South Carolina Returns to Simplified Sales Tax Formula

Energy Star Incentive Expires July 1, 2024.  Sales Tax for All Energy Efficient Homes Will Be $300

Starting in July 2024, both Energy Star homes and houses built to SC energy standards will be taxed at the same rate. 

The state’s Energy Star tax incentive program expires July 1, 2024.  It eliminated sales tax for homes meeting Energy Star standards and allowed qualifying purchasers to apply for a $750 state income tax deduction.

The legislature approved the incentive in 2009 with a July 1, 2024 expiration date

South Carolina’s other energy efficiency sales tax incentive remains on the books. That law sets the sales tax on homes that meet state standards at $300.  The standards are:  R30 roof insulation;  R11 walls; and R19 floor insulation–plus energy efficient windows and doors.  There can be trade-offs in the Insulation for ceilings, walls and floors can as long as the home has the same over-all efficiency.

In a nutshell, Energy Star homes will now fall into the $300 tax category. In order to qualify for the reduced $300 tax rate the manufacturer must place a state approved sticker in the breaker showing the calculations have been done.  Retailers record the homes energy certification number on a state form and save it for three years.

The industry asked the legislature to give the Energy Star incentive another five-year extension.  But attitudes toward tax incentives have changed at the Statehouse, according to MHISC Executive Committee member Joanne Polston.

“Many legislators will go along with a one-time incentive to promote things like energy efficiency or economic development.   After that they want the product to sink or swim passed on consumer acceptance,” she said.

“Of course we pushed hard to save the Energy Star tax formula,” Polston said. “ But if they had to have only one, many retailers prefer the $300 efficiency incentive. The Energy Star incentive saved customers hundred of dollars; the state incentive saves thousands of dollars.”    The Energy Star program required that not just the home but the installation of each home meet federal specs. There were twice as many forms involved that had to be provided to the homebuyer, manufacturer, retailer and a federal database.