Biggins Lacy Shapiro & Company, LLC

South Carolina Economic Development Incentives Programs

TAX CREDITs

Jobs Tax Credit: A business that creates a monthly average of at least 10 net new jobs at a corporate headquarters, manufacturing, distribution, processing, warehousing, agribusiness or R&D facility is eligible to receive an annual credit of $1,500 to $25,000 per job.  Qualified service-related facilities that meet certain job number and wage thresholds may also qualify for this credit.  This non-refundable, as-of-right credit may be claimed for 5 years. An additional $1,000 per job bonus is available to companies that locate in a multi-county industrial park.  The actual amount of the tax credit will depend on the development tier of the county where the project is located.  The credits cannot be used to offset more than 50% of income tax liability in a given year. Unused credits may be carried forward for up to 15 years.

Corporate Headquarters Tax Credit: Companies that establish or expand a corporate headquarters facility in South Carolina may receive a tax credit equal to 20% of the value of the portion of the facility dedicated to the headquarters operation or 20% of the first 5 years of direct lease costs.  To qualify, a business must create at least 40 full-time jobs that are engaged in corporate headquarters or R&D. At least 20 of those jobs must be classified as headquarters staff positions. Tax credits are non-refundable and non-transferable and may be claimed for up to 10 years. Businesses that create a minimum of 75 new jobs with average cash compensation that is at least two times the state’s per capita income may receive an enhanced credit.

Investment Tax Credit: Manufacturers that relocate to or expand in South Carolina are eligible for a one-time corporate income tax credit of up to 2.5% of the cost of new production equipment.   The credit can be used to offset up to 100% of corporate tax liability.  All unused credits can be carried forward for up to 10 years.    

Research and Development Tax Credit: A credit equal to 5% of a company’s qualified research expenses in the state may be claimed by eligible businesses. The credit cannot be used to offset more than 50% of a company’s remaining tax liability after all other credits have been applied. Unused credits can be carried forward for up to 10 years.

Corporate Income Tax Moratorium: Companies creating net new jobs in certain of South Carolina’s economically distressed counties can benefit from a corporate income tax moratorium where the Company’s entire state corporate income tax liability may be eliminated for a period of either 10 or 15 years. At least 90% of the company’s total investment in South Carolina must be in a county where the unemployment rate is twice the state average. The length of the moratorium depends on the number of net new full-time jobs created. Companies creating at least 100 net new full-time jobs in a five year period qualify for a 10 year moratorium, and companies creating at least 200 net new full-time jobs in a five year period qualify for a 15 year moratorium. 

GRANTS

Discretionary Grant Funds: South Carolina has three discretionary grant funds available to businesses that can demonstrate additional funding is needed to close a competitive cost gap relative to other states in contention for a project that involves new job creation and capital investment. The grant funds are administered by the South Carolina Coordinating Council for Economic Development. Projects are evaluated on a case-by-case basis with grant funds typically awarded to assist with the costs of items such as site preparation, road and infrastructure improvements when needed.

Job Development Credit:  Discretionary program offers a quarterly cash refund of a portion of the personal withholding taxes of new employees. To qualify, businesses must create at least 10 full-time jobs with wages at or above the average county wage and make a substantial capital investment. (Additional job creation and wage thresholds must be met in order for a service facility to be eligible.) The actual amount of refund a business is eligible to claim will depend on the tier level of the county where the project is located, the gross wages of new employees, as well as other factors.  The Coordinating Council generally limits the amount of JDC that may be claimed to no more than $3,250 per new employee per year.  A business is eligible to claim the credit for up to 10 years (15 years if certain criteria is met) provided it retains the number of new jobs specified in the project agreement.  Refunds must be used to reimburse the company for eligible capital expenditures and cannot be used to reduce state tax liability.    

JOB TRAINING                     

readySC and Apprenticeship Carolina: These two programs provide recruiting, training, and workforce development tools through the South Carolina Technical College System. Through the Apprenticeship program, eligible businesses can also receive a tax credit of up to $1,000 for each registered apprentice employed for at least 7 months during a year.  This credit may be claimed for up to 4 years.

TAX EXEMPTIONS/ABATEMENTS

Sales Tax Exemption: Inventories, intangible personal property, R&D equipment, manufacturing equipment, and industrial electricity are exempt from sales tax.  Construction materials used to construct a manufacturing or distribution facility with at least $100 million invested over an 18-month period are exempt from sales and use tax.  For a new or expanding recycling facility that invests at least $300 million, South Carolina provides certain exemptions from sales and use tax.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.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.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.

Data Centers: Businesses that operate data centers may receive exemptions from sales and use taxes in exchange for investing at least $50 million (or $75 million at a multi-tenant facility) and creating at least 25 jobs with an average wage that is 150% of the county or state per capita wage, whichever is lower.

Property Tax Exemptions and Abatements: Pursuant to new legislation, 14.2857% of the property tax value of manufacturing property assessed for property tax purposes will be exempt from property taxation; provided, however, that the total amount of the exemption for all entities in the State for that fiscal year will not exceed $85 million.  For any year in which the amount is projected to exceed $85 million, the exemption amount shall be proportionally reduced.  This new exemption is being phased in in equal installments over six years beginning in 2018. Please note that this exemption does not apply to property under a Fee-in-Lieu agreement.

Additionally, South Carolina offers a five-year abatement from county operating taxes for new and expanding manufacturing and research and development facilities investing at least $50,000 in the facility.  Generally, the county’s operating portion makes up about 25% to 35% of the local millage rate. A five-year abatement does not apply to property under a Fee-in-Lieu agreement.

Fee-in-Lieu of Property Taxes (FILOT): Companies making a total capital investment of at least $2.5 million may negotiate with the county to obtain a lower assessment ratio and stabilize millage rates for up to 30 years.  By law, the company has five years to meet the minimum investment threshold, and the county can offer an additional five-year extension to complete the project.  Thus, all of the investment placed under the fee must be incurred within a maximum of ten years.  The company may include both real and personal property under the FILOT agreement.  However, 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.)

Under a FILOT, payments to local government are significantly reduced through the negotiation of a lower assessment rate from 10.5% to as low as 6%.  For certain large projects assessment ratios as low as 4% may be negotiated. The company may also 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 South Carolina Department of Revenue and may be re-appraised every five years.

 Last updated: May 2019



 
Biggins Lacy Shapiro & Company, LLC
609-924-9775
info@blsstrategies.com