What South Carolina tax interest rate applies from July through December 2026, and what rate is paid on eligible refunds?

Plain-English summary

South Carolina's listed tax interest rate is 7% from July 1 through December 31, 2026. The rate applies to tax underpayments and overpayments under S.C. Code Ann. § 12-54-25.

Interest is generally compounded daily. The exception identified in the letter is an underpayment of declaration of estimated tax, which uses simple interest.

The Department pays less than the listed rate on eligible refunds. The letter says 2025 S.C. Act No. 69, Provisos 41.2 and 117.81 reduce eligible refund interest by a total of three percentage points. That reduces the listed 7% rate to 4%.

Why the prior refund provisos still applied

The General Assembly ratified the fiscal year 2026-2027 budget bill, H.R. 5126, on August 11, 2026, and the Governor vetoed certain items on August 17. As of this letter's August 24 issue date, the General Assembly had not acted on those vetoes, so the budget was not final. The letter therefore says Joint Resolution R128, S769 continued the fiscal year 2025-2026 provisos until the new budget became final.

The historical table begins September 1, 1985. Immediately before the covered period, the listed rate was 6% from April 1 through June 30, 2026.

What this means for you

Taxpayers with unpaid balances

Use the 7% listed rate for an underpayment during July-December 2026. Because interest is generally compounded daily, the exact amount depends on the balance and the number of days outstanding.

Taxpayers expecting refunds

For an eligible refund during the covered period, the letter applies a three-point reduction to the listed rate, reducing 7% to 4%.

Estimated-tax filers

Underpayments of declaration of estimated tax use simple interest instead of daily compounding.

Common questions

Q: What listed rate applies from July 1 through December 31, 2026?
A: 7%.

Q: What rate applies to an eligible refund?
A: 4% after the three-percentage-point reduction described in the letter.

Q: Why did the prior budget provisos continue?
A: The fiscal year 2026-2027 budget was not final when this letter was issued, so Joint Resolution R128, S769 extended the earlier provisos.

Q: Is all tax interest compounded daily?
A: No. The letter says simple interest applies to underpayments of declaration of estimated tax.

Citations and references

• S.C. Code Ann. § 12-54-25 (2014)
• S.C. Code Ann. § 12-4-320 (2014)
• SC Revenue Procedure #09-3
• 2025 S.C. Act No. 69, Provisos 41.2 and 117.81
• Joint Resolution R128, S769
• H.R. 5126, 126th General Assembly, 2d Session (2026)

Source

• Landing page: https://dor.sc.gov/advisory-opinion-search
• Original PDF: https://dor.sc.gov/sites/dor/files/policies/IL26-19.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 #26-19
SUBJECT:

Interest Rate

DATE:

August 24, 2026

REFERENCE:

S.C. Code Ann. Section 12-54-25 (2014)
2025 S.C. Act No. 69, Provisos 41.2 and 117.81

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 – 12/31/24
01/01/25 – 03/31/26
04/01/26 – 06/30/26
07/01/26 – 12/31/26

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

*Note: reduction of interest rate on refunds. The General Assembly ratified a budget bill for fiscal year 2026-27,
H.R. 5126 (126th Leg. 2d Sess. (2026), on August 11, 2026. The Governor vetoed certain items on August 17, 2026.
The General Assembly has not acted on these vetoes, therefore the budget is not final. Until the budget becomes final,
the effective dates of the provisos in the budget for fiscal year 2025-2026 are extended pursuant to Joint Resolution
R128, S769. Accordingly, 2025 S.C. Act No. 69, Provisos 41.2 and 117.81 direct the Department to continue to reduce
the rate of interest paid on eligible refunds by a total of three percentage points from the listed rates.