(The Center Square) — Saying the state’s Unemployment Insurance Trust Fund is “fully solvent,” South Carolina officials announced many businesses will see a decrease in their taxes in 2024.
According to Gov. Henry McMaster, a Republican, and S.C. Department of Employment and Workforce Executive Director William Floyd, tax rates will decrease or hold steady for employers in 2024. It marks the third consecutive year state officials lowered UI business taxes.
“Strong economic and wage growth have played a crucial role in maintaining our trust fund balance above the required threshold,” Floyd said in an announcement. “Our agency is committed to building the workforce, facilitating job placement, and supporting employers.
“Our unemployment rate has steadily declined and now matches the low 2.9% rate of February 2020,” Floyd added. “And we have a record number of people working in South Carolina with one of the fastest growing labor forces in the country.”
The Palmetto State’s UI Trust Fund has a $1.6 billion balance, and South Carolina officials say they set the 2024 tax rates to raise roughly the same revenue as the state did in 2023 and 2022. State officials said they lowered rates for 18 rate classes by an average of 6% compared to 2023 levels; rates for the other two classes are set by statute and remain the same.
“High taxes are a perennial problem for small businesses, so today’s announcement is welcome news,” National Federation of Independent Business State Director Ben Homeyer said in a statement to The Center Square. “The less businesses have to pay in unemployment insurance taxes, the more revenue they’ll have to grow their businesses and hire more people.”
To determine tax rates, DEW officials said they look at the state of the UI Trust Fund, the economy, projected unemployment rates, estimated benefit payments and how much money they need to pay those benefits.
“With this cut to unemployment taxes and recently cutting the manufacturing and industrial property assessment ratio to 6 percent, South Carolina is on the right track,” Oran Smith, a senior fellow at the Palmetto Promise Institute, told The Center Square via email. “But North Carolina continues to press us. It is time to look at even more comprehensive tax reform to make us truly and fully competitive.”