Greenville, NC: How Greenville changed SC’s penny sales tax laws

Four cities in Greenville County have placed a penny sales tax proposal on the ballot for the upcoming November general election. It is a first for cities in South Carolina, driven by a nearly quarter-century effort by Greenville leaders and state lawmakers.

Greenville, Simpsonville, Mauldin and Travelers Rest pursued the opportunity after the South Carolina General Assembly passed the Municipal Tax Relief Act in May. The new law allows eligible cities to impose an additional 1% local sales tax for eight years if approved by voters, a power previously only given to counties.

In addition, Greenville County is once again asking voters to approve an additional penny on every dollar of eligible sales to fund roads and infrastructure work – a request that has been rejected three times since 2002.

The new law requires cities to spend the tax revenue on specific capital projects such as roads, infrastructure and buildings. For example, the city of Greenville has proposed a list of 521 projects to fund using the penny sales tax. It also requires cities to spend at least 20% of the revenue generated toward property tax relief for owner-occupied homes within the municipality. The property tax stipulation does not apply to the county’s referendum.

20 years in the making

Greenville city leaders have pushed for this legislation for more than two decades. Advocacy efforts began after voters in Greenville County first rejected a local sales tax in 2002. Greenville Mayor Knox White said the penny sales tax would have helped the city pay for necessary neighborhood infrastructure such as sidewalks and street resurfacing projects.

The city approached the Greenville County Legislative Delegation about changing the law to allow municipalities to levy a penny sales tax shortly after the 2002 referendum failed. White said that the first bill, H.3903, was introduced in the state House of Representatives in 2003. However, the legislation ultimately died in the state Senate.

“I don’t know how many times it was introduced and failed,” White said. “We had to be patient.”

Over the years, Greenville County has made other attempts impose a tax to fund critical road and infrastructure projects. Referendums were added to the 2014 and 2024 general election ballots but failed to pass. White said that while Greenville County voters rejected the tax proposals, the measures were overwhelmingly supported by voters inside Greenville’s city limits.

City leaders and the local legislative delegation renewed efforts to extend taxing power to municipalities following the 2024 election. White credits the success of passing the Municipal Tax Relief Act to the local legislators currently in office. State Sen. Jason Elliott (R-Greenville) and Sen. Ross Turner (R-Columbia) introduced the Municipal Tax Relief Act in January 2026.

Why now?

To understand why the municipal measure gained traction this time around, it’s important to remember that by 2026, 44 out of the 46 counties in South Carolina had passed some form of local option sales tax since it became available in the late 1990s. The only two counties that never passed a penny sales tax are Greenville and Oconee.

From a legislative perspective, Elliott said Greenville County’s multiple unsuccessful attempts made it increasingly difficult for its legislative delegation to advocate for increased state funding for roads in the county. Nearly every other county in the state had taken the initiative to meet their own infrastructure needs.

As a former state House member, Elliott said getting the legislation across the finish line required work in both chambers to build a coalition of support. In the state House, Rep. Bruce Bannister (R-Greenville), another member of Greenville County’s legislative delegation and chairman of the House Ways and Means Committee, played a crucial role in building enough support to get the bill passed, Elliott said.

Those efforts might have been stymied without crucial buy-in from the Municipal Association of South Carolina and the South Carolina Association of Counties. Limiting the law to counties without a local option tax and adding the property tax relief component helped earn the support of both associations.

Elliott said the hard reality is that state road spending gets prioritized based on which local governments have skin in the game. For instance, the city of Greenville would generate more than $500 million over eight years for infrastructure needs under the new law — with 20% of that going toward property tax relief.

“There is no way that the legislature is going to appropriate that kind of funding to the city of Greenville or any municipality in Greenville County,” Elliott said.

What happens next

What no one expected was Greenville County Council pursuing a transportation penny sales tax again so soon after voters narrowly defeated the last effort. Elliott said that because of the framing of the Municipal Tax Relief Act and its limitation to cities in counties without a local option tax, municipal governments in Greenville and Oconee counties have a narrow window of opportunity to take advantage of the new law.

“It would be governance and political malpractice (for the cities) not to do it now if you’re going to be barred from doing it if the county is successful,” Elliott said.

Another issue is how the new law includes a property tax abatement, while existing measures open to counties do not. Elliott said revisiting local option tax laws governing counties and amending them to include a property tax relief component will be a priority in the next legislative session.

Ultimately, “it’s the voters determining that they are going to use a different avenue to meet their infrastructure needs,” Elliott said.

Penny tax proposals

South Carolina currently has three counties without a local sales tax: Greenville, Oconee and Beaufort. Cities in those counties are eligible to propose a penny sales tax based on the Municipal Tax Relief Act. Here’s a look at what’s happening in the other two counties.

• Oconee County: Tax referendums have been placed on the November ballot in the cities of Walhalla, West Union, Seneca and Westminster.
• Beaufort County: Beaufort County Council has placed a transportation penny sales tax proposal on the ballot.

Property tax relief

The Municipal Tax Relief Act requires municipalities to use at least 20% of the generated tax revenue as a credit on property tax bills for owner-occupied homes. It does not mean homeowners will see a 20% reduction in their tax bill. The money collected will be proportionally divided among all property owners. For example, the city of Greenville estimates a home valued at $250,000 will see an annual reduction of about $300 in property taxes. Travelers Rest estimates an annual rebate of $278 on a home valued at $250,000.

Past penny sales tax results

Greenville County has made several attempts to impose a local sales tax to fund roads and infrastructure projects.

Common penny sales tax questions

How does a penny sales tax work? One cent per dollar is added to eligible purchases within that city or county.

Are there restrictions on how the money is used? Yes, funds can only be used for roads, infrastructure and some capital projects.

What if Greenville County and a city both pass a penny sales tax referendum? Eligible purchases within that city will see a 2-cent additional tax.

What purchases are exempt from the additional tax? While there are exceptions, gas, utilities, rent, mortgages, most groceries, unprepared food and prescriptions are not subject to a penny tax.