Governor's Budget-South Carolina

South Carolina Gov, Henry McMaster (left) releases his budget proposal along with Lt. Gov. Pamela Evette (right) on Monday, Jan. 10, 2022, in Columbia, S.C.

(The Center Square) — South Carolina taxpayers will be receiving income tax refund checks by the end of the year after Gov. Henry McMaster signed a bill to approve both refunds this year and an income tax rate cut for the future.

The legislation will result in income tax refund checks being sent in late November or December for those who paid taxes this year. It will be a full refund for those who paid $800 or less, which includes 33% of taxpayers.

Any South Carolina taxpayer who paid $100 in taxes will receive the $100 rebate and that rebate will grow along with tax liability up to a cap of $800 per tax filing. Those who did not pay income taxes will not receive a rebate.

The state’s top income tax rate will now drop from 7% to 6.5% for the 2022 tax year, for income taxes paid in 2023. The bill also would lower that top rate by 0.1 percentage points each year, starting in 2023, until it reaches 6%.

Ultimately, the legislation will reduce the state from its current six income tax brackets to three of 6%, 3% and 0%. The bill will result in a $600 million impact in the first year and ultimately a $1 billion impact.

The bill also includes a 33% cut in manufacturing property taxes from 9% to 6% starting this tax year in what will amount to $100 million in savings statewide for manufacturers.

South Carolina's House and Senate debated tax cut measure near the end of this year's session with both passing separate bills. A conference committee then took portions of each bill and created a final bill, which no longer included a tax rebate for those who did not pay income taxes.

South Carolina's Legislature then approved the agreement last week before McMaster signed the measure. McMaster still has the state's budget appropriations on his desk with action expected on that bill, which could include line-item vetoes like last year, in the next week.