State law requires cities and towns that issue business licenses to update their business license class schedules every odd-numbered year. As a result, councils must pass an ordinance making the necessary updates by December 31, 2025.
This is a requirement of South Carolina’s Business License Tax Standardization Act of 2020, or Act 176. The law established ongoing steps that cities and towns in South Carolina must take to keep their business licensing practices compliant with state law, making business licenses a consistent process for businesses operating in multiple jurisdictions.
The key action for cities and towns in 2025 is updating the class schedule. A standard class schedule for categorizing businesses accurately helps make sure that businesses are placed in the appropriate class based on the most recent statistical profitability data from the Internal Revenue Service.
To make updating the class schedule as simple a process as possible, the Municipal Association of SC developed an amendment to the model business license ordinance that includes the updated standard class schedule, available online.
Municipalities must adopt this class schedule by ordinance by December 31, 2025. This adopted class schedule will be used for the business licensing year running from May 1, 2026, to April 30, 2027. It will also be the one used for the license year running from May 1, 2027, to April 30, 2028. Cities will next need to undertake this update process in 2027.
Cities and towns must also remember that adopting the updated class schedule is the first step in the process, followed by making corresponding updates to the schedule within the system and software used to calculate new licenses starting with the 2026 business license year.
The Municipal Association has created a business licensing resources webpage, offering materials explaining the law, the model ordinance and class schedule, as well as sample documents that business license administrators need.