowner must apply to the tax assessor of the county where the easement is located, with documentation of the existence, location, and amount of acreage contained in the easement.

    As used in this section, fair market value with reference to real property means fair market value determined in the manner provided pursuant to Article X of the Constitution of this State, Section 12-37-930 and Article 25, Chapter 37 of this title.

 

SECTION 2.  This act takes effect upon approval by the Governor.

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