A bill

 

TO AMEND THE SOUTH CAROLINA CODE OF LAWS BY ENACTING THE "SMALL BUSINESS LIVABLE WAGE TAX CREDIT ACT" BY ADDING SECTION 12-6-3830 SO AS TO PROVIDE FOR AN INCOME TAX CREDIT FOR CERTAIN QUALIFIED EMPLOYERS WHO PAY NONEXEMPT EMPLOYEES AT OR ABOVE THE LIVABLE WAGE.

 

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

 

SECTION 1.  This act may be cited as the "Small Business Livable Wage Tax Credit Act."

 

SECTION 2.  The General Assembly finds that:

       (1) Small businesses employ approximately forty-three percent of South Carolina's workforce.

       (2) Small employers are the backbone of the state's economy and deserve support in remaining competitive.

       (3) Voluntary incentives, not mandates, are the most effective way to encourage free-market adoption of higher wages.

       (4) Employees who earn a livable wage contribute more in state and federal income taxes, strengthening the tax base and reducing reliance on public assistance.

       (5) A temporary, declining tax credit will allow small businesses time to adjust pricing, productivity, and operations while raising wages.

 

SECTION 3.  Article 25, Chapter 6, Title 12 of the S.C. Code is amended by adding:

 

    Section 12-6-3830. (A) As used in this section:

       (1) "Qualified employer" means a business entity registered in this State that:

           (a) employs fewer than fifty employees;

           (b) is in good standing with the Secretary of State; and

           (c) elects to participate in this program voluntarily.

       (2) "Livable wage" means the hourly wage rate published annually by the MIT Living Wage Calculator, or a successor source approved by the Department of Employment and Workforce, specific to the county in which the employee works.

       (3) "Incremental wage cost" means the difference between the federal minimum wage and the livable wage, multiplied by the total hours worked by covered employees.

    (B)(1) A qualified employer may claim a credit against income or payroll taxes equal to the incremental wage cost of paying employees at or above the livable wage.

       (2) In the first year in which the credit is earned, the amount of the credit is one hundred percent of the incremental wage cost. Thereafter, the credit is seventy-five percent of incremental wage cost in the second year, fifty percent of incremental wage cost in the third year, and twenty-five percent of incremental wage cost in the fourth year. The credit may not be claimed beyond the fourth year.

       (3) Unused credit may be carried forward for two years.

    (C) To qualify for the credit, an employer must:

       (1) maintain or increase headcount relative to the previous tax year;

       (2) pay all nonexempt employees at or above the livable wage;

       (3) submit annual payroll verification to the Department of Revenue; and

       (4) remain current on all state tax obligations.

    (D) Participation in the tax credit is voluntary.

    (E)(1) The department shall promulgate regulations as necessary to implement the provisions of this section.

       (2) The department shall publish an annual summary report including:

           (a) number of participating employers;

           (b) number of employees paid livable wages;

           (c) total credits claimed; and

           (d) estimated increase in individual state income tax revenue from employees.

       (3) Individual employer payroll data may not be publicly disclosed.

 

SECTION 4.  This act takes effect upon approval by the Governor and first applies to income tax years after 2025. The provisions of Section 12-6-3830 are repealed on December 31, 2035. Any carryforward credits shall continue to be allowed until the two-year time period is completed.

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