SC counties fear losing boat tax revenue, seek to delay push for cuts
County leaders are taking aim at a bill making its way through the S.C. Legislature that would change how local governments can tax motorboats, and potentially cut back counties’ tax revenues.
A boon for boat owners would be a challenge for other residents, the group that represents the state’s county governments says.
“The current proposal shifts taxes from a minority of boat owners to a majority of non-boat owners,” said Josh Rhodes, deputy executive director of the S.C. Association of Counties. “We’re saying your taxes will have to go up, because these services still have to be paid for.”
Lawmakers say the bill, H.3858, will reduce South Carolina’s tax on boat owners, which critics have labeled some of the highest in the country, from 10.5% to 5.25%. The bill would also eliminate the separate property tax on a boat’s outboard motor, something that opponents have said amounts to double taxation.
But the association that represents South Carolina’s 46 counties in Columbia says the bill, which was approved by the S.C. House Ways and Means Committee on Wednesday, will “drastically reduce local revenues upon which law enforcement, EMS and fire funding rely.” Two-thirds of that funding loss will hit schools, the association said in a print out.
Who should pay?
Any revenue lost will have to be made up by increases on other taxpayers, potentially increasing taxes on cars, commercial property, rental property and small businesses, the Association of Counties says, adding that the tax relief the bill envisions is disproportionate. Out of 5 million people in South Carolina, there are only 216,000 registered boats.
“This bill benefits 5% of the population at the expense of 95%,” the association’s brief against the bill reads. “This is not broad tax reform but a targeted special interest tax break that hurts way more people than it helps. If you don’t own a boat you lose under this plan.”
But supporters of the changes frame them as a basic matter of fairness. A review of county tax records around the state found examples where taxpayers’ boats were taxed at a value that seemed to include the value of the attached motor, in addition to the separate motor tax.
Saluda County Auditor Memmus Forrest, whose office was dinged for several such examples, said county tax notices may have unintentionally used the wrong valuation in assessing some taxes. But he also said counties also often have incomplete information on the model of boat being assessed.
“I don’t have the staff or the time, and neither does any other county, to go out and look at your boat to find the right model and any accessories on it,” Forrest said.
He said the auditor’s office often depends on taxpayers themselves to challenge an assessment to make specific adjustments. Forrest recommends boat owners have a bill of sale on their watercraft to show the price they actually paid for it.
South Carolina’s tax rate on boats is also often as much as three times what a boat owner would pay in neighboring counties in North Carolina or Georgia.
“Thousands have reached out to their House and Senate members to say they want fairness on boat property taxes,” said Gettys Brannon, president and CEO of the S.C. Boating and Fishing Alliance. “We have the highest boat taxes in the country and it’s not particularly close.”
How much revenue would be lost?
Rhodes estimates the bill could cost local governments a total of $59 million, based on state data. But Brannon said boat taxes account for less than 1% of a county’s tax rolls.
“The idea that fire stations will close down because of this is a false choice,” he said.
Instead, he thinks counties could benefit from the change. Brannon said that since Beaufort County cut its own boat tax in half, it has seen a 40% jump in boat registrations, compared to 21% in neighboring Charleston County.
“It’s simple economics that if you lower the cost of something, more people will buy it and more people will keep and register their boats here,” Brannon said. “Nearly 80% [of boats worth more than $120,000] now are registered out of state.”
Lawmakers have little time to make the bill into law this year. The House and Senate would both have to pass the bill unchanged before the legislative session ends for the year next Thursday. If legislators hit pause on the bill, Rhodes said, the association’s legislative committee could work on solutions that would alleviate counties’ concerns about lost revenue.
The tax change could be timed to go into effect during counties’ reassessment period, when local governments routinely re-evaluate tax rates because of rising property values.
“I suspect that might work, if we have time to study and look at it,” Rhodes said.
He argues that the reason South Carolina’s boat taxes are so high is that local school districts are restricted by state law in how much revenue they can raise from taxpayers’ homes, which leads them to draw their operating budgets from other sources.
“Until that problem is addressed, it’s not going to be fixed,” Rhodes said.
Rhodes said it “makes sense” to combine the tax on boats and their motors, but was reluctant to see local governments’ tax revenues cut in half.
“A special interest tax exemption makes the entire tax code worse,” he said.
This story was originally published May 2, 2025 at 7:55 AM.
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