Questions and Answers on the  Local Option Sales Tax 

for Property Tax Relief

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What is the Local Option Sales Tax for  Property Tax Relief?

• Passed by General Assembly in 1990 in order to:– Provide property tax relief on county and municipal 

tax bills.– Provide an alternate revenue source for counties and 

municipalities.

• 31 of 46 counties in South Carolina have enacted  it.

– Berkeley (passed 1996)– Charleston (passed 1990)– Colleton (passed 1990)

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What is Subject to the Local Option  Sales Tax for Property Tax Relief?

• Applied uniformly in the county in both incorporated and 

unincorporated areas.

• Applies to retail sales subject to state sales tax and unprepared 

food purchases.  However, the sale of qualifying food items, where 

payment is made with food stamps or WIC vouchers, are exempt 

(SC Department of Revenue).

• Sales taxes are paid by both residents and non‐residents alike.– 2010 retail study indicates 18% of Summerville retail customers and 

10% of St. George retail customers are from outside the retail market.

• BEA estimated range of first full year of collections (FY 14‐15): 

$8,986,026‐$9,984,472.– Collections begin in May 2014 if passed.– Used most conservative estimate for scenarios ($8,986,026).

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What does State Law Say on How the  Funds Can Be Used?

• Enumerated in SC Code of Laws Title 4, Chapter 10,  Article 1.

• 5% of collections over $5M retained by the state to be  given to counties who do not collect a minimum 

distribution enumerated in state law (estimated at  $199,301).

• Of the remaining amount:– 71% must be used to provide a credit on county and 

municipal property taxes (estimated at $6,238,575).– 29% to be distributed to the county and its cities that can 

be used at their discretion (estimated at $2,548,150).• A governing body may elect, but is not required to use these funds 

for property tax relief. 4

How is the Property Tax Relief (71%)  Portion Distributed?

• 67% allocated to the county.

• 33% distributed to municipalities.– Funds are then distributed by population to each 

municipality.

• Must be used for property tax credits on city and  county tax bills.

• Establishes a credit factor on tax bills.– Factor calculated by dividing projected sales tax collections 

by total appraised value subject to tax.– Factor is multiplied against taxable appraised value for a 

credit on the tax bill. 5

How is the Property Tax Relief (71%)  Portion Distributed? (Estimated)

Dorchester County $4,179,845Summerville $1,259,800North Charleston $636,732St. George $69,256Ridgeville $65,113Harleyville $21,281Reevesville* $6,548Total $6,238,575

* Reevesville does not levy a millage.6

How is the Discretionary (29%) Portion  Distributed?

• 50% of money is distributed between county and  municipalities based on the point of sale.

• 50% of the money is distributed between county  and municipalities based on population.

• Use is subject to each jurisdiction’s discretion.

• A governing body may elect individually to  provide additional tax relief above the 71%  portion.

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How is the Discretionary (29%) Portion  Distributed? (Estimated)

Dorchester County $1,136,398Summerville $831,075North Charleston $476,748St. George $61,607Ridgeville $24,813Harleyville $15,514Reevesville $1,995Total $2,548,150

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Estimated Property Tax Credit Factors  at 71%

Jurisdiction Collections Appraised Value Credit 

Factor

County 

Credit per 

$100,000 of 

Value

Municipal 

Credit per 

$100,000 of 

Value

Total 

Credit per 

$100,000 

of  Value

Dorchester County $4,179,845 $10,934,439,159 0.000382 $38.23 $0.00 $38.23

Summerville $1,259,800 $3,094,951,192 0.000407 $38.23 $40.70 $78.93

North Charleston $636,732 $1,948,003,776 0.000327 $38.23 $32.69 $70.91

St. George $69,256 $117,377,346 0.000590 $38.23 $59.00 $97.23

Ridgeville $65,113 $27,671,077 0.002353 $38.23 $235.31 $273.54

Harleyville $21,281 $33,491,863 0.000635 $38.23 $63.54 $101.77

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Estimated Property Tax Credit Factors  at 100%

Jurisdiction Collections Appraised Value Credit 

Factor

County 

Credit per 

$100,000 of 

Value

Municipal 

Credit per 

$100,000 of 

Value

Total 

Credit per 

$100,000 

of  Value

Dorchester County $5,316,243 $10,934,439,159 0.000486 $48.62 $0.00 $48.62

Summerville $2,090,874 $3,094,951,192 0.000676 $48.62 $67.56 $116.18

North Charleston $1,113,480 $1,948,003,776 0.000572 $48.62 $57.16 $105.78

St. George $130,863 $117,377,346 0.001115 $48.62 $111.49 $160.11

Ridgeville $89,926 $27,671,077 0.003250 $48.62 $324.98 $373.60

Harleyville $36,795 $33,491,863 0.001099 $48.62 $109.86 $158.48

10

Typical Household Impact and the  Break‐even Point

• Depends on each household.  Sales tax paid  depends on:

– If they are savers or spenders.– Where they spend their retail dollar and if it happens 

in Dorchester County or another county.– What they buy and if those purchases are subject to 

sales tax.

• Have established “break‐even point”

to show  how much in taxable purchases would need to be 

made before the sales tax paid exceeds the credit  received for a typical family.

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Estimated Typical Household Impact  at 71%

• Median Household Income: $54,875• Assuming $150,000 owner‐occupied house 

and 2 cars worth $10,000 each:

Jurisdiction Estimated 

CreditBreak‐Even in 

Taxable Sales % of MHI

Dorchester County $64.98 $6,498.49 11.84%Summerville $134.18 $13,418.34 24.45%North Charleston $120.55 $12,055.18 21.97%St. George $165.29 $16,528.94 30.12%Ridgeville $465.01 $46,501.36 84.74%Harleyville $173.01 $17,300.53 31.53%

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Estimated Typical Household Impact  at 100%

• Median Household Income: $54,875• Assuming $150,000 owner‐occupied house 

and 2 cars worth $10,000 each:

Jurisdiction Estimated 

CreditBreak‐Even in 

Taxable Sales % of MHI

Dorchester County $82.65 $8,265.27 15.06%Summerville $197.50 $19,750.06 35.99%North Charleston $179.82 $17,982.48 32.77%St. George $272.18 $27,218.41 49.60%Ridgeville $615.05 $61,504.93 112.08%Harleyville $269.42 $26,941.97 49.10%

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