Doing Business Here

South Carolina Incentives

Businesses locating in South Carolina will benefit from

One of the lowest corporate
income tax rates in the
Southeast U.S.

A business-friendly method to
determine income subject to
the state’s corporate income
tax rate

Numerous credits and methods
to reduce and eliminate
corporate income tax liability

Corporate Income Tax Incentives

South Carolina provides a myriad of credits that can completely eliminate a company’s corporate income tax liability for up to 10, or in some cases, 15 years.

20% Additional Credit for HQ’s
Personal Property Costs
5% Credit of the Taxpayer’s
Qualified Research Expenses
10%Income Tax Credit on
Renewable Energy Systems
York County
Tier 1
$1,500

Lancaster County
Tier 2
$2,750

Chester County
Tier 4
$8,000

Fairfield County
Tier 3
$4,250

Richland County
Tier 1
$1,500
Tax Credits Map

This map identifies I-77 Alliance’s counties, their 2017 development designations, and the credit amount available per new job for Jobs Tax Credits.

The Jobs Tax Credit is a valuable financial incentive that rewards new and expanding companies for creating jobs in South Carolina. In order to qualify, companies must create and maintain a certain number of net new jobs in a taxable year. The number of new jobs is calculated as the increase in the average monthly employment from one year to the next.

Types of Businesses That Qualify for the Jobs Tax Credit

Businesses (Non-Service Related Facilities) Jobs Requirement
Manufacturing
Processing
Agricultural Packaging
Warehousing and Distribution
Research and Development
Agribusiness Operations
Qualifying Technology Intensive Facilities
Corporate office facilities housing a majority of the headquarters functions
10 New Jobs
Monthly Average of 10 net new jobs must be created
Businesses (Service-Related Facilities) Jobs Requirement
Facility is engaged in an activity listed under the North American Industry Classification System Manual Section 62, subsectors 621, 622 and 623 or Section 4881, subsector 488190 10 New Jobs
Monthly Average of 10 net new jobs must be created
In a Tier 4 County 10 New Jobs
Monthly Average of 10 net new jobs must be created
In a Tier 1, 2 or 3 County Facility must create in a single taxable year a monthly average of:
  • 175 new jobs;
  • 150 new jobs in a building that has been vacant for at least 12 months;
  • 100 new jobs with an average salary 1.5 times the lower of the state or the county per capita income;
  • 50 new jobs with an average salary 2 times the lower of the state or the county per capita income; or
  • 25 new jobs with an average salary 2.5 times the lower of the state or the county per capita income.

Small Business Jobs Tax Credit

Qualification Requirements

  • Job Creation - monthly average of 2 net new jobs, instead of 10.
  • Employees – fewer than 99 employees worldwide
  • Business Types - Manufacturing, processing, agricultural packaging, warehousing and distribution, research and development, agribusiness, or qualified technology intensive facility or a corporate office that has fewer than 99 employees worldwide

Hourly Wage Determines Credit Amounts

  • Net New Jobs that Pay 120% of the County’s Average Hourly Wage Rate – company receives full credit amount
  • New New Jobs that Pay Less than 120% of the County’s Average Hourly Wage Rate - company receives credits from $750 to $4,000 per job (or $1,750 to $5,000 in a multi-county industrial park)
20% Tax Credit for first 5 Years of Operation

To offset the costs associated with relocating or expanding a corporate headquarters facility, South Carolina provides a generous 20% tax credit based on the value of the actual portion of the facility dedicated to the headquarters operation or direct lease costs for the first five years of operation.

Features

  • credit can be applied against either corporate income tax or the license fee
  • credits are not limited in their ability to eliminate corporate income taxes
  • can potentially eliminate corporate income taxes for as long as 10 years from the year earned

Eligibility Requirements

  • Company must create a minimum of 40 new full-time jobs that are engaged in corporate headquarters or research and development. At least 20 of these jobs must be classified as staff employees.
  • Facility must be the location where the majority of the company’s financial, legal, personnel, planning, and/or other staff functions are handled on a regional or national basis.
  • Facility must be the sole corporate headquarters within the region or nation with other facilities that report to it.
20% additional credit for HQ’s tangible personal property costs

In addition to the standard Corporate Headquarters Tax Credit, South Carolina offers an additional credit equal to 20% of the tangible personal property costs of establishing the headquarters.

Features

  • Credit may be used to eliminate both a company’s franchise tax and the corporate income tax
  • Unused credits may be carried forward for 15 years

Eligibility Requirements

  • Tangible personal property must be:
    • purchased for the headquarters facility or research and development facility, which is a part of the same project
    • used for headquarters- or research and development-related functions and services
    • used to create a minimum of 75 permanent new full-time jobs performing headquarters- or research and development-related functions and services, 20 of which are staff level
  • 75 new headquarters-related jobs must have an average cash compensation level of more than 2 times the state per capita income
Up to
2.5% credit

One-time corporate income tax credit up to 2.5% for new production equipment

South Carolina allows manufacturers locating or expanding in South Carolina a one-time credit against a company’s corporate income tax of up to 2.5% of a company’s investment in new production equipment.

Features

  • Credit may be used to offset up to 100% of corporate income tax liability
  • Unused credits may be carried forward for 10 years

Credit Values

Actual value of the credit depends on the applicable recovery period for property under the Internal Revenue Code, as illustrated in the table below:

Recovery Period Credit Value
3 years 0.5%
5 years 1.0%
7 years 1.5%
10 years 2%
15 years+ 2.5%
5% credit of the taxpayer’s qualified research expenses

To reward companies for increasing research and development activities, South Carolina offers a credit equal to 5% of the taxpayer’s qualified research expenses in the state.

Credit limits

Credit taken in any one taxable year may not exceed 50% of the company’s remaining tax liability after all other credits have been applied

Unused portion of the credit

Can be carried forward for 10 years from the date of the qualified expenditure

$8 million tax credits allowed annually

South Carolina provides a credit against income taxes or withholding taxes to entities that use state port facilities and increase base port cargo volume by 5% over base-year totals.

Tax Credits

Total amount of tax credits allowed to all qualifying companies is limited to $8 million annually

Eligibility Requirements

Company must have 75 net tons of non-containerized cargo or 10 loaded TEUs transported through a South Carolina port for their base year

No Limit To the amount of tax

To reward qualified recycling facilities, South Carolina offers a credit equal to 30% of the cost of recycling property placed into service each year.

Benefits

  • there is no limit to the amount of tax that can be offset with the credit
  • the credit can be carried forward indefinitely

Qualification Requirements

  • recycling facility that has a $300 million investment within five years
  • manufactures products for sale composed of 50% or more postconsumer waste material by weight or volume
Credit up to
$3,500 for each facility

South Carolina allows a company a credit against income taxes equal to 25% of the costs incurred by the company in the purchase and installation of the following:

  • solar energy system
  • small hydropower system
  • geothermal machinery and equipment for heating water, space heating for heating water, space heating, air cooling, energy-efficient daylighting, heat reclamation, energy-efficient demand response or the generation of electricity in or on a facility in South Carolina owned by the company

Benefits

  • amount of the credit in any year may not exceed $3,500 for each facility or 50% of the income tax liability for the taxable year, whichever is less
  • unused credit can be carried forward for 10 years
Use up to
$650,000 of credit in a year

South Carolina allows a company a credit against income taxes or corporate license fees, or both, for 25% of the costs incurred for the purchase and installation of equipment used to create power, heat, steam, electricity, or another form of energy for commercial use from a fuel consisting of 90% or more biomass resource.

Benefits

  • taxpayer may use up to $650,000 of credit in a tax year
  • unused credit may be carried forward 15 years
Can
Completely Eliminate state income tax

Credits may be available to a company constructing a facility in South Carolina that produces and/or distributes renewable fuels.

Benefits

  • credits for the construction of biodiesel production or distribution facilities can completely eliminate state income tax
  • unused credits may be carried forward for up to 10 years

Credit Amounts

  • Production facility = 25% of the cost of constructing or renovating a building and equipping the facility for the purpose of producing renewable fuel.
  • Distribution facility = 25% of the cost of purchasing, constructing, and installing the property. Eligible property includes pumps, storage tanks, and related equipment that are directly and exclusively used for distribution, dispensing, or storing renewable fuel.
10% income tax credit

South Carolina provides a nonrefundable income tax credit equal to 10% of qualifying expenditures to qualifying companies in the renewable energy field that are expanding or locating in South Carolina.

Benefits

  • taxpayer’s total credit for all expenditures cannot exceed $500,000 for any taxable year and $5 million total for all taxable years
  • unused credits can be carried forward for 15 years

Company Qualification Requirements

  1. Manufacture renewable energy systems and components in this state for solar, wind, geothermal, or other renewable energy uses
  2. Invest at least $500 million in new qualifying plant and equipment in the year the tax credit is claimed
  3. Meet certain job and wage requirements of the State Energy Office.

NOTE: This income tax program is available until December 31, 2019.

Up to
$2,500 Claimed for each production measure

South Carolina allows a taxpayer a credit equal to 25% of all expenditures incurred during the taxable year for the purchase and installation of the following energy conservation and renewable energy production measures:

  • Conservation tillage equipment
  • Drip/trickle irrigation systems including all necessary measures and equipment
  • Dual purpose combination truck and crane equipment

Credit Claims

  • company may claim the credit only one time for each of the three measures in a lifetime
  • maximum credit that may be claimed for each measure is $2,500
  • pass through entities, the credit is determined at the entity level and is limited to $2,500
  • unused credit can be carried forward for 5 years

Sales & Use Tax + Incentives

South Carolina supports new and expanding industry with a wide range of valuable exemptions to the state and local sales tax, including machinery and equipment, as well as applicable repair parts, used in the production of tangible goods.

6% South Carolina Sales and Use Tax Rate

The sales tax applies to all retail sales, leases, and rentals of tangible personal property, including the value of property purchased at wholesale and then used or consumed by the purchaser. The use tax is based on the sales price of such property.

Some counties assess a local option sales tax and/or a capital project sales tax, which currently range from 1 to 2.5%, where proceeds of such local taxes go toward infrastructure improvements or a rollback of property taxes.


Out-of-State Sales
Exempt
Sales Tax if buyer out of state

South Carolina exempts sales tax on the gross proceeds of the sales of tangible personal property where the seller, by contract of sale, is obligated to deliver to the buyer, an agent of the buyer, or a donee of the buyer, at a point outside of South Carolina or to deliver it to a carrier or to the mails for transportation to a point outside of South Carolina.


Out-of-State Purchases
Tax Credit
For taxes paid in another state

South Carolina provides a use tax credit for purchases of tangible personal property paid in another state, if the state in which the property is purchased and the sales and use taxes are paid allows substantially similar tax credits on tangible personal property purchased in this state. If the amount of the sales or use tax paid in the other state is less than the amount of use tax imposed in South Carolina, the user is required to pay the difference to this state.

Valuable Exemptions

South Carolina supports new and expanding industry with a wide range of valuable exemptions to the sales tax (state and local).

Sales Tax Exemptions

  • Machinery and equipment, and applicable repair parts, used in the manufacturing, processing, agricultural packaging, recycling, compounding, mining or quarrying of tangible personal property for sale
  • Materials that will become an integral part of the finished product
  • Coal, coke, or other fuel for manufacturers, transportation companies, electric power companies, and processors
  • Industrial electricity and other fuels used in manufacturing tangible personal property
  • Research and development machinery and equipment
  • Air, water and noise pollution control equipment
  • Material handling equipment for manufacturing or distribution projects investing $35 million or more in the state
  • Packaging materials
  • Long distance telephone calls and access charges, including 800 services

Construction Materials

Construction materials used in the construction of a single manufacturing or distribution facility with a capital investment of at least $100 million in an 18 month period will be exempt from sales tax.


Technology Intensive Materials

“Technology intensive” companies locating or expanding in South Carolina may be exempt from some sales and use taxes when the new or expanding facility meets certain investment and job creation requirements.

Eligibility Requirements

  • Qualify as a “technology intensive facility” which is defined as a facility at which a firm engages in the design, development, and introduction of new products or innovative manufacturing processes, or both, through the systematic application of scientific and technical knowledge.
  • Invest at least $300 million in real or personal property at the facility over a five-year period, 60% of which must be spent on computer equipment
  • Create at least 100 new jobs within a five-year period with an average wage that is at least 150% of the state per capita wage

Items that May be Exempt from Sales and Use Tax

  • computer equipment
  • electricity used by the facility
  • equipment and raw materials

Recycling Equipment

For a new or expanding recycling facility that invests at least $300 million by the end of the fifth calendar year after the year in which the company begins construction or operation of the facility, South Carolina provides certain exemptions from sales and use tax.

Items Exempt from Sales and Use Tax

  • Recycling property used at the facility
  • Electricity, natural gas, propane or fuels of any type, oxygen, hydrogen, nitrogen or gases of any type, and fluids and lubricants used by the facility
  • Tangible personal property that becomes, or will become, an ingredient or component part of products manufactured for sale by the facility
  • Tangible personal property of, or for, the facility which is, or will be used:
    1. for the handling or transfer of post-consumer waste material
    2. in, or for, the manufacturing process
    3. in, or for, the handling or transfer of manufactured products
  • Machinery and equipment foundations used, or to be used, by the facility

Datacenter Materials

Datacenters locating or expanding in South Carolina may be exempt from some sales and use taxes when the new or expanding facility meets certain investment and job creation requirements.

Eligibility Requirements

  • Must be certified by the SC Department of Commerce as a qualifying datacenter
  • Invest at least $50 million (or a combined $75 million with one or more other companies) in real or personal property at a single facility over a five year period
  • Create at least 25 new jobs within a five year period with an average wage that is at least 150% of the state or county per capita wage, whichever is lower
  • Maintain the 25 jobs for at least 3 years. The items that may be exempt from sales and use tax are: computer equipment, software and electricity directly used in datacenter operations. Once qualified for this exemption, all future computer equipment purchases are exempt.

Local Property Tax Exemptions + Incentives

In South Carolina, there is no state tax on real or personal property, plus, there is no tax, state or local, on inventories or intangibles.

3 Exempt Classes

In support of business, South Carolina exempts three classes of property from local property taxation:

  • All inventories (raw materials, work-in-progress, and finished goods)
  • All intangible property
  • All pollution control equipment
5-Year Property Tax Abatement

Up to 50%
Offset of the total millage

Manufacturers investing $50,000 or more and distribution or corporate headquarters facilities investing $50,000 or more and creating 75 new jobs in Year 1, are entitled to a five-year property tax abatement from county operating taxes. This abatement usually represents an offset of up to 20% to 50% of the total millage, depending on the county.


Textile Revitalization Credit

Up to 100%
Offset of income or license tax liability

There are credits for rehabilitating abandoned textile mill sites that encourage businesses to renovate, improve, and redevelop abandoned textile mill sites.

Eligible Sites - abandoned sites initially used for, or designed for use by, textile manufacturing

Benefits

A company that improves, renovates, or redevelops an eligible site may be eligible for one of two tax credits:

  • A credit against income taxes or license taxes equal to 25% of the rehabilitation expenses, which can offset up to 100% of income or license tax liability. Plus, unused credits can be carried forward up to five years.
  • A credit against real property taxes equal to 25% of the rehabilitation expenses of an eligible site multiplied by the local taxing ratio of each local taxing entity that has consented to the tax credit. This credit can offset up to 75% of property taxes for a period of up to eight years.

Retail Facilities Revitalization Act

Up to 100%
Offset of income tax liability

There are credits for rehabilitating abandoned retail facility sites that encourage businesses to renovate, improve, and redevelop abandoned retail facility sites.

Eligible Sites - abandoned sites whose primary use was as a retail sales facility with at least one tenant occupying 40,000 SF or larger building

Benefits

A company that improves, renovates, or redevelops an eligible site may be eligible for one of two tax credits:

  • A credit against income taxes or license taxes equal to 10% of the rehabilitation expenses. The credit can offset up to 100% of the income tax liability. Unused credits can be carried forward up to five years.
  • A credit against real property taxes equal to 25% of the rehabilitation expenses of an eligible site multiplied by the local taxing ratio of each local taxing entity that has consented to the tax credit. This credit can offset up to 75% of property taxes for a period of up to eight years.

Revitalization of Abandoned Building Credit

Up to 100%
Offset of income or license tax liability

To qualify for this credit, taxpayer must improve, renovate, or redevelop an eligible site for income producing purposes and incur rehabilitation expenses in an amount as detailed here:

Rehabilitation Expenses Area or Population Requirements
Greater than $250,000 building in unincorporated area of a county or in a municipality of a county with a population of more than 25,000 persons
Greater than $150,000 building in unincorporated area of a county or in a municipality of a county with a population of at least 1,000 but less than 25,000 persons
Greater than $75,000 building in unincorporated area of a county or in a municipality of a county with a population of less than 1,000 persons

Benefits

A qualifying taxpayer may be eligible for one of two tax credits:

  • A credit against income taxes or license taxes equal to 25% of the rehabilitation expenses. The credit can offset up to 100% of the income or license tax liability. Unused credits can be carried forward up to five years.
  • A credit against real property taxes equal to 25% of the rehabilitation expenses of an eligible site multiplied by the local taxing ratio of each local taxing entity that has consented to the tax credit. This credit can offset up to 75% of property taxes for a period of up to eight years.

Discretionary Incentives

If a company’s total capital investment is $2.5 million+, a county can negotiate a FILOT agreement, resulting in substantial cost savings for a company coming to South Carolina.

Up to 30 Years
Of Lower Assessment Ratio and Stabilized Millage Rates

Under this program, companies making substantial capital investments may negotiate a lower assessment ratio and stabilize millage rates for up to 30 years. The long-term savings of the FILOT is based on the actual investment and is dependent on both the assessment and millage rates negotiated with the county.

Substantial Benefits of FILOT for a Company

Savings Payments to local government are significantly reduced through the negotiation of a lower assessment rate (from 10.5% to as low as 6%)
The company may negotiate a locked-in millage rate for up to 30 years or a five-year adjustable rate for the property that is subject to the FILOT
With a FILOT, personal property depreciates, but real property is fixed at the original cost for the life of the fee. However, the county and the company may instead provide that any real property subject to the FILOT may be reported at its fair market value as determined by the appraisal of the Department of Revenue and may be re appraised every five years.
Replacement Property Property that is replacing property previously under the FILOT is allowed to go under the agreement up to the original income tax basis of the original fee property it is replacing at any time during the agreement.
Additional Savings for Substantial Capital Investments If a company is investing more than $400 million, or investing more than $150 million and creating at least 125 net new jobs, a “Super Fee” is negotiable. This fee can further lower the assessment rate to as low as 4%.

Eligibility Requirements

  • If total capital investment is $2.5 million or greater, a county can negotiate with a company for a FILOT agreement
  • Company has five years to meet the minimum investment threshold, and the county can offer an additional five-year extension to complete the project.
  • Company may include both real and personal property under the FILOT agreement. (Property that has been on the tax rolls in the state previously, including existing buildings, is not eligible for the FILOT. This restriction is waived for companies investing an additional $45 million or more in new investment.)
Reimbursements
for creating new, full-time jobs with health care benefits

The Job Development Credit effectively uses the personal withholding taxes of new employees to reimburse qualified, approved companies that add value to South Carolina and the community in which they locate. These reimbursements are for eligible capital expenditures (land, building, site development, pollution control equipment, or infrastructure) associated with projects creating new full-time jobs that also provide health care benefits for South Carolina citizens.

Eligibility Requirements

  • Company is required to make its payroll books and records available for inspection by the South Carolina Coordinating Council for Economic Development and the Department of Revenue
  • Company must furnish a report prepared by the company that itemizes the sources and uses of the funds, and such report must be filed by June 30 following the calendar year in which the refunds are received
  • Meet the requirements of a manufacturing, agricultural packaging, processing, corporate office and processing, corporate office, warehouse and distribution, research and development, agribusiness, tourism, or qualified service related facility as required for the Jobs Tax Credit
  • Create at least 10 new, full-time jobs (or meet additional requirements if qualifying as a service facility)
  • Provide full-time employees with a benefits package that includes a comprehensive health plan and pay at least 50% of an eligible employee’s cost of health plan premiums
  • Pay a non-refundable $4,000 application fee, receive a positive cost/benefit certification (the project is of greater benefit than cost to the state) from the Coordinating Council, and pay a $500 annual renewal fee

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