What is the tax rate range imposed on excess contributions to a Catastrophe Savings Account in South Carolina?

The tax rate range imposed on excess contributions to a Catastrophe Savings Account in South Carolina is 3% to 7%. This specific rate is designed to address funds that exceed the allowable contribution limits established for these accounts.

Catastrophe Savings Accounts (CSAs) are intended to help South Carolina residents save for catastrophic events, particularly related to natural disasters. The state provides certain tax advantages to encourage individuals to contribute to these accounts, but it also sets limits on how much can be contributed to ensure the program's effectiveness and sustainability.

When contributions exceed these limits, the tax rate reflects a penalty aimed at discouraging over-contribution, which helps maintain the integrity of the savings program. Therefore, understanding that this penalty exists within the specified range, which falls between 3% and 7%, is crucial for individuals looking to manage their contributions effectively and stay compliant with state tax regulations.