Accommodations Tax FAQs

​What is the difference between the state accommodations tax and the local accommodations tax?

State Accommodations Tax
The state accommodations tax is a mandatory 2 percent charge applied to all accommodations statewide. Accommodations are defined as "the rental or charges for any rooms, campground spaces, lodgings, or sleeping accommodations furnished to transients by any hotel, inn, tourist court, tourist camp, motel, campground, residence, or any place in which rooms, lodgings, or sleeping accommodations are furnished to transients for a consideration." The SC Department of Revenue collects these dollars and distributes them back to cities and counties by a formula based on the location of the short-term rental.

Local Accommodations Tax
County and municipal governments may impose a local accommodations tax by ordinance adopted by a positive majority of the entire governing body. The cumulative rate of the tax may not exceed 3 percent. A county government may not impose an accommodations tax exceeding 1.5 percent within a municipality without consent by resolution of the municipal council.

Who approves accommodations tax expenditures?

State Accommodations Tax
A municipality receiving more than $50,000 in revenue from the state accommodations tax must appoint an advisory committee to make recommendations for how the revenue generated from the accommodations tax should be spent. The advisory committee consists of seven members, with a majority being selected from the hospitality industry of the municipality or county receiving the revenue. At least two of the hospitality industry members must be from the lodging industry, where applicable. One member must represent the cultural organizations of the municipality receiving the revenue.

The advisory committee submits written recommendations to the municipal council at least once annually. The report addresses how to spend the portion of accommodations tax revenue that remains after allocations are made to the general fund and the tourism and promotion funds. The municipal council may accept, reject or modify these recommendations.

The council must submit an annual report detailing use of the state accommodations tax proceeds to the state Tourism Expenditure Review Committee. TERC is an 11-member committee that reviews the tourism-related expenditures funded with state accommodations tax revenue.

Local Accommodations Tax
There is no requirement for an advisory committee for local accommodations tax expenditures. The municipal council is solely responsible for approving local accommodations tax expenditures unless otherwise established by the council.

Are there restrictions on the use of the accommodations tax revenue?

State Accommodations Tax
Yes. State law is very specific about how cities and counties can spend state accommodations tax revenue. The first $25,000 is deposited into the local governments' general fund, 30 percent of the balance must be allocated to a special fund for the exclusive use of tourism advertising and promotion, and the remaining balance must be used for tourism-related expenditures as defined in SC Code Section 6-1-530.

Local Accommodations Tax
Local Accommodations Tax proceeds must be used for tourism-related projects and programs as defined in SC Code Section 6-1-530.

Acceptable tourism-related expenses

As defined by SC Code Section 6-1-530:

  • Tourism-related buildings such as civic centers, coliseums and aquariums.
  • Tourism-related cultural, recreational or historic facilities.
  • Beach access, renourishment, or other tourism-related lands and water access.
  • Highways, roads, streets and bridges providing access to tourist destinations.
  • Advertisements and promotions related to tourism development.
  • Water and sewer infrastructure to serve tourism-related demand.

Funds can also be used for operation and maintenance of the above items, including police, fire protection, emergency medical services and emergency-preparedness operations.

Learn more about South Carolina regulations for short-term rentals.