“South Carolina is a perennial leader in incentives.”

South Carolina allows manufacturers locating in Economic Impact Zone (EIZ) counties a one-time credit against a company’s corporate income tax of up to 5% of a company’s investment in new production equipment. The actual value of the credit depends on the applicable recovery period for property under the Internal Revenue Code.

In an effort to offset the cost associated with relocating or expanding a corporate headquarters facility, South Carolina provides a generous 20% credit based on the cost of the actual portion of the facility dedicated to the headquarters operation or direct lease costs for the first five years of operation. The credit can be applied against either corporate income tax or the license fee. These credits are not limited in their ability to eliminate corporate income taxes and can potentially eliminate corporate income taxes for as long as 10 years from the year earned. Eligibility for this credit is determined by meeting a number of specific criteria.

To reward companies for increasing research and development activities in a taxable year, South Carolina offers a credit equal to 5% of the taxpayer’s qualified research expenses in the state. The term “qualified research expenses” is defined in Section 41 of the Internal Revenue Code. The 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. Any unused portion of the credit can be carried forward for 10 years from the date of the qualified expenditure.

The Economic Development Set-Aside Program assists companies in locating or expanding in South Carolina through road, water and sewer infrastructure, site improvements and other costs related to business location or expansion.

This program allows existing industries to claim a Retraining Credit for existing production employees. The credit allows up to 50% of approved training costs for eligible production workers (not to exceed $500 per person per year.)

The Rural Infrastructure Fund assists qualified counties in South Carolina’s  rural areas by providing financial assistance for infrastructure and other activities that enhance economic growth and development, including job creation and product development.

This income tax credit is offered to qualified entities that use state port facilities and increase base port cargo volume by 5% over base-year totals. (The base year qualifications are 75 net tons of non-containerized cargo or 10 loaded TEU’s transported through a South Carolina port).

These grants support new or expanding tourism, recreation facilities or designated development areas primarily through infrastructure projects.

readySC™, Apprenticeship Carolina™, Foreign Trade Zone and BuySC

Note: These programs are administered by the SC Coordinating Council for Economic Development. [CCED].

South Carolina’s sales and use tax rate is 6%.  

Exemptions include:

• Electricity and fuels used in the manufacturing process

• Machinery, equipment and replacement parts used for manufacturing

• Equipment used in research and development

• Raw materials to become part of the finished product           

• Air, water and noise pollution control equipment

• $300 maximum sales tax applies to sale or lease of motor vehicles, trucks, aircraft, boats and other related items

• Parts and supplies used to repair or condition aircraft owned or leased by the federal government or commercial air carriers

• Material handling equipment for manufacturing projects investing $35 million or more in the state

• Construction materials used in the construction of a single manufacturing and distribution facility with a capital investment of at least $100 million will be entirely exempt from sales tax

In South Carolina, only local governments may levy property taxes. A company’s property tax liability is a function of:  Property Value x Assessment Ratio x Millage.

To determine Fair Market Value, real property is appraised, while tangible personal property is recorded at cost and then depreciated based on a statutory depreciation rate (for manufacturers) and income tax depreciation (for other businesses). The Fair Market Value is then assessed at rates established in the South Carolina Constitution. The local millage rate is applied to the assessed value to determine the property taxes. Millage rates in South Carolina are site specific and set annually by local government. A mill is equal to $0.001.Property Tax Exemptions may include inventories (raw materials, work-in-progress, finished goods), intangibles (stocks, dividends, interest) and pollution control equipment.

Allows qualifying companies to negotiate a fee instead of paying property taxes. Advantages include: significantly lowering property tax payments and negotiating the applicable millage rate to a 20 year locked rate or a five-year adjustable rate and stabilizing payments to local government for the term of the agreement (up to 20 years). Companies investing as little as $2.5 million dollars may negotiate this exemption with the county in which they locate. This 20-year incentive creates significant savings for companies by lowering the assessment ratio from 10.5% for manufacturers to as low as 6%. Furthermore, the millage may be held lower than if the property were not under a FILOT.