What South Carolina tax interest rate applies from July 1 through September 30, 2026, and what rate is paid on eligible refunds?

Plain-English summary

South Carolina's listed tax interest rate is 7% for July 1 through September 30, 2026. The rate applies to tax underpayments and overpayments under S.C. Code Ann. § 12-54-25.

Interest is generally compounded daily. The exception identified in the letter is an underpayment of declaration of estimated tax, which uses simple interest.

The amount the Department pays on eligible refunds is lower. Budget Provisos 41.2 and 117.81 require a combined three-percentage-point reduction from the listed rate. Because the General Assembly had not passed a fiscal year 2026-2027 budget as of publication, Joint Resolution R128 (S769), effective May 15, 2026, extended the fiscal year 2025-2026 provisos until a new budget passes. For an eligible refund in the July 1-September 30, 2026 period, that reduces the listed 7% rate to 4%.

The attached historical table also records the Department's rates for periods beginning September 1, 1985. Immediately before the current quarter, the listed rate was 6% from April 1 through June 30, 2026.

What this means for you

Taxpayers with unpaid balances

For the July-September 2026 quarter, use the 7% listed rate when estimating South Carolina interest on an underpayment. Because interest is generally compounded daily, the exact charge depends on the balance and the number of days outstanding.

Taxpayers expecting refunds

Do not assume the Department pays the full listed rate. Eligible refund interest during fiscal year 2025-2026 is reduced by three percentage points under the cited budget provisos, dropping 7% to 4%.

Estimated-tax filers

The letter distinguishes underpayments of declaration of estimated tax: those use simple interest rather than daily compounding.

Common questions

Q: What is the listed rate for July 1 through September 30, 2026?
A: 7%.

Q: Is tax interest compounded?
A: Generally yes, daily. Simple interest applies to underpayments of declaration of estimated tax.

Q: Does an eligible refund earn 7% during that quarter?
A: No. For fiscal year 2025-2026, the Department must reduce eligible refund interest by three percentage points, which reduces 7% to 4%.

Q: What was the listed rate immediately before July 2026?
A: 6% from April 1 through June 30, 2026.

Citations and references

Authority and statutes:

• S.C. Code Ann. § 12-54-25 (2014) — interest on tax underpayments and overpayments
• S.C. Code Ann. § 12-4-320 (2014) — Department's authority to issue advisory opinions
• SC Revenue Procedure #09-3
• 2025 S.C. Act No. 69, Provisos 41.2 and 117.81 — three-percentage-point reduction in eligible refund interest
• Joint Resolution R128 (S769), effective May 15, 2026 — extends fiscal year 2025-2026 provisos until a new budget passes

Source

• Landing page: https://dor.sc.gov/advisory-opinion-search
• Original PDF: https://dor.sc.gov/sites/dor/files/policies/IL26-15.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 #26-15
SUBJECT:

Interest Rate

DATE:

July 2, 2026

REFERENCE:

S.C. Code Ann. Section 12-54-25 (2014)
2025 S.C. Act No. 69, Provisos 41.2 and 117.81

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
04/01/96 – 06/30/96
07/01/96 – 03/31/98

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

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
01/01/08 – 03/31/08
04/01/08 – 06/30/08
07/01/08 – 09/30/08
10/01/08 – 12/31/08

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

Period
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
10/01/22 – 12/31/22
01/01/23 – 09/30/23
10/01/23 – 12/31/24
01/01/25 – 03/31/26
04/01/26 – 06/30/26
07/01/26 – 09/30/26

Rate*
5%
4%
3%
4%
3%
4%
5%
6%
5%
3%
4%
5%
6%
7%
8%
7%
6%
7%

*Note reduction of interest rate on refunds. As of the date of publication, the General Assembly has not passed a
budget for fiscal year 2026-2027. Pursuant to Joint Resolution (R128, S769) which became effective on May 15, 2026,
the effective dates of the provisos in the budget for fiscal year 2025-2026 are extended until a new budget is passed.
Accordingly, 2025 S.C. Act No. 69, Provisos 41.2 and 117.81 direct the Department to continue to reduce the rate of
interest paid on eligible refunds by a total of three percentage points from the above listed rates.