Sales tax regulations can be complex, and as a business owner in South Carolina, understanding your tax obligations is crucial for compliance and avoiding costly penalties. Whether you’re selling products online or operating a brick-and-mortar store, knowing how sales tax works in South Carolina will help you manage your finances effectively.
At Peavy and Associates, we specialize in guiding businesses through the complexities of South Carolina’s tax system. In this blog, we’ll break down everything you need to know about South Carolina’s sales tax regulations for 2025.
1. What is South Carolina’s Sales Tax Rate?
South Carolina has a statewide base sales tax rate of 6%. However, local counties and municipalities can impose additional local option sales taxes, bringing the total sales tax rate up to 9% in some areas.
How to Determine the Correct Rate:
- The South Carolina Department of Revenue (SCDOR) provides an updated list of county sales tax rates (SCDOR Website).
- If you operate in multiple locations, you must apply the correct rate for each county.
2. What is Subject to Sales Tax?
Most tangible personal property sold in South Carolina is subject to sales tax. This includes:
✅ Clothing
✅ Electronics
✅ Furniture
✅ Vehicles
✅ Prepared food and beverages
Exemptions from Sales Tax
- Some goods and services are exempt from sales tax in South Carolina, including:Prescription medications and medical devices
- Unprepared groceries (exempt from the state’s 6% sales tax but may still be subject to local sales taxes)
- Wholesale sales (goods sold for resale)
- Certain agricultural supplies and equipment
Pro Tip: If you sell tax-exempt goods, keep proper documentation to support the exemption in case of an audit.
3. Sales Tax on Services: What’s Taxable?
Unlike many other states, most services are NOT subject to sales tax in South Carolina. However, there are some exceptions, including:
- Lodging services (hotels and short-term rentals)
- Dry cleaning and laundry services
- Communications services (cable, satellite TV, and phone services)
- Repair services for taxable items (e.g., car repairs, appliance repairs)
If your business provides both goods and services, you may need to charge sales tax on the tangible portion of the sale (e.g., if you sell a computer and offer installation services, the computer is taxable, but the installation may not be).
4. Do Online Businesses Need to Collect Sales Tax?
Yes! South Carolina requires remote sellers, marketplace facilitators, and online businesses to collect and remit sales tax if they meet economic nexus thresholds.
Economic Nexus Threshold
Your business is required to collect sales tax in South Carolina if, in the previous or current calendar year, you:
📌 Had $100,000 or more in gross sales to South Carolina customers OR
📌 Conducted 200 or more separate sales transactions in South Carolina
This applies to Amazon, eBay, Shopify, and Etsy sellers, as well as other e-commerce businesses.
Tip: If you meet these thresholds, register for a South Carolina sales tax permit through the South Carolina Department of Revenue (SCDOR) website.
5. How to Register for a Sales Tax Permit
If your business is required to collect sales tax, you must register for a sales tax license before making taxable sales.
Steps to Register:
- Go to the South Carolina Department of Revenue (SCDOR) website (dor.sc.gov).
- Apply online through the MyDORWAY portal to receive your South Carolina Sales Tax License.
- Display your sales tax license at your place of business.
- Start collecting and remitting sales tax as required by state law.
There is a one-time registration fee of $50 when applying for a sales tax license.
6. Filing and Remitting Sales Tax in South Carolina
Once you start collecting sales tax, you must file returns and remit the collected tax to the SCDOR.
Filing Frequency
Your filing frequency depends on the amount of sales tax you collect:
- Monthly: If you collect $100 or more per month in sales tax
- Quarterly: If you collect less than $100 per month
- Annually: If your total sales tax liability is less than $100 per year
How to File Sales Tax Returns
Sales tax returns must be filed electronically through the MyDORWAY online portal.
📌 Due Date: Sales tax returns are due on the 20th of the following month.
For example, sales tax collected in March 2025 must be reported and remitted by April 20, 2025.
7. Penalties for Late or Incorrect Sales Tax Filings
Failure to file or pay sales tax on time can result in penalties and interest charges.
- Late Filing Penalty: 5% per month (up to a maximum of 25%)
- Late Payment Penalty: 0.5% per month (up to a maximum of 25%)
- Interest: Accrues daily on unpaid balances
To avoid penalties:
✅ Set up automatic reminders for sales tax deadlines.
✅ Double-check tax rates and exemptions to avoid under-collecting or over-collecting.
✅ Keep accurate sales records in case of an audit.
8. Are There Any Sales Tax Incentives for Businesses?
Yes! South Carolina offers several sales tax exemptions and incentives for businesses:
Sales Tax Exemptions for Manufacturers
Manufacturers can apply for exemptions on raw materials, industrial equipment, and energy use.
Retailer’s Discount
Businesses that file and pay sales tax on time can claim a discount of 3% on their tax liability (up to $3,000 per year).
Enterprise Zone Sales Tax Exemptions
Businesses located in designated enterprise zones may qualify for sales tax exemptions on equipment and materials.
Final Thoughts: Stay Compliant and Save Money
Understanding South Carolina’s sales tax regulations is essential for businesses to remain compliant and avoid penalties. By properly collecting, reporting, and filing sales tax, you can protect your business while maximizing available tax incentives.
At Peavy and Associates, we specialize in South Carolina sales tax compliance and planning. If you need help registering for a sales tax permit, filing returns, or managing audits, contact us today!