Statehouse Update January 28-29

Update 1/29/26: Adjustments were made to this summary to reflect developments that occurred during the week.

Although South Carolina was spared the brunt of the winter storm this past weekend, it was enough for the Statehouse to cancel all but two committee hearings on Tuesday. Despite the one-day delay, lawmakers are back for a shortened week and hitting the ground running.

Tax reform is the “it” topic this week, with two important pieces of tax reform on the Senate floor calendar. Budget hearings are continuing in the House as representatives also look to tackle judicial reform and other pressing matters in committee.

Taxes and spending

Income tax H.4216 – Establishes two new tax brackets (1.99% up to $30,000 and 5.39% for anything above), eliminates all standard and itemized deductions, adds a graduated deduction of up to $30,000 for those earning under $110,000, and conditionally lowers the top marginal tax rate by 1% until it reaches 1.99%. This bill is currently on the Senate floor.
Homestead exemption S.768 – Raises the homestead exemption to $150,000 and adds a five-year state residency requirement. Taxpayers currently exempt will be grandfathered in. This bill is on the Senate floor.
Unemployment tax code S.688 – Increases the period for calculating an employer’s unemployment insurance rate from 12 month to 20 months by 2028. This bill also increases funding to state unemployment insurance by creating a new “solvency surcharge” tax and removing the caps on several insurance penalties.
Film industry handouts H.3832 – Allocates rebates amounting to 30% of an annual production budget to film producers that spend over $250,000 and heightens that budget limit to $2 million annually. This bill also heightens the cap for tax incentives from $10 million to $30 million while allowing unused portions of that cap to carry over for up to three years. Last week, the House recommitted this bill to the Ways and Means Committee. Click here to read the Policy Council’s full bill analysis.
Small business tax cuts H.5006 – Provides tax exemptions on the first $10,000 of net depreciated value of business personal property owned by a small business. This bill also allows SC-based corporations to exclude up to $50 million in equity contributions from license tax calculations under specific conditions. A House Ways and Means legislative subcommittee is scheduled to hear this bill on Thursday, Jan. 29 at 9am. Update: This bill has advanced to the full House Ways and Means Committee.

Judicial reform

Judicial selection reform H.4755 – Authorizes the Governor to appoint all 12 members of the Judicial Merit Selection Commission (JMSC), eight of which must be members of the SC Bar in good standing, and no more than four can be law enforcement professionals. This bill also prohibits current lawmakers from serving on the JMSC, and former lawmakers must wait two years after leaving office. The House Judiciary Committee is scheduled to hear this bill on Wednesday, Jan. 28 at 10am. Update: This bill has advanced to the House floor.
Magistrate reform H.3530 – Imposes a 14-day limit on magistrate holdover service before the Governor must appoint a temporary replacement, and expands magistrate jurisdiction to civil cases up to $25,000 and criminal offenses punishable by up to $25,000 in fines or one year of imprisonment. A House Judiciary subcommittee is scheduled to hear this bill on Thursday, Jan. 29 at 9am. Update: This bill has advanced to the full House Judiciary Committee.

Education

School board ethics S.70 – Requires local school boards to adopt a code of ethics and training programs created by the State Board of Education. This bill currently resides in a Senate Education subcommittee.

Regulation

Small business regulatory freedom H.3021 – For every new regulation introduced, two existing regulations must be removed, aiming to reduce regulatory requirements by 25%. This bill also changes the regulatory review process to prevent major regulations from persisting without legislative approval. This bill currently resides in a Senate Judiciary subcommittee.

Department of Transportation

DOT Modernization S.831 – Creates a Coordinating Council for project prioritization and shifts certain DOT Commission duties to the Transportation Secretary while retaining the Commission. The bill also increases the biennial alternative fuel fee with a mechanism for future increases, and redirects all related revenue from the Infrastructure Maintenance Trust Fund to the State Highway Fund. A Senate Transportation subcommittee is scheduled to hear this bill on Thursday, Jan. 29 at 9am.

Budget Hearings

Despite low activity on Tuesday, two House budget subcommittees met, and the Department of Commerce requested a one-time appropriation of $150 million for economic development related to Scout Motors.

The following House Ways and Means budget subcommittees will meet later this week:

Criminal Justice Subcommittee

Wednesday, Jan. 28 at 10am; hearing from the Law Enforcement Training Council, SLED, and the Department of Public Safety.
Thursday, Jan. 29 at 9:30am; hearing to discuss provisos.

Constitutional Subcommittee

Thursday, Jan. 29 immediately after House adjourns; hearing from the Judicial branch, Administrative Law Court and the Department of Environmental Services.

Economic Development Subcommittee

Wednesday, Jan. 28 at 10:30am; hearing from the Department of Agriculture, SC Research Authority, SC Housing, Jobs-Economic Development Authority, Santy Cooper, and the Ports Authority.

Healthcare Subcommittee

Wednesday, Jan. 28 at 10am; hearing an update on University of South Carolina Neurological Hospital and Health Science Campus, the Department on Aging, and to discuss provisos.

Higher Education Subcommittee

Thursday, Jan. 29 at 11:30am or immediately after House adjourns; hearing from the University of South Carolina system and to discuss provisos.

Transportation & Regulatory Subcommittee

Thursday, Jan. 29 at 9am; hearing from the Commission for Community Advancement & Engagement, Department of Consumer Affairs, and Human Affairs Commission.

Click here for the full Policy Council breakdown of Gov. McMaster’s fiscal year 2027 Executive Budget.