South Carolina's new income tax law, signed by Governor Henry McMaster, aims to simplify the tax system by reducing the number of brackets from three to two, effective from the 2026 tax year. Under the new structure, individuals will pay 1.99% on income up to $30,000 and 5.21% on income above that, down from the current top rate of 6%. The legislation is projected to save taxpayers between $309 million and $325 million in its first phase, benefiting approximately 43% of taxpayers. High earners, particularly the top 1% with average incomes around $1.7 million, stand to gain the most, saving about $3,139 annually. In contrast, middle-income and working-class families are expected to save around $146 per year, while the lowest 20% of earners will see no tax savings. Critics express concerns that the removal of deductions may lead to increased taxes for about 23% of taxpayers, particularly those who itemize deductions. They also warn that fully eliminating the income tax could reduce state revenue by 45%, potentially impacting public services. Supporters argue that the law will enhance South Carolina's competitiveness in attracting businesses.