South Carolina is a state in the Southeastern United States and the easternmost state of the Deep South. The state can be divided into three geographic areas. From east to west: the Atlantic coastal plain, the Piedmont, and the Blue Ridge Mountains. Locally, the coastal plain is referred to as the Low Country, and the other two regions as the Midlands and the Upstate respectively. The Atlantic coastal plain makes up two-thirds of the state. Its eastern border is the Sea Islands, a chain of tidal and barrier islands.
The state has a humid subtropical climate, although high elevation areas in the upstate area have few subtropical characteristics than areas on the Atlantic coastline. In the summer, South Carolina is hot and humid. Winter temperatures are much less uniform in South Carolina. Snowfall is somewhat uncommon in most of the state, while coastal areas receive less than an inch annually on average.
Business Climate
Major agricultural outputs of the state are tobacco, poultry, cotton, cattle, diary products, soybeans, hay, rice, and swine. Industrial outputs include textile goods, chemical products, paper products, machinery, automobiles, automotive products and tourism.
Many large corporations have moved their locations to South Carolina. Boeing opened an aircraft manufacturing facility in Charleston in 2011, which serves as one of two final assembly sites for the 787 Dreamline. Domtar, in Rock Hill, is the only Fortune 500 company headquartered in the state. The fortune 1000 list includes SCANA, Sonoco Products and ScanSource.
Tax Climate
The top individual income tax rate is 7%. The top corporate income tax rate is 5%.
South Carolina uses the sales factor for the apportionment of corporate income. South Carolina uses the market-based method for the sourcing of services and intangible property.
Sales Tax Structure
South Carolina’s state base sales tax is 6%, which ranks 16th in the nation. The average local sales tax rate is 1.43%. South Carolina does not collect sales tax on purchases of most prescription drugs and groceries. Prepared food is subject to special sales tax rates under South Carolina law.
South Carolina has enacted economic nexus legislation. Remote sellers are required to register, collect and remit SC sales tax if the company’s gross receipts is more than $100,000 in the previous or current calendar year. This legislation went into effect on November 1, 2018.
South Carolina is moderate in its approach to the taxation of technology products for sales tax purposes. All digital products are exempt from taxation. Both prewritten and custom computer software that is electronically downloaded is also exempt from taxation. Lastly, Software as a Service (SaaS) is taxable. How products are produced, sold and delivered is critical to determining their tax status.
Some states have annual sales tax holidays, during which certain items the state wants to promote the purchase of (like school supplies, emergency preparedness supplies, or energy efficient appliances) can be purchased sales tax free. South Carolina had a sales tax holiday the first weekend in August (Aug. 2-4). During the annual sales tax holiday, a variety of back-to-school essentials were exempt from the state’s 6% sales tax and any applicable local taxes. Tax free items ranged from clothing, accessories and shoes to school supplies, backpacks, and computers. Shoppers also found tax-free items for their home or dorm room.
Random Facts
- South Carolina is the 11th smallest state in the country. It would fit inside Alaska 21 times.
- South Carolina is the only state in the country that grows tea.
- South Carolina’s state flower is the Yellow Jessamine. Children, mistaking the flower for honeysuckle, have been poisoned by sucking its nectar. The nectar is also toxic to honey bees.
- South Carolina is home to the legendary Angel Oak Tree, which shades an area of 17,000 square feet with its enormous limbs. The Live Oak Tree is considered to be over 500 years old and is one of the oldest living things east of the Mississippi River. The tree gets its name from the Angel family who once owned the land the tree is on, on John’s Island, south of Charleston.
- Wild hogs roam much of the state. They were originally brought to the U.S. by the Spanish in the 1500s and they are a continuing problem in the state. They prey on wildlife and livestock and their rooting and nesting behavior promotes soil erosion. Additionally, they contribute to the spread of tree disease and hinder attempts at reforestation.
- South Carolina is called the Palmetto state, named for the distinctive tree that grows along its coast. Additionally, palmetto trees are historically important because they were used to build Fort Moultrie, the site of the American colonists’ first victory in the Revolutionary War. British cannon balls would just bounce off of the soft Palmetto Walls.
- Several popular movies were filmed in South Carolina, including Full Metal Jacket, Prince of Tides, The Swamp Thing, Sleeping with Enemy, and The Notebook.
- South Carolina is named in honor of King Charles I of England, who first formed the English Colony, with Carolus being Latin for “Charles.”
Our team at Miles Consulting Group is available to discuss the specifics of your state tax situation, whether in South Carolina or other states, we can help you navigate the complex tax structures arising from your multistate operations. Call us to help you achieve the best tax efficiencies.
