SOUTH CAROLINA - As the Palmetto State enters 2026, residents will see several legislative changes intended to put more money back in their pockets, modernize government services, and improve road safety. From significant tax cuts to major reforms for small businesses, here are five of the most important South Carolina laws and administrative changes taking effect on January 1, 2026.
1. Individual Income Tax Cut and Withholding Update
South Carolina continues its multi-year effort to lower the tax burden on its residents.
- The Change: Following a series of tax reforms passed in previous sessions, the South Carolina Department of Revenue (SCDOR) has officially updated the State withholding tax tables for 2026.
- The Impact: For most taxpayers, this means a slight increase in take-home pay as the state continues to compress tax brackets and lower the top marginal rate. Employers are required to begin using these new tables and the updated 2026 SC W-4 form on the first day of the year.
2. The "Justice Act" (Liquor Liability Reform)
In response to a crisis that forced many small bars and restaurants to close due to skyrocketing insurance premiums, the "Justice Act" officially takes effect on New Year's Day.
- The 50% Cap: If a business is found partially at fault for an incident involving an overserved patron (such as a DUI), its liability is now capped at 50% of the actual damages, provided the business was not the sole cause of the harm.
- Proportionate Fault: For the first time, drunk drivers will be included on civil verdict forms, ensuring that the person who chose to drive impaired is held primarily responsible for the damages they caused.
3. Mandatory Alcohol Server Training
Tied closely to the liquor liability reform is a new mandate for anyone working in the hospitality industry.
- The Requirement: Beginning January 1, every server and manager at establishments that serve alcohol for on-premises consumption must complete a state-approved Alcohol Server Training program.
- The Timeline: New employees must complete this training within 60 days of being hired.
- The Benefit: Businesses that ensure all staff are trained may be eligible for significant credits on their liquor liability insurance premiums, a move intended to stabilize the hospitality market in South Carolina.
4. SCDMV Security and "Dot-Gov" Migration
The South Carolina Department of Motor Vehicles is undergoing a massive digital overhaul to protect residents from fraud and identity theft.
- New Website: On January 5, 2026, the agency will officially move its online home to dmv.sc.gov. This shift to a verified government domain is designed to help residents distinguish the legitimate agency from phishing sites.
- Centralized Issuance: The state is also transitioning to a "central issuance" model for driver's licenses. While you still visit a branch to apply, your permanent, high-security laser-engraved card will now be mailed to you from a secure facility rather than printed on-site.
5. Hands-Free Law: The End of "Warning Season."
While SouthCarolina'ss "Hands-Free" law technically passed in 2025, the grace period for drivers officially ends as the new year begins.
- The Enforcement: Since the law took effect, police have primarily issued warnings to drivers caught using a cell phone while operating a vehicle.
- The Fines: Starting in early 2026, the "warning phase" is over. Drivers caught with a phone in their hand will now face fines and points on their license. Under the law, you must use hands-free technology (such as Bluetooth or a mount) when you need to use your phone while driving.
Honorable Mention: Law Enforcement Privacy Protection
Taking effect in late January, the Law Enforcement Personal Privacy Protection Act (S. 126) will allow active and former law enforcement officers, judges, and prosecutors to request that their home addresses and personal contact information be restricted from public access on government websites and databases to ensure their safety.
