South Carolina Senate votes against tax conformity bill, ending uncertainty for filers

COLUMBIA, S.C. (WIS) - South Carolina taxpayers will not need to amend or delay filing their state returns this year after the Senate voted against a bill that would have aligned state tax law with recent federal changes.

Senate lawmakers rejected the measure amid concerns that conforming with federal tax law would interfere with long-term plans to eliminate South Carolina’s income tax. The decision preserves an estimated $288 million in state revenue that would have otherwise been returned to taxpayers.

Sen. Tom Davis, R-Beaufort, chair of the Senate Labor, Commerce and Industry Committee, said the vote was difficult because of the immediate financial impact.

“What makes this so difficult is that here and now, if we do not conform, the bottom line for this year anyway is South Carolina is getting paid $288 million more,” Davis said.

Supporters of the Senate decision said conforming would have undercut other tax-cutting efforts already underway at the State House.

Gov. Henry McMaster recently signed separate legislation that sets South Carolina on a path to gradually eliminate the state income tax. That law also decouples South Carolina from the federal standard deduction beginning next year, allowing the state to chart its own tax policy independent of Congress.

Senate Majority Leader Shane Massey, R-Edgefield, said the chamber’s vote reflects a broader shift away from automatic conformity.

“We’re not going to be beholden to everything Congress does for our tax policy,” Massey said. “We’re going to set our own tax policy, and we’re going to have more people pay less as opposed to less people paying more, which will allow us to drastically drop income tax.”

Massey argued that giving up the $288 million now could slow efforts to reduce income tax rates in the future.

“This is a much better policy,” he said. “This is more beneficial to the taxpayer than a short-sighted gain.”

The debate had left some taxpayers unsure whether they should file their state returns. In response, the South Carolina Department of Revenue extended the state filing deadline to Oct. 15 while lawmakers weighed the bill.

With the Senate’s decision, taxpayers who delayed filing now have clarity and do not need to worry about amending returns tied to possible conformity changes, barring any unexpected legislative action.

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