What to Know About Sales Tax in South Carolina

Sales tax is a tax on the sale of goods and certain services. In South Carolina, this tax is applied to the gross proceeds of retail sales, and the funds generated are used for public services and infrastructure. Understanding the specifics of this tax is useful for both consumers and business owners operating within the state.

South Carolina Sales Tax Rates

The statewide sales tax rate in South Carolina is 6%. Many counties and some cities also levy additional local option sales taxes, which can range from 1% to 3%. These local taxes are collected by the retailer with the state tax, leading to a combined rate that can be as high as 9% in some areas.

Local taxes are subject to change, as they are often approved by voters for specific purposes and durations, such as funding capital projects. To ensure compliance, businesses must apply the correct combined rate based on where the customer takes possession of the goods, a system known as destination-based sourcing. The South Carolina Department of Revenue (SCDOR) provides online tools to look up current rates for every locality.

What is Taxable in South Carolina

In South Carolina, sales tax applies to the retail sale of tangible personal property, including goods like furniture, clothing, electronics, and household appliances. The tax also extends to the sale of motor vehicles, boats, and aircraft, which are subject to a 5% sales tax with a maximum cap of $500. The state’s sales tax is also levied on a specific list of services.

Taxable services include furnishing accommodations for transients like hotel rooms, laundry and dry-cleaning services, and certain communication services. The tax also applies to admissions for places of amusement and the rental of tangible personal property. Digital products transferred electronically, like prewritten software and e-books, are subject to sales tax. It is the retailer’s responsibility to collect and remit the tax, as South Carolina’s law considers the tax a liability of the vendor.

Key Sales Tax Exemptions

South Carolina provides several exemptions from its sales tax. One of the most widely applicable is for unprepared food items, commonly referred to as groceries. This exemption applies only to the 6% state sales tax; local option taxes may still apply to these items.

Another area of exemption relates to healthcare. Prescription medicines and prosthetic devices sold on a doctor’s prescription are not subject to sales tax, and durable medical equipment paid for by Medicare or Medicaid is also exempt. Feminine hygiene products are also exempt from the state’s sales tax.

For businesses, there are exemptions for machinery and equipment used in manufacturing, materials that become part of a final product, and agricultural items like farm machinery and fertilizers. Additionally, an annual sales tax holiday in early August allows consumers to purchase school supplies, clothing, and computers tax-free.

How to Register for a Sales Tax License

Before a business can make retail sales and collect sales tax in South Carolina, it must obtain a retail license from the South Carolina Department of Revenue (SCDOR). The application process requires gathering specific information beforehand. Applicants will need the following:

• A Federal Employer Identification Number (FEIN) or a Social Security Number for a sole proprietorship
• The legal business name and physical address
• The names and addresses of owners, partners, or corporate officers
• A North American Industry Classification System (NAICS) code

The official application is Form SCDOR-111, the Combined Tax Registration Application, which most businesses complete online through the SCDOR’s free tax portal, MyDORWAY. There is a $50 fee to register for the retail license. Upon successful online submission, the business receives its sales tax registration number instantly, allowing it to begin operations while the physical license is mailed.

Filing and Paying South Carolina Sales Tax

Once registered, a business must file regular returns and remit collected sales tax to the SCDOR. The process is managed through the MyDORWAY online portal, which is mandatory for any business with a tax liability of $15,000 or more per filing period. The SCDOR assigns a filing frequency to each business based on its volume of sales.

Most new businesses are on a monthly filing schedule, with returns and payments due on the 20th of the month following the reporting period. Some businesses may be permitted to file on a quarterly or annual basis. When filing, the business reports its total gross sales and details any allowable deductions to calculate the taxable sales.

After submitting the return, payment can be made from a bank account via an ACH transfer or by credit or debit card for an additional processing fee. A return must be filed for every period, even if the business had no sales and no tax is due.