South Carolina’s property tax rate for manufacturers is among the highest in the nation. A new tax break went into effect July 1 as part of legislation that raises the state’s gasoline tax.
Officials say the impact of the property tax break will be limited since most manufacturers are already getting a lower assessment rate under the Fee in Lieu of Taxes (FILOT) program.
Taxes are one of the top factors that manufacturers consider when looking for a new site. South Carolina’s Fee in Lieu of Taxes program has been in effect for 20 years. Officials say counties have used it so often as an incentive to attract new companies to the state that it’s difficult to find manufacturers that aren’t part of the program. FILOT reduces the assessment rate from 10.5% to 6%. Large manufacturers can get a reduction to 4%.
Companies that are not part of the FILOT program will now get a tax break. The new law exempts 19.05% of the value of manufacturing property for tax purposes, implemented in two equal installments in tax years 2019 and 2020.
Once fully implemented, the exemption will reduce property tax bills by about $48.7 million statewide, according to the state Revenue and Fiscal Affairs Office. The state will reimburse counties that lose property tax revenue because of the new legislation.
Officials say the new exemption will help level the playing field for companies that weren’t able to take advantage of the FILOT program.