SC Senate approves boat tax reduction, dumps controversial motor tax
South Carolina’s senators have given the green light to a change in how state and local governments tax watercraft, moving the bill one step closer to the governor’s desk.
The state Senate on Wednesday voted 39-1 to advance a bill that would cut the state’s tax on boats nearly in half and eliminate a separate tax on outboard motors.
Besides some technical changes, the bill is the same as one that passed the S.C. House of Representatives last year. The bill will still need to pass a largely pro forma third reading and the Senate and House members must concur with any changes, but Wednesday’s nearly unanimous vote means the bill is likely to become law before the current legislative session ends in May.
But the lopsided vote didn’t mean senators didn’t have qualms about the bill, with many raising concerns during the floor debate about how the loss of revenue will affect local government’s budgets.
As passed, the bill would cut South Carolina’s boat tax from 10.5% — which critics have long pointed out is one of the highest in the nation — down to 6%, a change that Sen. Danny Verdin, R-Laurens, said would save taxpayers $51.4 million a year.
To ease the impact on local governments that collect that revenue, the change will be phased in over three years. By eliminating the separate tax on motors, it would also do away with what advocates for the bill have called a double taxation of boat owners.
But some senators warned local governments may have to find alternate funding to replace the boat money if they want to avoid cutting public services.
“If we don’t have a mechanism to hold them harmless, you’re going to shift the obligation on people who have enough money to buy a boat onto people who don’t,” said Sen. Brad Hutto, D-Orangeburg.
Hutto proposed an amendment that would have had the state provide a “backstop” to make up the difference in funding for local governments. He argued wealthier counties would be better able to absorb the change than some of the areas he represents.
“We don’t have a million-dollar house in the whole county,” he said.
Others pointed out that it was the S.C. Association of Counties’ sign off on the three-year phase in that ultimately allowed the bill to move out of the House.
“We wouldn’t be getting here without the concurrence or, I’m not going to say blessing, but without having your folks from back home ringing your phone off the hook, saying ‘you can’t transfer more burden to the counties,’” Verdin said. “I think they’ve sold it because my phone has stopped ringing off the hook from my auditors and my county council chairmen.”
Proponents also believe a lower tax rate would lead to more boat registration in the state, and lead boat owners who keep their larger watercraft out of state to bring them back to South Carolina, potentially increasing revenue.
But while the bill would bring the Palmetto State more in line with the southeastern average, Sen. Ed Sutton, D-Charleston, was skeptical South Carolina would be able to out-compete jurisdiction without a property tax on boats.
“A lot of those folks are paying zero in taxes in Delaware or in the Bahamas,” Sutton said. “I don’t think we’re going to see larger sportfishing boats, because they still would have to pay taxes.”
Hutto’s proposed amendment was voted down 28-12, allowing the tax cut to move forward. Even most of those who voiced concerns ultimately voted for it.
This story was originally published March 5, 2026 at 6:30 AM with the headline "SC Senate approves boat tax reduction, dumps controversial motor tax."
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