South Carolina Incentives and Workforce Development Guide
The updated South Carolina incentives guide is brought to you by Real Street Expo, a new event sponsored by Business Facilities and Today’s Facility Manager magazines.
For a list of South Carolina economic development agencies that can help with the site selection process, visit our Online Site Seekers’ Guide.
- Economic Development Set-Aside Program:
- Assists companies in locating or expanding in South Carolina through road or site improvements and other costs related to business location or expansion. Overseen by the Coordinating Council for Economic Development, it is the Coordinating Council’s primary business development tool for assisting local governments with road, water/sewer infrastructure or site improvements related to business location or expansion.
- Rural Infrastructure Fund (RIF):
- Assists qualified counties in the state’s rural areas by providing financial assistance for infrastructure and other activities that enhance economic growth and development. It can be used for job creation and/or product development. Qualified counties are designated as “Tier III” or “Tier IV” by the Department of Revenue and have received approval for an economic development strategic plan by the Coordinating Council for Economic Development.
- Tourism Infrastructure Development Grant:
- Supports new or expanding tourism or recreation facilities or designated development areas primarily through infrastructure projects. This program is generated from a share of the state admissions tax on qualified tourism and recreation establishments and is overseen by the Coordinating Council for Economic Development.
- Single Factor Sales Apportionment:
- Companies whose primary business in the state is manufacturing, distribution, or selling or dealing in tangible personal property will apportion its income by multiplying the net income remaining after allocation by a fraction consisting of a company’s sales made in South Carolina divided by its total number of sales. This formula is advantageous for a company whose majority of sales occurs outside South Carolina.
- Job Development Credit:
- South Carolina’s Enterprise Program is substantially different from the state’s other tax incentives because it does not reduce a particular tax liability; instead, it provides companies with funds to offset the cost of locating or expanding a business facility in this state. Representing actual cash contributions to the project, this incentive allows South Carolina to lower the effective cost of investment and positively contribute to a company’s bottom line and profitability. To be eligible to apply for the Job Development Credit, a company must: meet the requirements of a manufacturing and processing, corporate office, warehouse and distribution, research and development, agribusiness, or tourism as required for the Jobs Tax Credit and create at least 10 new, full-time jobs. A service-related facility may qualify by meeting certain job number and wage thresholds. The company must 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.
- Port Volume Increase Credit:
- A possible credit against income taxes or withholding taxes to manufacturers, distributors, or entities engaged in freight forwarding, freight handling, goods processing, cross docking, transloading, or wholesaling of goods that use state port facilities and increase base port cargo volume by 5% over base-year totals. To qualify, a company must have 75 net tons of non-containerized cargo or 10 loaded TEUs transported through a SC port for their base year. The total amount of tax credits allowed to all qualifying companies is limited to $8 million per calendar year. South Carolina also allows the Coordinating Council to award up to $1 million of the $8 million credits to a new warehouse or distribution facility which commits to expending at least $40 million at a single site and creating at least 100 new, full time jobs within three years and has a base cargo requirement of at least 5,000 TEUs or its non-containerized equivalent. The credit has been also been expanded to include eligibility for a taxpayer engaged in the movement of goods imported or exported through South Carolina’s port facilities if the cargo supports a presence in the State and the taxpayer does not have a distribution center in the State at the time of initial approval of the port volume tax credit, so long as the taxpayer employs at least 250 full time employees in South Carolina and completes the construction of the distribution facility in South Carolina, and is operational, within 5 years of the initial approval of the port volume tax credit; and the base year port usage for the taxpayer shall be not less than 5,000 TEUs or its non-containerized equivalent.
- Job Tax Credit:
- By creating new jobs in South Carolina, companies may be eligible for a tax credit against their South Carolina income tax liability. To be eligible for job tax credits, a company must establish or expand a manufacturing, distribution, processing, warehousing, research and development, tourism, technology intensive facility or agribusiness within the state and create a monthly average of 10 net new full-time jobs at the facility in a single taxable year. If a company has fewer than 99 employees worldwide, it may be eligible for a job tax credit if it creates a monthly average of two or more net new full-time jobs in a single taxable year. A service-related facility may qualify by meeting certain job number and wage thresholds. The job tax credit is available for a five year period beginning with Year Two (Year One is used to establish the created job levels) if the jobs are maintained. The value of these credits is determined by the development tier of the county. There are four tiers of counties, and the counties will continue to be ranked annually. In most instances, companies can expect to receive from $1,500 to $8,000 per job depending on the county designation. Credits can be used to offset up to 50% of South Carolina income tax in a single year, and unused credits may be carried forward for 15 years. Regional industrial park legislation allows companies locating in these parks to earn an extra $1,000 for each job for five years.
- Investment Tax Credit:
- Allows manufacturers 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. The actual value of the credit depends on the applicable recovery period for property under the Internal Revenue Code.
- Corporate Headquarters Credit:
- Provides a 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 is determined by meeting a number of specific criteria.
- Research & Development Tax Credit:
- A credit equal to 5% of the taxpayer’s qualified research expenses in the state. 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.
- Sales Tax Exemptions:
- South Carolina offers a number of sales tax exemptions including: manufacturing production machinery and repair parts; manufacturing materials that become an integral part of the finished product; coal or other fuel for manufacturers, transportation companies, electric power companies, and processors; industrial electricity and other fuels used in manufacturing tangible personal property; R&D equipment; manufacturers’ air, water, and noise pollution-control equipment; material-handling equipment in manufacturing and distribution facilities investing at least $35 million; packaging materials; long-distance telecommunications services, including 800 services; and parts and supplies used to repair or condition aircraft owned or leased by the federal government or commercial air carriers. South Carolina also offers an exemption for construction materials used in manufacturing or distribution facilities investing at least $100 million over 18 months. South Carolina offers a sales tax exemption on computer equipment, software, and electricity (only electricity used for the datacenter) for new or existing data centers (data hosting or processing services) that will:
- invest $50 million (or a must invest a combined $75 million with one or more other companies) at a single location over a 5 year period;
- create 25 jobs at a single location over the five year period;
- pay employees a wage of at least 150% of the lower of the state or county average per capita wage;
- maintain the 25 jobs for three years after creation; and
- be certified by the Department of Commerce. In addition to the sales tax exemptions, South Carolina further reduces the tax burden by providing a valuable sales tax cap of $300 on the sale or lease of automobiles, trucks, boats and aircraft to all companies and individuals.
- Fee-in-lieu of Property Taxes (FILOT):
- May be offered at the discretion of a county for companies with a total investment of $2.5 million or greater on new buildings and equipment. Property that has previously been subject to South Carolina property taxes is not generally eligible for the fee unless a company is investing an additional $45 million in the project beyond the price of the property. A negotiated FILOT could lower the assessment ratio from 10.5% to as low as 6% and either lock the current millage rate or adjust it every five years for up to 30 years. For certain large projects—such as $400 million in investment or $150 million in investment and 125 jobs – assessment ratios as low as 4% may be negotiated. Under the FILOT, personal property depreciates at a prescribed rate, while real property stays at cost for the life of the fee, except that with county consent, manufacturing real property in a FILOT may be taxed at fair market value as determined by a Department of Revenue appraisal and may be re-appraised every 5 years. Additionally, property that is placed in service to replace existing fee property may be subject to the fee as well. As a general rule, property can be subject to a FILOT for up to 30 years.
- Credit for Revitalization of Abandoned Buildings:
- A credit is available to a taxpayer that improves, renovates or redevelops a site, at least 66% of which has been closed continuously or otherwise nonoperational for at least five years (excluding a building used immediately preceding as a single-family residence) from the date that the taxpayer files a Notice of Intent to Rehabilitate. In order to qualify for this credit, the taxpayer must incur rehabilitation expenses in an amount greater than $250,000 for building in unincorporated area of county or in a municipality of the county with a population of more than 25,000 persons; greater than $150,000 for building in unincorporated area of county or in a municipality of the county with a population of at least 1,000 persons but less than 25,000 persons; or greater than $75,000 for building in unincorporated area of county or in a municipality of the county with a population of less than 1,000 persons. A taxpayer who qualifies may claim either:
- a credit against income taxes or license tax may apply equal to 25% of the rehabilitation expenses. This credit is to be taken in equal installments over 5 years beginning with the tax year in which the site is placed in service. The credit is limited to 50% of income or license tax liability and the credit may not exceed $500,000 in any one tax year. Unused credits can be carried forward up to five years. In this case, the taxpayer must file the Notice of Intent to Rehabilitate with the Department of Revenue before incurring expenses; or
- 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. To receive this credit, the county or municipality in which the site is located must determine the eligibility of the site and the proposed project. A majority vote of the local governing body must approve the project, and the determinations and approval must be made by public hearing and ordinance. In this case, the taxpayer must file the Notice of Intent to Rehabilitate with the county or municipality before incurring expenses.
- Enterprise Zone Retraining Program:
- Helps existing industries maintain their competitive edge and retain their existing workforce by allowing them to claim a Retraining Credit for existing production or technology employees. If approved, companies can reimburse themselves up to 50% of approved training costs for eligible production or technology workers (not to exceed $500 per person per year).
- Pre-Job Training Program:
- The readySC™ program, offered through the S.C. Technical College System, provides pre-job training at little or no cost for eligible new or expanding companies with curricula tailored to meet a company’s workforce requirements. The comprehensive program includes recruiting, screening, testing, developing customized instruction material along with coordinating and upfitting training space.
- Coordinating Council for Economic Development:
- Established by the General Assembly in response to a general need for improved coordination of economic development efforts by those state agencies involved in the recruitment of new business and the expansion of current enterprises throughout the state.