What is South Carolina's tax interest rate for underpayments and overpayments for the period beginning October 1, 2023 (per SC IL #23-17)?

Plain-English summary

South Carolina's interest rate on both tax underpayments and overpayments is 8% for the period October 1, 2023 through March 31, 2024. The rate is set under S.C. Code § 12-54-25 and changes periodically as the underlying federal rate moves.

Two mechanical points matter. First, the interest is compounded daily, except that simple interest applies to underpayments of declaration of estimated tax. Second, for fiscal year 2023-2024 (July 1, 2023 through June 30, 2024), budget Provisos 41.2 and 117.82 direct the Department to reduce the interest it pays on eligible refunds by a total of three percentage points from the listed rate. So while a taxpayer who owes tax accrues interest at the full 8%, the interest paid on an eligible refund for that fiscal year is effectively 5%.

The letter also reproduces the Department's full historical interest-rate table going back to 1985, which is useful when computing interest across older periods.

What this means for you

If you owe South Carolina tax

Interest accrues at 8% for the October 1, 2023 - March 31, 2024 period, compounded daily (simple interest for underpaid estimated tax). Interest is separate from any penalties.

If South Carolina owes you a refund

For fiscal year 2023-2024, the interest the state pays on eligible refunds is reduced by three percentage points, so it is effectively 5% rather than 8%. This reduction is a temporary budget-proviso measure tied to that fiscal year.

Computing interest over multiple periods

Because the rate changes over time, use the rate in effect for each period. The verbatim table below lists every rate from 1985 forward.

Common questions

Q: Is the underpayment rate the same as the overpayment (refund) rate?
A: The base rate is the same (8% here), but for fiscal year 2023-2024 the interest paid on eligible refunds is reduced by three percentage points under budget provisos, making it effectively 5%.

Q: Is South Carolina interest simple or compound?
A: It is compounded daily, except that simple interest applies to underpayments of declaration of estimated tax.

Source

• Landing page: https://dor.sc.gov/advisory-opinion-search
• Original PDF: https://dor.sc.gov/sites/dor/files/policies/IL23-17.pdf

Original ruling text

STATE OF SOUTH CAROLINA

DEPARTMENT OF REVENUE
300A Outlet Pointe Blvd., Columbia, South Carolina 29210
P.O. Box 125, Columbia, South Carolina 29214-0575

SC INFORMATION LETTER #23-17
SUBJECT:

Interest Rate

DATE:

November 30, 2023

REFERENCE:

S.C. Code Ann. Section 12-54-25 (2014)
2022 S.C. Act No. 239, Provisos 41.2 and 117.82

AUTHORITY:

S.C. Code Ann. Section 12-4-320 (2014)
SC Revenue Procedure #09-3

SCOPE:

An Information Letter is a written statement issued to the public to announce general
information useful in complying with the laws administered by the Department. An
Information Letter has no precedential value.

The interest rate to be applied to underpayments and overpayments* of taxes is listed below. The rate is
compounded daily except simple interest applies to the underpayment of declaration of estimated tax.
Period

Rate*

Period

09/01/85 – 12/31/85
01/01/86 – 06/30/86
07/01/86 – 09/30/87
10/01/87 – 12/31/87
01/01/88 – 03/31/88
04/01/88 – 09/30/88
10/01/88 – 03/31/89
04/01/89 – 09/30/89
10/01/89 – 03/31/91
04/01/91 – 12/31/91
01/01/92 – 03/31/92
04/01/92 – 09/30/92
10/01/92 – 06/30/94
07/01/94 – 09/30/94
10/01/94 – 03/31/95
04/01/95 – 06/30/95
07/01/95 – 03/31/96
04/01/96 – 06/30/96
07/01/96 – 03/31/98

11%
10%
9%
10%
11%
10%
11%
12%
11%
10%
9%
8%
7%
8%
9%
10%
9%
8%
9%

04/01/98 – 12/31/98
01/01/99 – 03/31/99
04/01/99 – 03/31/00
04/01/00 – 03/31/01
04/01/01 – 06/30/01
07/01/01 – 12/31/01
01/01/02 – 12/31/02
01/01/03 – 09/30/03
10/01/03 – 03/31/04
04/01/04 – 06/30/04
07/01/04 – 09/30/04
10/01/04 – 03/31/05
04/01/05 – 09/30/05
10/01/05 – 06/30/06
07/01/06 – 12/31/07
01/01/08 – 03/31/08
04/01/08 – 06/30/08
07/01/08 – 09/30/08
10/01/08 – 12/31/08

Rate*
8%
7%
8%
9%
8%
7%
6%
5%
4%
5%
4%
5%
6%
7%
8%
7%
6%
5%
6%

Period
01/01/09 – 03/31/09
04/01/09 – 12/31/10
01/01/11 – 03/31/11
04/01/11 – 09/30/11
10/01/11 – 03/31/16
04/01/16 – 03/31/18
04/01/18 – 12/31/18
01/01/19 – 06/30/19
07/01/19 – 06/30/20
07/01/20 – 03/31/22
04/01/22 – 06/30/22
07/01/22 – 09/30/22
10/01/22 – 12/31/22
01/01/23 – 09/30/23
10/01/23 – 03/31/24

Rate*
5%
4%
3%
4%
3%
4%
5%
6%
5%
3%
4%
5%
6%
7%
8%

*Note reduction of interest rate on refunds. For fiscal year 2023-2024 (July 1, 2023 through June 30,
2024), Budget Provisos 41.2 and 117.82 direct the Department to reduce the rate of interest paid on eligible
refunds by a total of three percentage points from the above listed rates.