In 2017, the South Carolina General Assembly passed the Infrastructure and Economic Development Reform Act as an initiative to raise revenue for transportation projects coupled with an inevitable tax increase.
Specifically, the act provided for a 12-cent increase in the state’s motor fuel user fee each July from 2017 to 2022, for a total increase from 16 cents per gallon to 28 cents per gallon. The funds raised by the increase are to be used for repairs, maintenance, and improvements to South Carolina’s existing transportation system.
To offset this increase, the General Assembly provided taxpayer residents an income tax credit – the motor fuel tax credit – for up to two vehicle or motorcycles, or for up to four vehicles depending on the name on the registration. The tax credit is calculated based on motor fuel purchased in South Carolina and preventative vehicle maintenance performed in South Carolina (i.e., new tires and oil changes). Moreover, the tax credit may not exceed the lesser of the two amounts.
The motor fuel tax credit was a way to imply that the higher gas tax would not apply to state residents. However, the legislature is not fully funding the tax credits, so taxpayers will only be refunded a portion of the tax money.
Unfortunately, the motor fuel tax credit is not much money on an individual basis. However, if you drive a larger vehicle or more miles on average, then this tax credit may be beneficial.
For the 2019 tax year, taxpayers will be able to receive $.05 on each gallon bought. The table below illustrates the potential refundable amount of the credit:
| Tank Capacity in Gallons | Tank Fill-Ups per Month | Refundable Tax Credit |
| 10 | 4
6 8 |
$24.00
$36.00 $48.00 |
| 12 | 4
6 8 |
$28.80
$43.20 $57.60 |
| 15 | 4
6 8 |
$36.00
$54.00 $72.00 |
| 20 | 4
6 8 |
$48.00
$72.00 $96.00 |
| 25 | 4
6 8 |
$60.00
$90.00 $120.00 |
Because the tax credit is calculated on the lesser amount of either the extra fuel tax paid or preventative maintenance costs, it is imperative for the taxpayer to keep receipts to prove the date, amount, and the type of preventative maintenance expenses incurred in South Carolina for each vehicle and receipts to prove the number of gallons of motor fuel purchased in South Carolina for each vehicle.
To claim the motor fuel tax credit, the taxpayer must include South Carolina Form 941 with his or her tax return. For additional information please find the applicable SC Revenue Ruling here: https://dor.sc.gov/resources-site/lawandpolicy/Advisory%20Opinions/RR17-6.pdf
If you have questions about the SC Motor Fuel Tax Credit or any questions in general about the 2019 filing season, contact Onyx Tax today.