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New Taxes and Fees for Road Maintenance

To raise additional money for state highway maintenance, the S.C. General Assembly passed a highway bill (“Act 40”) that took effect July 1, 2017. It increased the state’s gasoline tax and imposed fee increases on taxpayers when they lease, buy, register, obtain license tags for, and pay property taxes on:

• motor vehicles including family vans, pickups, and motorcycles
• recreational vehicles including travel trailers and fifth wheels
• buses, large commercial vans, and tractor-trailers
• boats and aircraft
• self-propelled light construction equipment

Act 40 provided that the revenues from these higher taxes and fees be deposited in a special account called the “Infrastructure Maintenance Trust Fund” and used only to repair, maintain, and improve South Carolina’s existing highway system. For more details refer to the legislation.

The Act also created the “Safety Maintenance Account” to allow motorists to take state income tax credits for amounts they spend on preventive maintenance for their vehicles, subject to certain limits. Get more information about these tax credits.

The new revenue is being collected from motorists in part through a tax increase on every gallon of fuel purchased. While this tax hike will eventually total 12 cents per gallon, at any point in time it will be difficult for a motorist to feel the increase because it’s being phased in over six years in annual increments of only 2 cents.

On the other hand, the additional taxes and fees that will now be charged to buy and register a vehicle are much more noticeable, as anyone can attest who’s gone through that experience in recent months. Whether a motorist pays in small increases at the gas pumps or in large amounts when buying and registering a car, Act 40 mandated that a great amount of new money would be involuntarily transferred from taxpayers to state government. The state projects that Act 40 will raise about $175 million in new revenue in the first fiscal year, with annual revenues gradually increasing to $625 million during the six-year phase-in.

The bill’s expressed justification for these increased taxes and fees was that additional money was needed to fix our state’s ill-maintained highway system. Because Act 40 used the condition of our state highways to justify raising our taxes by $625 million a year in perpetuity, it’s essential that everyone is able to see that this new revenue is properly accounted for and used for no other purpose but to repair, maintain, and improve our state’s highway system.

The links below for the Infrastructure Maintenance Trust Fund (IMTF) and the Safety Maintenance Account (SMA) open to tables showing monthly and year-to-date collections of the new taxes and fees imposed by Act 40. The tables also identify the state agencies responsible for collecting the new taxes and fees. Once the S.C. Department of Transportation establishes projects and begins spending from the IMTF we will also provide spending details on those projects. Likewise, as information becomes available we will provide the total amount of preventive maintenance income tax credits claimed annually by taxpayers that are funded from the SMA.

Infrastructure Maintenance Trust Fund

Safety Maintenance Account