What tax and fee changes take effect July 1, 2017 under South Carolina's Infrastructure and Economic Development Reform Act (per SC IL #17-8)?

Plain-English summary

This Information Letter summarizes the transportation-funding tax and fee changes in the South Carolina Infrastructure and Economic Development Reform Act (Act No. 40, enacted May 10, 2017), focused on changes that took effect July 1, 2017. The Act raises revenue to build and maintain the state's road network; it increases the motor fuel user fee and the maximum tax on purchasing or leasing motor vehicles and certain trailers, while also providing property tax and income tax relief.

This letter covers the pieces the Department administers or that took effect July 1, 2017:

• New infrastructure maintenance fee (IMF). When a vehicle, trailer, semitrailer, or other item that must be registered under Chapter 3 of Title 56 is first registered, the owner pays the IMF to the SC Department of Motor Vehicles. It is 5% of the sale's gross proceeds (for a licensed dealer sale) or 5% of fair market value (for a non-dealer sale), not to exceed $500. (The dealer-facing mechanics are detailed in the companion letter, SC Information Letter #17-10.)
• Higher motor fuel user fee. The existing 16-cents-per-gallon user fee under § 12-28-310 increases by two cents per gallon each year for six years, beginning July 1, 2017.
• Higher motor carrier road tax. The road tax on motor carriers under § 56-11-410 (16 cents per gallon) is increased on the same July 1, 2017 schedule.
• Sales and use tax on motor vehicles and related items is also affected.

The Act's income and property tax relief provisions are not covered here; the letter says they will be summarized in the Department's later annual legislative summary.

What this means for you

If you buy or register a vehicle

Expect the new infrastructure maintenance fee (5% of price or fair market value, capped at $500) when you first register the vehicle with the SCDMV.

If you buy motor fuel or operate as a motor carrier

The per-gallon motor fuel user fee and the motor carrier road tax began stepping up two cents per gallon per year on July 1, 2017 and continue to rise on that schedule.

Common questions

Q: What is the new infrastructure maintenance fee?
A: A fee paid to the SCDMV when a vehicle is first registered — 5% of the sale's gross proceeds (dealer sale) or 5% of fair market value (non-dealer sale), capped at $500.

Q: How much did the motor fuel user fee go up?
A: It rises two cents per gallon each year for six years beginning July 1, 2017, from the prior 16 cents per gallon.

Q: Does this letter cover the Act's income and property tax relief?
A: No. The letter states those provisions will be summarized in the Department's later annual legislative summary.

Subject

South Carolina Infrastructure and Economic Development Reform Act

Source

• Landing page: https://dor.sc.gov/advisory-opinion-search
• Original PDF: https://dor.sc.gov/sites/dor/files/policies/IL17-8.pdf

Original ruling text

STATE OF SOUTH CAROLINA

DEPARTMENT OF REVENUE
300A Outlet Pointe Blvd., Columbia, South Carolina 29210
P.O. Box 12265, Columbia, South Carolina 29211

SC INFORMATION LETTER #17-8
SUBJECT:

South Carolina Infrastructure and Economic Development Reform Act

DATE:

June 21, 2017

REFERENCE:

Act No. 40 (Enacted May 10, 2017)

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 General Assembly recently enacted the South Carolina Infrastructure and Economic
Development Reform Act to address the needs of South Carolina’s transportation infrastructure
system and to set the State on the path toward a first-class road network. The revenues from this
act will provide the resources needed to build and maintain a safe highway system for the
residents and businesses of South Carolina.
While the act increases the motor fuel user fee and the maximum tax on the purchase or lease of
motor vehicles and certain trailers and semitrailers, it also provides property tax relief and
income tax relief.
The purpose of this information letter is to provide information on tax changes under this act that
will become effective July 1, 2017. As such, this information letter will only address the
imposition of a new infrastructure maintenance fee upon the registration of a vehicle with the
Department of Motor Vehicles, the changes in the motor fuel user fee and the motor carrier road
tax, and the application of the sales and use tax to motor vehicles, trailers, semitrailers, and other
items. The provisions of the act concerning income and property tax relief will be summarized
when the Department issues its annual legislative summary later this summer.
Note: The Department does not typically summarize legislation that will be administered by
another state agency. However, since the changes to the sales and use tax law are so intertwined
with the new infrastructure maintenance fee that will be administered by the Department of
Motor Vehicles, this information letter will summarize the new infrastructure maintenance fee.
The summary of the new infrastructure maintenance fee in this information letter has been
reviewed and approved by the Department of Motor Vehicles.

House Bill 3516, Section 2 (Act No. 40)

Motor Fuel User Fee - Increase in the Per Gallon Fee
Code Section 12-28-310(A) imposes a user fee of sixteen cents per gallon on:
(1) all gasoline, gasohol, or blended fuels containing gasoline that are used or consumed for
any purpose in this State; and
(2) all diesel fuel, substitute fuels, or alternative fuels, or blended fuels containing diesel fuel
that are used or consumed in this State in producing or generating power for propelling
motor vehicles.
Code Section 12-28-310(D) has been added so that beginning July 1, 2017, the user fee will
increase by two cents a gallon each year for six years as follows:
Date of Increase

New User Fee Rate Per Gallon

July 1, 2017
July 1, 2018
July 1, 2019
July 1, 2020
July 1, 2021
July 1, 2022

18 cents
20 cents
22 cents
24 cents
26 cents
28 cents

The inspection fee imposed under Code Section 12-28-2355(A) at the rate of one-quarter cent
per gallon, and the environmental impact fee imposed under Code Section 12-28-2355(B) at the
rate of one-half cent per gallon, did not change.

House Bill 3516, Section 3 (Act No. 40)

Motor Carrier Road Tax - Increase in the Per Gallon Tax
Code Section 56-11-410 imposes a road tax on every motor carrier of sixteen cents per gallon for
the privilege of using the streets and highways of South Carolina. The road tax is calculated on
the amount of gasoline or other motor fuel used by the motor carrier in its operations in South
Carolina, provided the motor carrier is allowed a credit against the road tax for the South
Carolina motor fuel user fee imposed by Code Section 12-28-310 and paid by the carrier for
operations within and without South Carolina.

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Code Section 56-11-410 has been amended to increase the road tax, beginning July 1, 2017, two
cents a gallon each year for six years as follows:
Date of Increase

New Road Tax Rate Per Gallon

July 1, 2017
July 1, 2018
July 1, 2019
July 1, 2020
July 1, 2021
July 1, 2022

18 cents
20 cents
22 cents
24 cents
26 cents
28 cents

House Bill 3516, Section 10 (Act No. 40)

Motor Fuel User Fee - Inventory Tax Repealed
Code Section 12-28-530, which concerns the payment in certain circumstances of the motor fuel
user fee on motor fuel inventories when there has been an increase in the user fee rate, has been
repealed and will not apply to the increased user fee rate beginning July 1, 2017 or to any future
increase in the user fee rate.

House Bill 3516, Section 5 (Act No. 40)

New Infrastructure Maintenance Fee – SC Department of Motor Vehicles
Code Section 56-3-627 has been added to impose a new infrastructure maintenance fee
beginning July 1, 2017 to account for necessary road maintenance in South Carolina. This fee
will be in addition to the registration fees imposed by Chapter 3 of Title 56.
The owner of each vehicle, trailer, semi-trailer or other item that must be registered pursuant to
Chapter 3 of Title 56 must pay the infrastructure maintenance fee upon first registering the
vehicle, trailer, semi-trailer or other item with the SC Department of Motor Vehicles. The SC
Department of Motor Vehicles may not issue a registration until the fee has been collected.
The infrastructure maintenance fee is remitted to the SC Department of Motor Vehicles and is
imposed under three circumstances as follows:
 Purchases or Leases from a Dealer
The infrastructure maintenance fee is imposed when the owner first registers a vehicle, trailer,
semi-trailer or other item required to be registered under Chapter 3 of Title 56 that was
purchased or leased from a dealer. The fee is the lesser of:

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•

5% of gross proceeds of sale, or sales price (as those terms are defined in Chapter 36
of Title 12); or

•

$500.

If the dealer has a South Carolina retail license or offers to license and register the item, then the
dealer must collect the fee and remit it to the Department of Motor Vehicles.
 Purchases or Leases from a Person Other than a Dealer
The infrastructure maintenance fee is imposed when the owner first registers a vehicle, trailer,
semi-trailer or other item required to be registered under Chapter 3 of Title 56 that was
purchased or leased from a person other than a dealer, such as an individual or a business that is
not licensed as a dealer. The fee is the lesser of:
•

5% of fair market value; or

•

$500.

Code Section 56-3-627(C)(2) excludes from the infrastructure maintenance fee the following
purchases and leases from non-dealers:
•
•
•
•
•
•
•

Items transferred to members of the immediate family;
Items transferred to legal heirs, legatees, and distributees;
Certain transactions involving the formation of a partnership or corporation;
Items transferred to licensed dealers, financial institutions and secured parties (as a
result of repossession) for resale;
Items transferred to a seller or secured party as a partial payment;
Transactions exempt from the sales and use tax; and
Transfers where a sales or use tax has been previously paid on the transaction
necessitating the transfer.

 Vehicles First Registered Out-of-State and Later Registered in South Carolina by the Same
Owner
The infrastructure maintenance fee is imposed when a vehicle, trailer, semi-trailer or other item
required to be registered under Chapter 3 of Title 56 was first registered in another state by the
owner and is subsequently registered for the first time in South Carolina by the same owner. This
fee is $250.
For example, if a person living in Georgia purchased a motor vehicle and first registered it with
the Georgia Department of Motor Vehicles, then that person would owe the $250 Infrastructure
Maintenance Fee if that person subsequently moved to South Carolina and registered that same
motor vehicle with the South Carolina Department of Motor Vehicles.
The $250 fee for a vehicle registered out-of-state and later registered in South Carolina does not
apply if the owner of the item is serving on active duty in the armed forces of the United States.
The $250 fee also does not apply to a spouse or dependent of a person serving on active duty in
the armed forces of the United States.
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House Bill 3516, Section 7B (Act No. 40)

Exemption from the Sales and Use Tax – Items Subject to the New
Infrastructure Maintenance Fee
Code Section 12-36-2120 has been amended to add an exemption from state and local sales and
use tax for the gross proceeds of sales, or sales price, of any item subject to the infrastructure
maintenance fee imposed under Code Section 56-3-627.

House Bill 3516, Section 7A (Act No. 40)

Sales to Nonresidents – Sales Tax on Certain Transactions Remitted to the SC
Department of Motor Vehicles
Beginning July 1, 2017, the Infrastructure Maintenance Fee applies to vehicles, trailers, semitrailers or other items required to be registered with the South Carolina Department of Motor
Vehicles under Chapter 3 of Title 56. It does not apply to the sale of vehicles, trailers, semitrailers or other items sold to persons that will register and use such items in another state.
If a person purchases a vehicle, trailer, semi-trailer or other item in South Carolina to be
registered and used in another state (e.g., a nonresident) the sales and use tax applies, unless
otherwise exempt.
Code Section 12-36-2110(A)(5) has been added to provide that the sales tax due on the sale of
items subject to a maximum tax under Code Section 12-36-2110(A)(1) that will be registered in
another state must now be collected by and remitted to the SC Department of Motor Vehicles,
not the SC Department of Revenue.

House Bill 3516, Section 7A (Act No. 40)

Maximum Sales and Use Tax
The maximum sales and use tax imposed in Code Section 12-36-2110(A)(1) has increased from
$300 to $500 beginning July 1, 2017. This increase applies to each sale or lease of each:
•

aircraft, including unassembled aircraft which is to be assembled by the purchaser, but
not items to be added to the unassembled aircraft;

•

motor vehicle;

•

motorcycle;

•

boat;

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•

trailer or semitrailer, pulled by a truck tractor, as defined in Code Section 56-3-20, and
horse trailers, but not including house trailers or campers as defined in Code Section 563-710;

•

fire safety education trailer;

•

recreational vehicle, including tent camper, travel trailer, park model, park trailer, motor
home, and fifth wheel; or

•

self-propelled light construction equipment with compatible attachments limited to a
maximum of one hundred sixty net engine horsepower.

However, the maximum tax imposed under Code Section 12-36-2110(C) for musical instruments
and office equipment purchased by a religious organization remains $300. The maximum tax
imposed under Code Section 12-36-2110(B) for certain energy efficient manufactured homes
remains the same as well.

House Bill 3516, Section 7C (Act No. 40)

Casual Excise Tax
Since motor vehicles and motorcycles are subject to the new infrastructure maintenance fee
remitted to the Department of Motor Vehicles, Code Section 12-36-1710 – which imposes a
casual excise tax on the issuance of a certificate of title or other proof of ownership on certain
items – has been amended to remove motor vehicles and motorcycles. The casual excise tax
now only applies to boats, boat motors, and airplanes.

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