The legislative session concluded last week with several key victories for the business community, though there is still much work ahead. We’ll touch on the highlights here, but as always, a comprehensive update will be included in this year’s legislative scorecard, set to be released this summer.
The House has passed income tax reform and it will be a top priority for the Senate when the next session begins. The proposal establishes a two-bracket system: 1.99% on the first $30,000 of income and 5.39% on income above that. If the state maintains a 5% annual revenue growth, the top tax rate will decrease by 0.2% each year, with the ultimate goal of eventually reaching a flat tax rate of 1.99%, and reducing it to zero. The updated plan also decouples from the federal tax system, reducing the tax burden for many, with 42% of residents expected to see lower taxes and about a third seeing no change. This reform is designed to stimulate economic growth, improve the state’s competitiveness and create a more favorable environment for businesses and workers alike.
The South Carolina Energy Security Act is designed to foster a more competitive and sustainable energy environment, offering businesses advantages such as cost savings, regulatory clarity and access to innovative energy solutions. The Chamber was proud to support this initiative from the outset, recognizing its potential to strengthen South Carolina’s energy landscape. A key provision of the bill allows Dominion Energy to partner with Santee Cooper to develop a new gas plant at the retired Canadys coal plant, a crucial project for meeting South Carolina’s increasing energy demands with a proven and reliable solution.
The state budget is now headed to a conference committee, where key differences between the House and Senate versions will be negotiated. Both chambers have agreed to exclude earmarks from this year’s budget. While a continuing resolution (CR) has passed both chambers as a precaution, it is not expected to be necessary. Lawmakers must reach a final agreement by July 1 or the CR will take effect to ensure uninterrupted government operations. The House has appointed Rep. Bannister, Rep. Hewitt and Rep. Stavrinakis to the conference committee, while the Senate has named Sen. Peeler, Sen. Jackson and Sen. Alexander as its conferees.
The House and Senate made passage of the Military Tax Increment Financing (TIF) legislation, a top priority this session, aligning South Carolina’s military TIF statute with the broader state TIF framework. This legislation strengthens the security of Joint Base Charleston by supporting the relocation of defense operations from the old Navy Yard to within the secure perimeter of the base. It also expands the use of military TIFs to include affordable housing. Additional wins for our military priorities include the passage of a charter school admissions preference bill, which will make it easier for military families transitioning into South Carolina to enroll their children in the school of their choice, regardless of the time of year.
A version of liquor liability reform passed both chambers and was recently signed by the governor. For bars and restaurants, this legislation offers hope for reduced insurance premiums. However, key elements of the Senate’s original comprehensive tort reform package were ultimately excluded. As a result, many businesses across South Carolina will continue to face challenges in a litigious environment. We will continue to fight for comprehensive tort reform that will support all businesses.
The final bill includes several important provisions: mandatory alcohol server training, fault apportionment, required reporting by the Director of Insurance on the availability of commercial casualty coverage (including liquor liability), incentives for risk-reducing practices such as early closure through step-down coverage adjustments and changes to the verdict form procedure to allow consideration of non-parties. It also removes the “1% rule,” which previously allowed bars and restaurants to be held financially responsible for 100% of damages despite minimal fault. Importantly, the law does not take effect until January 2026 and its provisions will only apply to insurance policies issued on or after January 1, 2026.
Despite these advancements, the legislation falls short in some critical areas. Specifically, numerous exceptions in the verdict form provisions signal a lack of commitment to a policy of personal responsibility. Under the current language, individuals whose conduct is deemed willful, wanton, reckless or intentional cannot be listed on the verdict form for the purpose of fault apportionment.
However, Section 9 of the bill creates a notable carveout: it allows drunk drivers to be added to the verdict form at the request of either party. Yet, if both the intoxicated driver and the bar or restaurant are found liable, the establishment is automatically held responsible for at least 50% of the damages.
This legislation represents progress in the broader effort to reform liability laws but serious gaps remain. Chris Trainor with The State recently described the hospitality industry’s feelings about the bill “much like your favorite cocktail: mixed.” The Chamber will continue to push for meaningful, comprehensive tort reform that ensures fairness, promotes responsibility and supports the long-term viability of South Carolina’s business community.
If there are state-level issues affecting your business, now is the best time to share them with us! The Business Advocacy team will begin to prepare our legislative agenda for the upcoming year and meet with our delegation to identify the priorities they plan to champion next year.
Have a great weekend!
