Salem Sales Tax: South Carolina What Businesses Must Know ?

Sales tax range in South Carolina

In South Carolina, the state sales tax rate in 2024 remains consistent at 6%, the same as it was in 2023, providing a stable answer to the question of how much is South Carolina sales tax.

Specific car sales tax rules also apply when buying automobiles from an out-of-state dealership, especially regarding the car sales tax South Carolina. If South Carolina residents purchase a car outside the state and no sales tax is collected by the seller, the buyer is responsible for paying use tax upon registering the vehicle in South Carolina.

For those looking to purchase big-ticket items like automobiles, it's essential to understand the car sales tax in SC. Upon buying a vehicle out-of-state, South Carolina residents are required to pay a use tax equivalent to the state's standard sales tax rate plus any applicable local taxes when they register the vehicle in SC. This ensures that all vehicle purchases, whether in-state or out-of-state, are taxed fairly.

This use tax is equivalent to the total car sales tax that would have been applied if the vehicle was purchased within the state, and it's important to know how much is sales tax in South Carolina for accurate calculations. This ensures a level playing field between in-state and out-of-state purchases and helps fund local services.

Local jurisdictions, such as counties and municipalities, have the authority to impose additional local sales taxes, including the auto sales tax SC, which can result in varying total sales tax rates across different areas within the state. This stability indicates no significant adjustments in local sales taxes within the major counties from 2023 to 2024/

For 2024, the combined state and local sales tax rate in South Carolina ranges from 6% to 9%. This range reflects any county or municipal additional local sales taxes. For example:

• Charleston County: Total rate - 8%, state rate - 6%, local rate - 2%.
• Greenville County: Total rate - 7%, state rate - 6%, local rate - 1%.
• Horry County: Total rate - 7%, state rate - 6%, local rate - 1%.
• Richland County: Total rate - 8%, state rate - 6%, local rate - 2%.
• Lexington County: Total rate - 7%, state rate - 6%, local rate - 1%.

Calculating South Carolina sales tax

Determine the Taxable Amount: Calculate the sale amount of your product or service. Subtract any applicable discounts, exemptions, or deductions.

State Sales Tax Calculation: Apply South Carolina state sales tax rate of 6%.

Local Sales Tax: Check for additional local taxes which can range from 0% to 3%. Add the local tax rate to the state's 6% if applicable.

E-commerce Sales: State tax rate: 6%. Add local sales tax based on the delivery address.

For businesses selling goods and services online, knowing the intricacies of e-commerce sales tax in SC is vital. South Carolina imposes a state sales tax rate of 6%, and additional local taxes based on the delivery address may apply. This applies to all remote sellers meeting the economic nexus threshold, making it important for businesses to track their sales volumes and comply with state and local tax obligations.

Software as a Service (SaaS): Generally subject to the 6% state sales tax rate. Local tax might apply depending on the jurisdiction.

Services: Most services in South Carolina are not taxable. Verify if your specific service is exempt or taxable by state law.

Add Local and State Taxes: Combine the 6% state rate with any local rates to get the total rate. Example: 6% state + 2% local = 8%.

Calculate Final Sales Tax: Multiply the taxable amount by the total tax rate. Ensure to separate local and state portions for accurate accounting.

Collection and Remittance: Collect the calculated tax at the point of sale. Remit collected taxes to the South Carolina Department of Revenue as required by law.

For car dealerships, it is essential to calculate and remit sales tax accurately on the vehicles they sell. Dealerships must apply the combined state and local car sales tax rates to the sale price of each vehicle. Failure to do so can result in significant penalties and interest. To ensure compliance, dealerships should stay informed about any changes in applicable local and state tax rates and adhere to proper accounting practices.

Recent changes to South Carolina sales tax

In 2024, the state of South Carolina implemented several changes to its sales tax policies compared to 2023. Here is a brief overview of those changes:

General State Sales Tax Rate: The general state sales tax rate remained consistent at 6% in 2024, unchanged from 2023.

Local Option Sales Taxes: Many counties in South Carolina saw adjustments in their local option sales taxes. For instance, Charleston County increased its local sales tax surcharge by 0.5% starting January 1, 2024, moving it from 1% in 2023 to 1.5% in 2024. This change primarily funds education and transportation projects.

Exemptions and Exclusions: In 2024, an important update to the list of exempt items included a broader range of environmentally friendly products. Items like solar panels and energy-efficient appliances, previously taxed at the full rate, began to see reduced rates or exemptions starting in July 2024.

Digital Goods: Changes were also made in the taxation of digital goods. As of June 2024, digital streaming services and online software subscriptions that were previously partially taxed are now fully subject to the 6% state sales tax. This adjustment aimed to account for the growing digital economy.

Holiday Sales Tax: The annual back-to-school tax holiday weekend saw no change in its duration but introduced more specific guidelines on eligible items. This update included clearer definitions on which electronics and school supplies qualify for tax exemptions, effective August 2024. This standardization aimed to resolve ambiguities present in 2023.

Understanding origin vs. destination sales tax collection

South Carolina is an origin-based sales tax collection jurisdiction, meaning that sales tax is collected based on the location of the seller rather than the location of the buyer.

For further details, you can refer to the South Carolina Department of Revenue’s guidance on sales tax: https://dor.sc.gov/tax/sales

Taxable products in South Carolina

In South Carolina, sales tax is applied to a variety of product genres. Here's an overview of some of the main categories that generally incur sales tax:

Tangible Personal Property

This encompasses most physical goods, including but not limited to:

• Electronics (computers, smartphones, TVs)
• Appliances (refrigerators, washing machines)
• Furniture (sofas, beds, tables)
• Books
• Clothing
• Toys and games

Prepared Food and Beverages

• Restaurant meals
• Take-out food
• Catering services
• Certain pre-packaged foods if prepared for immediate consumption

Automobiles and Related Products

• New and used cars
• Motorcycles
• Boats
• Automotive parts and accessories

Household Supplies

• Cleaning products
• Paper goods
• Personal hygiene products

Building Materials and Home Improvement Goods

• Lumber
• Paint
• Hardware supplies

Health and Beauty Products

• Cosmetics
• Over-the-counter medications
• Health supplements

Pet Products

• Pet food
• Pet accessories

Entertainment and Recreational Goods

• Sporting goods
• Musical instruments
• Video games and consoles

Utilities

Sales tax can apply to certain utilities, like

• Electricity
• Natural gas

Digital Goods

Depending on state laws, sales tax may also apply to:

• E-books
• Digital music
• Streaming services

Is SaaS taxable in South Carolina?

In South Carolina, SaaS (Software as a Service) is generally considered taxable.

The state taxes the sale and use of software, including cloud-based services provided via SaaS models. Consequently, businesses should ensure compliance with state tax regulations when offering or utilizing SaaS products in South Carolina.

Are digital products taxable in South Carolina?

As of 2024, digital products in South Carolina, such as software downloads, e-books, and digital music, are subject to the state sales tax.

This includes any electronically transferred products that are used, consumed, or accessed within the state. Businesses selling such products must collect and remit sales tax accordingly.

Are services taxable in South Carolina?

In South Carolina, most services are generally not subject to sales tax.

However, certain services, such as telecommunications and accommodations, are taxable. It's crucial to review specific regulations, as taxability can vary based on the nature of the service provided.

Physical nexus

Physical nexus refers to the requirement for businesses to have a physical presence in a state to be obligated to collect and remit sales tax.

2024 Criteria

Having a business location: If a business operates an office, store, warehouse, or other place of business in the state, it establishes physical nexus.

Employees or representatives: Employing individuals in South Carolina or having salespeople, agents, or representatives operating within the state.

Property ownership or leasing: Owning or leasing property such as buildings, machinery, or inventory within the state.

Installation and services: Performing installation, maintenance, or service activities within South Carolina can also create a physical nexus.

Delivery in company vehicles: Using company-owned vehicles to deliver goods into the state.

2023 Comparison

Installation and services (clarification): While providing installations and services required nexus in 2023, more specific guidelines on the scope of these activities were clarified for 2024.

Delivery in company vehicles (expanded): In 2023, the criteria were less explicit about delivery methods. The 2024 update emphasizes that deliveries using company vehicles constitute nexus.

Economic nexus

Economic nexus determines a retailer's obligation to collect and remit sales tax based on the volume of sales or transactions rather than physical presence. Here is a brief on the economic nexus for sales tax in South Carolina for 2024 and a comparison with 2023:

South Carolina Economic Nexus in 2024

Threshold: Retailers are required to collect and remit sales tax if they have gross revenues exceeding $100,000 from sales of tangible personal property, products transferred electronically, and services delivered into the state.

Measurement Period: The threshold is calculated based on the preceding or current calendar year.

Registration Requirement: Out-of-state sellers who meet the economic nexus threshold must register for a South Carolina sales tax permit.

Tax Rate: The state sales tax rate remains 6%, with additional local taxes possibly applying.

Enforcement: The South Carolina Department of Revenue (SCDOR) enforces compliance through audits and penalties.

Marketplace Facilitators: Marketplace facilitators meeting the $100,000 threshold must collect and remit sales tax on behalf of third-party sellers.

Comparison with 2023

Threshold in 2023: The threshold for triggering economic nexus was also $100,000 in gross revenues.

Measurement Period in 2023: The calculation period was similarly based on the preceding or current calendar year.

Registration Requirement in 2023: The requirement for out-of-state sellers to register remained consistent with that of 2024.

Tax Rate in 2023: The state sales tax rate was 6% in 2023 as well.

Enforcement in 2023: SCDOR’s enforcement practices, including audits and penalties, were unchanged from 2023 to 2024.

Marketplace Facilitators in 2023: Marketplace facilitators with $100,000 or more in sales also had to collect and remit sales tax on behalf of third-party sellers in 2023.

Sales tax exemption certificates

In South Carolina, a sales tax exemption certificate allows qualifying businesses and individuals to purchase goods without paying state sales tax.

To obtain this certificate, applicants must provide information proving eligibility, such as documentation that they are engaged in manufacturing, agriculture, or nonprofit activities. The certificate must be presented to the seller at the time of purchase.

Sellers are required to keep these certificates on file to verify that the sales tax was not collected. Improper use or issuance of exemption certificates can result in penalties, including fines and back taxes. Regular renewals may be required to maintain exemption status.

Sales tax discounts and incentives

In 2024, South Carolina offers several sales tax incentives and discounts aimed at businesses to stimulate economic growth and attract investment. Here are some key points:

Manufacturing Equipment Exemption: Businesses involved in manufacturing can benefit from a sales tax exemption on equipment and machinery used in the production process. This covers items directly involved in manufacturing, processing, compounding, mining, or quarrying tangible personal property.

Sales Tax Cap on Certain Items: There is a sales tax cap on specific items such as machinery for research and development and materials used in manufacturing processes. This cap can significantly reduce the overall tax burden on large capital expenditures.

Goods for Resale Exemption: Purchases of goods intended for resale are exempt from sales tax. This is advantageous for retailers and wholesalers as it prevents tax from being levied multiple times on the same item.

Clean Energy Equipment Incentives: South Carolina provides incentives for businesses investing in renewable energy equipment. This includes sales tax exemptions on materials, machinery, and equipment used in solar, wind, and other clean energy projects.

Data Centers: For businesses operating data centers, South Carolina offers specific exemptions on electricity consumption and cooling equipment, provided they meet certain investment and employment thresholds.

Agricultural Exemptions: Businesses engaged in agricultural activities can benefit from exemptions on farm machinery, livestock, feed, and other necessary agricultural inputs.

State tax holidays in South Carolina for 2024

Sales tax holidays are temporary periods when sales taxes are not collected on certain items, usually back-to-school supplies or energy-efficient products.

For 2024, South Carolina's sales tax holiday is August 2-4.