Property taxes or property tax equivalents have existed in South Carolina since the colonial era, and have long been the primary funding source for local government and schools. The first act of the South Carolina General Assembly establishing property taxes passed in 1777.
Property taxes remain one of the most important and stable revenue sources available to South Carolina municipalities. While cities and towns rely on a mixture of revenues — including business licenses, sales and use taxes, franchise fees, permits and state distributions — property taxes continue to provide critical support for core local government services and operations.
For local elected officials, understanding how property taxes are levied and how those revenues are used is essential for budget planning, financial management and communicating with residents.
Levying property taxes
Property taxes are levied on real property and personal property.
- Real property includes land, homes, commercial buildings and other permanently attached structures.
- Personal property includes items such as motor vehicles, boats, aircraft and business personal property.
Regardless of whether the property is a house, a business or an airplane, the method for calculating property taxes is the same. First, county assessors periodically determine the fair market value of the property. Next, the state constitution assigns an assessment ratio based on the type of property being taxed. Finally, the applicable units of local governments apply their own millage rates.
Assessment of property
Property values in South Carolina are assessed based on fair market value. State law defines this as the price a willing buyer would pay a willing seller in an arm’s-length transaction. The county assessor conducts a mass appraisal of properties within the county, using sales data, location, condition and market trends to estimate value. The county uses standardized methods rather than individual inspections to do this. Municipalities are not involved in this process.
State law requires properties to be reassessed every five years. The state imposes a 15% cap on increases in assessed value over a five-year cycle, unless the property changes hands or is significantly improved. Reassessment does not raise or lower taxes automatically, it simply updates property values to reflect changes in the market.
In the next step of the process, the fair market value of a property is multiplied by the constitutionally established assessment ratio. The property’s usage determines the ratio. Owner-occupied residences are assessed at 4%, while commercial, rental, and second homes are assessed at 6%. Meanwhile, the base ratio is 10.5% for some personal property.
This system of separate assessment ratios reflects a longstanding political choice to protect homeowners— particularly those who use their home as a primary residence — while relying more heavily on business and investment property for tax revenue.
Millage rates
Once a property has an assessed value, local units of government will apply their specific millage rates.
The only discretion local governments have in this process is in setting the millage rate. State law has already determined the assessment ratio, and the overall marketplace determines the fair market value of the property.
Local governments establish millage rates annually during their budget processes. Municipalities are required to publish a notice of their budget and corresponding millage rates to inform the public of the anticipated tax liability.
The “millage rate” is just the tax rate, expressed in a somewhat old-fashioned way. In it, 1 mill equals $1 of tax for every $1,000 of taxable value.
A taxpayer will generally receive a single tax bill from the county, combining the property taxes levied by all local governments that provide services to the taxpayer, including the county, the school district, the municipality and other local taxing entities.
Use of property tax revenues
Municipalities’ most common use of property tax revenue is to fund the municipal general fund, supporting the day-to-day functions of municipal government. Millage levied for this purpose is commonly referred to as operating millage. Revenue generated from operating millage helps fund such critical local government services such as police and fire protection, sanitation, code enforcement and streets, among others.
Municipalities may also levy property taxes to repay any general obligation debt they have. This millage is separate from general operating millage and is specifically dedicated to repayment of bonds. Cities and towns may use bonds to fund projects such as public safety facilities, municipal buildings, roads, recreation facilities, or items authorized by law.
Special tax districts and municipal participation
In some cases, municipalities may leverage unique taxing structures such tax increment financing districts, known as TIFs, or municipal improvement districts, known as MIDs, within a defined geographic area for particular development and redevelopment projects.
These mechanisms vary based on statutory authority and local circumstances, but can provide additional tools to support economic development, infrastructure improvements and revitalization efforts.
Additional resources
To learn more about municipal finance, revenue authority, budgeting and taxation in South Carolina, municipal officials should refer to the Municipal Association of South Carolina’s Handbook for Municipal Officials. The handbook provides an overview of municipal powers and responsibilities, including sections addressing property taxation, budgeting, debt financing, revenue sources, and financial administration. It serves as a helpful reference for local officials navigating municipal finance and governance issues.
The Association’s municipal members can also log in to the website and use the new SCottie artificial intelligence assistant to help understand how millage rates can impact residents.