2025-2026 Bill 5006 Text of Previous Version (May. 06, 2026)

(Text matches printed bills. Document has been reformatted to meet World Wide Web specifications.)

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.

Amend Title To Conform

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 whose corporate headquarters, as defined in Section 12-6-3410, is in South Carolina 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. 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.

(2) For purposes of this subsection, a qualifying entity includes:

(a) a venture capital fund as defined pursuant to 17 C.F.R. Section 275.203(1) 1;

(b) an angel or accredited investor, as defined pursuant to 17 C.F.R. Section 230.501; and

(c) a private investment firm that does not solicit capital from investors, excluding another qualifying entity or the general public, and meets one of the exemptions outlined in the Investment Company Act of 1940.

(3) A corporation claiming this exclusion must:

(a) submit an annual report to the department that contains the name of each qualifying entity, the date of the equity contribution, the manner in which the qualifying entity meets the requirements of item (2), the amount of the paid-in or capital surplus for each year that is attributable to each qualifying entity, and any other information that the department may require; and

(b) keep detailed books and records, including segregating out equity contributions attributable to each qualifying entity and retaining information concerning the information required to be provided in subitem (a).

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

SECTION 6.A. Article 3, Chapter 37, Title 12 of the S.C. Code is amended by adding:

Section 12-37-253. (A) Any eligible person may claim an exemption from county, municipal, school, and special assessment real property taxes equal to an amount of the fair market value on the person's dwelling place as set forth in subsection (C). A person may not claim this exemption and the exemption set forth in Section 12-37-250 and a person must be eligible for this exemption to claim the exemption set forth in Section 12-37-250. For purposes of eligibility, application, and reimbursement, this exemption must be administered in the same manner as the exemption allowed pursuant to Section 12-37-250, including the application of other laws affecting the exemption allowed pursuant to Section 12-37-250, mutatis mutandis. For a person eligible for this exemption pursuant to subsection (B)(1), the previous application for the exemption allowed pursuant to Section 12-37-250 must be considered the application for this exemption.

(B) A person becomes eligible for this additional exemption:

(1) if the person was eligible to claim the exemption pursuant to Section 12-37-250 in Property Tax Year 2025 and otherwise qualifies;

(2)(a) when the person meets the requirements of Section 12-37-250(A)(1)(i), (ii), or (iii); and

(b) when the person has been a resident of this State for at least five entire property tax years and filed an individual income tax return for at least five tax years in this State at any time before the application; or

(3)(a) when the person meets the requirements of Section 12-37-250(A)(1)(i), (ii), or (iii); and

(b) when the person has been a resident of this State for at least ten entire property tax years and filed an individual income tax return for at least ten tax years in this State at any time before the application.

(C) A person who qualifies for this exemption pursuant to item (B)(1) or (B)(3) qualifies for a one hundred fifty thousand dollar exemption. A person who qualifies for this exemption pursuant to item (B)(2) qualifies for a seventy-five thousand dollar exemption. The exemption amounts set forth in this subsection are not cumulative and may not be combined.

(D) By ordinance, a governing body of a county may increase the exemption allowed by this section, however, any taxes not collected as a result of the increase in the exemption are not eligible for reimbursement.

B. Section 11-11-150(A) of the S.C. Code is amended by adding:

(6) Section 12-37-270 for the homestead exemption allowed pursuant to Section 12-37-253;

C. Section 12-37-245 of the S.C. Code is repealed.

D. Chapter 45, Title 12 of the S.C. Code is amended by adding:

Section 12-45-72. In addition to the requirements provided in Section 12-60-2510, a property tax notice or assessment must include an itemized list of any homestead exemption received by the taxpayer and a notation of State Legislature Aiding in Saving Homes (SLASH), the amount in which the individual's property tax bill was reduced, and in the amount, if any, in which the State reimbursed the local taxing authorities on behalf of the individual.

E. If any section, subsection, paragraph, subparagraph, sentence, clause, phrase, or word of this SECTION is for any reason held to be unconstitutional or invalid, the General Assembly hereby declares that it would not have passed this SECTION, without the sections, subsections, paragraphs, subparagraphs, sentences, clauses, phrases, or words declared to be unconstitutional, invalid, or otherwise ineffective.

F. This SECTION takes effect upon approval by the Governor and first applies to property tax years beginning after 2025.

SECTION 7. This act takes effect upon approval by the Governor.

----XX----