Business taxes
South Carolina Use Tax: What You Owe on Untaxed Purchases and How to Report It
South Carolina use tax is owed by the buyer when tangible goods are bought for use in South Carolina and the seller did not collect South Carolina sales tax. The rate is the same as sales tax: the 6% state rate plus the local rate where the item is used. Individuals usually report it on their income tax return; businesses report it on a sales and use tax return or a UT-3.
- The buyer is liable until the tax is paid (S.C. Code 12-36-1330). A receipt showing South Carolina tax charged by a licensed seller ends that liability.
- The rate is set by where the item is used, stored or consumed, not where it was bought: 6% state plus the local rate for that location.
- Sales tax paid to another state is credited, purchase by purchase. There is no refund if the other state's tax was higher, and no credit for tax paid in another country.
- A business that is not a licensed retailer and buys regularly from out of state needs a free use tax registration and files the ST-3; an occasional buyer can use the UT-3.
- Goods bought tax-free for resale and then used in the business become taxable when they are withdrawn from stock.
Who this applies to
- Businesses buying equipment, furniture or supplies from out-of-state vendors that do not charge South Carolina tax
- Retailers that take items out of resale inventory for their own use
- Individuals buying online, by catalog or on trips without South Carolina tax being charged
- Contractors bringing equipment into South Carolina from jobs in other states
Who this may not apply to
- Purchases where the seller charged the full South Carolina state and local tax
- Items that would be exempt from South Carolina sales tax, such as prescription medicine
- Motor vehicles bought from out-of-state sellers, which pay the infrastructure maintenance fee at registration instead
- Property bought for use in another state and substantially used there before you moved
One tax, collected two ways
South Carolina adopted its use tax in 1951, the same year as its sales tax, and the two are designed to meet in the middle. Sales tax is collected by the seller. Use tax is imposed on the storage, use or consumption in South Carolina of tangible personal property bought at retail (S.C. Code 12-36-1310), and the buyer owes it when the seller did not collect. Either sales tax or use tax applies to a transaction, never both.
Out-of-state sellers with more than $100,000 of gross revenue from sales into South Carolina in the current or prior calendar year must hold a retail license and collect South Carolina tax themselves. Use tax shows up on the purchases from sellers who do not: smaller out-of-state vendors, foreign sellers, equipment suppliers that ship without charging tax, and things bought in person in another state. The seller's side of the obligation is covered in our sales tax article.
The rate, and the credit for tax paid elsewhere
The use tax rate equals the sales tax rate for the place where the item will be used: the 6% state rate plus that county's local rate. A purchase made in a South Carolina county with a lower local rate and used in a county with a higher one leaves the difference in local tax due. Individuals 85 and older get a 1% reduction in the state rate on purchases for their own personal use.
Under S.C. Code 12-36-1310(C), sales or use tax actually paid to another state is credited against South Carolina use tax. SCDOR Revenue Ruling 18-9 sets out how that works in practice:
| Tax paid where you bought it | South Carolina rate where it is used | South Carolina use tax due |
|---|---|---|
| None | 7% (6% state + 1% local) | The full 7% |
| 4% | 7% | 3%, the difference |
| 8.75% | 6% | Nothing, and no refund of the extra 2.75% |
| Foreign VAT or sales tax | 7% | The full 7%; no credit for tax paid in another country or a U.S. territory |
Where businesses get caught
- Capital purchases. A shop buying a machine, a dental practice buying chairs, or an office buying furniture from an out-of-state supplier that did not charge South Carolina tax owes use tax on it. A single large item can carry more use tax than a year of small online orders.
- Withdrawals from inventory. The tax base includes the fair market value of property bought at wholesale and then withdrawn from stock for use in the business or by the person withdrawing it (S.C. Code 12-36-90 and 12-36-110). A retailer that takes a display unit, a laptop or supplies out of resale inventory owes tax on that withdrawal.
- Leases and rentals. Use tax applies to leases and rentals of tangible personal property at retail, not only purchases.
- Construction equipment. Transient construction property brought into South Carolina is taxed on a prorated basis under S.C. Code 12-36-1320, with a prorated credit for the other state's tax only if that state grants a similar credit.
Use tax is normally assessed within 36 months of when the return was filed or due. When SCDOR receives the information from another state, a regional or national tax organization or the federal government, it can assess within 12 months of receiving it, up to 72 months after the tax could have been paid without penalty (S.C. Code 12-54-85(C)(5)). Keep purchase records for six years.
How a business reports it
- Licensed retailers report use tax on their own purchases on the worksheet of the ST-3, with the ST-389 for local taxes. No separate registration is needed.
- A business or nonprofit that is not a licensed retailer and regularly buys taxable property for its own use from out of state needs a use tax registration, which SCDOR issues free of charge. It then files the ST-3 for its filing period.
- A non-retailer that buys from out of state only occasionally can report a single purchase, or a month's, quarter's or year's purchases, on the UT-3.
- Boats, motors and airplanes go on the ST-236, the Casual or Use Excise Tax Return, or are paid when the craft is registered or titled.
- Sales and use tax returns are due by the 20th of the month after the filing period. A business with $15,000 or more of liability per period must file and pay electronically through MyDORWAY.
How individuals report it
The 2025 SC1040 instructions give individuals three options: report the tax on line 26 of the SC1040 using the use tax worksheet in the instructions, pay through MyDORWAY, or mail a UT-3 with a check. If you paid during the year or owe nothing, you check the box on line 26. Use tax has no minimum filing threshold, so a retiree with no income tax filing requirement can still owe it and would use the UT-3.
H.4216 rewrote the individual income tax for 2026 but did not amend the use tax. The 2026 SC1040 is being redesigned, so the line number may change; the obligation does not.
Moving to South Carolina
Household goods you bring when you move are generally not taxed if they were bought for use in your former state and substantially used there first. Something bought shortly before the move and barely used elsewhere can be taxed when it arrives, less any sales tax paid to the other state. There is no fixed safe-harbor period.
Want this worked out for your situation?
The rules above are general. Bring your numbers to a free consultation, in person on James Island or by video, and we will tell you how they apply to you.
Business Tax — Year-round planning, corporate returns, pass-through entities and multi-state compliance.
Sources
- SCDOR — Use tax
- SCDOR — Revenue Ruling 18-9, Use Tax Information for Individuals, Businesses and Nonprofits
- SCDOR — Sales and Use Tax Manual, Chapter 23 FAQs (September 2025)
- SCDOR — 2025 SC1040 individual income tax booklet (line 26, use tax worksheet)
- S.C. Code Title 12, Chapter 36 (sales and use tax)
South Carolina publishes new guidance and local governments change their rates, so check the source pages for anything that has moved since the date above. The information on this site is general in nature and is not tax, legal, or accounting advice for your situation. Tax law changes and the right answer depends on facts we would need to review with you. Please speak with a qualified professional before acting on anything you read here.
Questions people ask about this
Do I owe South Carolina use tax on an online purchase if the seller did not charge tax?
Yes. If an out-of-state seller did not charge South Carolina sales or use tax on an item delivered to you in South Carolina, you owe the use tax at the rate for the place where you use it, unless the item is exempt.
Can a business without a retail license pay use tax regularly?
Yes. A business or nonprofit that is not a licensed retailer but regularly buys taxable items from out of state can get a use tax registration from SCDOR at no charge and report the tax on the ST-3. Occasional purchases can go on a UT-3 instead.
Is there a minimum amount before an individual has to report use tax?
No. Unlike income tax, use tax has no minimum filing threshold. If you owe it, you report it, either on your SC1040, through MyDORWAY or on a UT-3.
How far back can SCDOR assess use tax?
Generally 36 months from when the return was filed or due. If SCDOR learns of a purchase from another state, a tax administration organization or the federal government, it can assess within 12 months of receiving the information, up to 72 months after the tax could have been paid without penalty.
Keep reading
- South Carolina Sales Tax for Small BusinessSales tax is the obligation small businesses most often discover late, because nothing about it is triggered by profit. It is triggered by making a sale, and it starts on the first one.
- Sales tax rates by townEvery municipality and unincorporated area in Charleston and Berkeley counties has a 9% combined sales tax rate: the 6% state rate plus 3% in local taxes. Dorchester County is 7%, which matters because Summerville and North Charleston both extend into it. The rate that applies is the one where the sale is delivered, not where your business is based.
- Moving to SC: a tax checklistThe tax side of a move to South Carolina comes down to a handful of steps: pin down the date you became domiciled here, get South Carolina tax withheld or paid from that date, apply for the reduced property tax ratio on your new home, and plan your first return as a part-year resident. From 2026 the state return also works differently from the federal one, starting from federal AGI with South Carolina's own deduction and two tax rates.
- SC business personal property taxSouth Carolina taxes the furniture, fixtures and equipment a business uses. You report their cost and income tax depreciation on an annual return, the net value is assessed at 10.5%, and the county bills the tax at local millage, due January 15. Starting with property tax year 2027, Act 243 of 2026 exempts the first $10,000 of net depreciated value for qualifying small businesses and sends every business personal property return to SCDOR.
- Active trade or business incomeSouth Carolina lets owners of sole proprietorships, partnerships, S corporations and LLCs taxed as one of those choose a 3% rate on active trade or business income instead of the regular individual rates. Individuals elect it each year on Form I-335; a qualifying partnership or S corporation can instead elect to pay the 3% tax itself, computed on Form I-435. H.4216 did not amend the statute, but SCDOR has not yet said how the election fits the new 2026 rate structure.
- SC bonus depreciation addbackSouth Carolina does not allow federal bonus depreciation under IRC Section 168(k). In the year an asset is placed in service, you add back the difference between your federal depreciation and the depreciation you would have claimed without bonus, then take extra South Carolina depreciation in the later years of the same recovery period. The asset carries a higher South Carolina basis until it is fully depreciated or sold.
- SC business license taxSouth Carolina has no statewide business license. Cities and counties that choose to levy one charge a business license tax, an excise on the privilege of doing business that is measured by gross income, not profit. Since Act 176 standardized the rules, every jurisdiction that levies it uses a May 1 to April 30 license year, an April 30 renewal date, a standard application and a common class schedule, but each sets its own rates.
- South Carolina tax guideHow South Carolina taxes income, businesses and property, and what the Charleston area adds on top, with the state or local source beside every rule.
Talk to a tax expert
Tell us what you are dealing with and we will tell you how we would handle it.