Fountain Inn City Council Convenes Special Meeting to Evaluate New State Municipal Tax Relief Act

The Fountain Inn City Council convened a special called meeting on Tuesday, June 23, 2026, to seek legal counsel regarding a newly enacted state law that could alter local tax structures and infrastructure funding. The exclusive focus of the executive session was to receive legal advice concerning the South Carolina Municipal Tax Relief Act.

The briefing follows the council’s urgent scheduling of the closed-door discussions.

Understanding the Municipal Tax Relief Act

The South Carolina Municipal Tax Relief Act was officially signed into law by Governor Henry McMaster on May 19, 2026, and took effect immediately. The legislation represents a significant shift in financial options for local governments across the state, particularly for cities seeking flexible revenue alternatives.

Under the provisions of the new law, qualifying municipal governing bodies are authorized to implement a local sales and use tax of up to 1%. However, the tax cannot be enacted unilaterally by council vote; it is strictly subject to a public referendum held during a standard general election, where local voters must directly approve or reject the ballot measure.

Strict Allocations for Property Tax Credits and Projects

For municipalities that choose to pursue the “penny tax” and secure voter approval, the law mandates strict guidelines on how the generated revenue must be managed:

• Mandatory Property Tax Relief: A minimum of 20% of all revenue collected through the 1% municipal sales tax must be legally allocated to provide a direct, nonrefundable credit against municipal property taxes for owner-occupied residential homes.

• Capital Infrastructure Funding: Any remaining revenue not dedicated to residential tax relief can be leveraged to fund essential, core government services and localized infrastructure projects. These eligible expenditures include the construction, repair, and overall improvement of public roads, bridges, drainage systems, or emergency services structures like local police and fire stations.

The tax is also designed with an inherent expiration date, maintaining a maximum lifespan of eight years before it automatically sunsets, unless voters choose to renew it through a subsequent general election referendum.

Next Steps for Fountain Inn

Because the Municipal Tax Relief Act contains strict regulations—including a cap ensuring cumulative local sales tax rates do not exceed 9% in any portion of the municipality—the Fountain Inn City Council utilized the special meeting to review legal parameters with the city attorney.

While council members did not take immediate public action following the executive session, the discussions indicate that city leadership is carefully analyzing whether a future sales tax referendum could effectively alleviate residential property tax burdens while simultaneously financing much-needed municipal infrastructure upgrades.