What is South Carolina's tax interest rate for underpayments and overpayments for the period beginning July 1, 2022 (per SC IL #22-9)?

Plain-English summary

South Carolina's interest rate on both tax underpayments and overpayments rises to 5% for the period July 1, 2022 through September 30, 2022 — up from 4% for the prior April 1, 2022 through June 30, 2022 period. The rate is set under S.C. Code § 12-54-25 and changes periodically as the underlying federal rate moves.

Two mechanical points matter. First, the interest is compounded daily, except that simple interest applies to underpayments of declaration of estimated tax. Second, for fiscal year 2022-2023 (July 1, 2022 through June 30, 2023), House Bill 5150 budget Provisos 41.2 and 117.82 direct the Department to reduce the interest it pays on eligible refunds by a total of three percentage points from the listed rate.

The letter also reproduces the Department's full historical interest-rate table going back to 1985, which is useful when computing interest across older periods.

What this means for you

If you owe South Carolina tax for a period that includes the third quarter of 2022, interest accrues at 5% per year, compounded daily. If the Department owes you a refund, the same 5% ordinarily applies — but for eligible refunds paid in fiscal year 2022-2023, the rate you receive is reduced by three percentage points because of the budget provisos. The rate is reset each quarter, so a bill or refund spanning several quarters uses different rates for different stretches; use the historical table in the letter for older periods.

Common questions

Q: Does the 5% rate apply to both what I owe and what the state owes me?
A: The base rate is the same 5% for underpayments and overpayments, but the interest the state pays on eligible refunds in fiscal year 2022-2023 is cut by three percentage points under the budget provisos.

Q: Is the interest simple or compounded?
A: It is compounded daily, except that simple interest applies to underpayments of declaration of estimated tax.

Q: How long does the 5% rate last?
A: Only for July 1, 2022 through September 30, 2022. The rate is reset periodically, so check the current Information Letter for later periods.

Source

• Landing page: https://dor.sc.gov/advisory-opinion-search
• Original PDF: https://dor.sc.gov/sites/dor/files/policies/IL22-9.pdf

Original ruling text

STATE OF SOUTH CAROLINA

DEPARTMENT OF REVENUE
300A Outlet Pointe Blvd., Columbia, South Carolina 29210
P.O. Box 125, Columbia, South Carolina 29214-0575

SC INFORMATION LETTER #22-9
SUBJECT:

Interest Rate

DATE:

June 24, 2022

REFERENCE:

S.C. Code Ann. Section 12-54-25 (2014)
House Bill 5150 (2022), (Act No. Unassigned), Provisos 41.2 and 117.82

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 interest rate to be applied to underpayments and overpayments* of taxes is listed below. The rate is
compounded daily except simple interest applies to the underpayment of declaration of estimated tax.
Period

Rate*

Period

09/01/85 – 12/31/85
01/01/86 – 06/30/86
07/01/86 – 09/30/87
10/01/87 – 12/31/87
01/01/88 – 03/31/88
04/01/88 – 09/30/88
10/01/88 – 03/31/89
04/01/89 – 09/30/89
10/01/89 – 03/31/91
04/01/91 – 12/31/91
01/01/92 – 03/31/92
04/01/92 – 09/30/92
10/01/92 – 06/30/94
07/01/94 – 09/30/94
10/01/94 – 03/31/95
04/01/95 – 06/30/95
07/01/95 – 03/31/96

11%
10%
9%
10%
11%
10%
11%
12%
11%
10%
9%
8%
7%
8%
9%
10%
9%

04/01/96 – 06/30/96
07/01/96 – 03/31/98
04/01/98 – 12/31/98
01/01/99 – 03/31/99
04/01/99 – 03/31/00
04/01/00 – 03/31/01
04/01/01 – 06/30/01
07/01/01 – 12/31/01
01/01/02 – 12/31/02
01/01/03 – 09/30/03
10/01/03 – 03/31/04
04/01/04 – 06/30/04
07/01/04 – 09/30/04
10/01/04 – 03/31/05
04/01/05 – 09/30/05
10/01/05 – 06/30/06
07/01/06 – 12/31/07

Rate*
8%
9%
8%
7%
8%
9%
8%
7%
6%
5%
4%
5%
4%
5%
6%
7%
8%

Period

Rate*

01/01/08 – 03/31/08
04/01/08 – 06/30/08
07/01/08 – 09/30/08
10/01/08 – 12/31/08
01/01/09 – 03/31/09
04/01/09 – 12/31/10
01/01/11 – 03/31/11
04/01/11 – 09/30/11
10/01/11 – 03/31/16
04/01/16 – 03/31/18
04/01/18 – 12/31/18
01/01/19 – 06/30/19
07/01/19 – 06/30/20
07/01/20 – 03/31/22
04/01/22 – 06/30/22
07/01/22 – 09/30/22

7%
6%
5%
6%
5%
4%
3%
4%
3%
4%
5%
6%
5%
3%
4%
5%

*Note reduction of interest rate on refunds. For fiscal year 2022-2023 (July 1, 2022 through June
30, 2023), Budget Provisos 41.2 and 117.82 of House Bill 5150 directs the Department to reduce the
rate of interest paid on eligible refunds by a total of three percentage points from the above listed
rates.