Corporate Income Tax
South Carolina's positive business environment starts with its corporate income tax structure. Businesses located in South Carolina benefit from:
- 5% corporate income tax, among the lowest in the nation.
- Corporations engaged in multi-state operations are taxed only on the portion of income derived from doing business in South Carolina.
- The basis for South Carolina's gross corporate income and taxable corporate income is based primarily upon a corporation's federal gross income and taxable income.
- Numerous credits and methods to reduce and eliminate corporate income tax liability (see tax credits tab).
Personal Income Tax
- South Carolina imposes an income tax on individuals at graduated rates ranging from 0% to a maximum rate of 7% for income over $13,150.
- There are six income tax brackets adjusted annually for inflation.
For more information on personal and corporate income tax, please visit the South Carolina Department of Revenue
- In South Carolina, only local governments levy property taxes.
- There is no state tax on real or personal property, and there is no tax — state or local — on inventories, intangibles or pollution control equipment.
- A local millage rate is applied to assessed value to determine total annual tax amount. Millage rates are set annually by the local governments.
Local property tax assessment rates
View local millage rates
|10.5%||Manufacturers' real and tangible personal property|
|10.5%||All other tangible personal property|
| 6.0%||Other real property|
| 4.0%||Qualified, owner-occupied residential real estate|
To offset property tax liability, qualified companies may take advantage of one of two incentives programs.
Five-Year Property Tax Abatement
Companies may apply for a five-year exemption from county property taxes (the exemption does not apply to school taxes) for the following:
- $50,000 investment in manufacturing facilities
- $50,000 investment in research and development facilities
- $50,000 investment (and 75 new jobs) in corporate headquarters or distribution facilities
Fee-In-Lieu of Property Tax (FILOT)
This discretionary local incentive allows qualifying companies to negotiate a fee instead of paying property taxes. Advantages include:
- Significantly lowering property tax payments by negotiating a lower assessment ratio (from 10.5% to as low as 6%)
- Ability to lower property tax payments 43% on average by negotiating a fee-in-lieu
- Negotiating the applicable millage rate to a 20-year locked rate or a five-year adjustable rate
- Stabilizing payments to local government for the term of the agreement (up to 20 years)
Sales and Use Tax
- The sales and use tax rate in South Carolina is 6%.
- A local option sales tax applies in each of our region's three counties (Berkeley add 2%, Dorchester add 1%; Charleston add 1.5%).
- 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.
Sales tax exemptions include:
- Electricity and fuels used in the manufacturing process
- Machinery, equipment and replacement parts used for manufacturing
- Equipment used in research & 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 by 2011
Unemployment Insurance (UI) and Workers' Compensation (WC)
||Avg UI employer tax rate as a % of total wages, 2010
||Avg UI employer tax rate as a % of taxable wages, 2010
||Avg WC benefits per $100 of covered wages, 2009
|Source: National Academy of Social Insurance and U.S. Department of Labor Employment & Training Administration, 10/2011.
- South Carolina's unemployment insurance rates for employers are below the national average (see chart above).
- The South Carolina SUTA unemployment insurance tax is based on the first $10,000 in wages for each employee for 2011. As of 2010, South Carolina employers are divided into a 20-tier rate system based on experience, with companies in tiers 1 to 12 paying between 0.1% and 2.237%, while tiers 13 to 20 pay rates ranging from 4.23% to 8.79%. The new company rate is tier 12 for the first 12 months. After the first year, the employer will have a benefit ratio computed on the date of the next rate computation based on their own benefit charges and taxable wages.
- According to the South Carolina Workers' Compensation Commission, for accidents that occur on or after January 1, 2011, the maximum weekly compensation rate is $704.92. An individual's compensation rate equals 66.67% of an individual's average weekly wage, not to exceed the average weekly wage in South Carolina as determined by the South Carolina Employment Security Commission.
Sources: National Academy of Social Insurance
U.S. Employment and Training Administration
South Carolina Workers' Compensation Commission
South Carolina Department of Employment and Workforce
Jobs Tax Credit
- Rewards new and expanding companies for creating jobs in South Carolina.
- 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.
- This credit is then used against your South Carolina corporate income tax liability.
- Unused credits can be carried forward for 15 years.
Corporate Headquarters Credit
- South Carolina provides a generous credit against corporate income tax or corporate license fees to offset costs associated with establishing, relocating or expanding a corporate headquarters facility with at least 40 employees.
- The credit is equal to 20% of qualifying real property costs and direct construction or lease costs for the first five years of operation.
Research & Development Credit
- Designed to reward companies for increasing research and development activities in a taxable year.
- Offers a credit equal to 5% of the taxpayer's qualified expenditures for R&D made in the state.
- Unused credits may be carried forward for 10 years.
Job Development Credit
With the approval of the South Carolina Coordinating Council, qualified companies are provided funds to help offset the cost of locating or expanding a business facility in the state. Effectively, the credit uses the state withholding taxes of new employees to reimburse the company for eligible expenditures including:
- Utility upgrades
- Fixed transportation facilities
- Real estate (site or building improvements)
- Manufacturing pollution control equipment
- Approved training costs
- Employee relocation expenses for technology-intensive facilities, R&D and certain corporate headquarters
The Job Development Credit begins once the company meets the agreed-upon job and investment goals, and is generally available for 10 or 15 years, depending on the development status of the county in which the company is located.
- Minimum of 10 new jobs with healthcare benefits
- Positive cost/benefit analysis
- Company must be financially viable and creditworthy
- Wages for new jobs must be equal to or above county average
- Application must be submitted and approved by S.C. Coordinating Council for Economic Development
Workforce Training / Development
South Carolina helps fund workforce training needs through three major options:
Customized training through readySC
- A state-funded program, readySC is provided at little or no cost to companies creating new jobs with competitive wages and benefits.
- The program offers customized recruitment, assessment, training development, management and implementation services to qualifying companies.
- An integral part of the S.C. Technical College System, readySC provides a pre-trained and productive workforce from the first day of operations.
Workforce Investment Act (WIA) employment and training services
- Provided through the Trident One-Stop Career System, a public-private partnership offering employment-related services to both job seekers and employers.
- The System operates one-stop centers in Berkeley, Charleston and Dorchester counties, and has facilities and meeting spaces available to area businesses to assist with training sessions, recruitment events, business seminars, small to medium conferences, career fairs, and pre-hire and post-hire testing sessions.
- The System also provides services to help eliminate or reduce the costs of employee recruitment, screening and testing, such as WorkKeys®.
- Both on-the-job and classroom programs are available.
Existing industry retraining funds
- South Carolina supports existing companies by offsetting a portion of the cost associated with the retraining of qualifying employees.
- The retraining must be approved and coordinated by our local technical college under the jurisdiction of the State Board for Technical and Comprehensive Education.
- Companies may be reimbursed up to $500 per employee per year (not to exceed $2,000 per employee over five years).
- To qualify, companies must match on a dollar-for-dollar basis.
- An application to the Coordinating Council for Economic Development is required for consideration ($500 application fee).
Foreign-Trade Zone (FTZ)
- Companies involved in international trade can take advantage of nearly a dozen general-purpose sites within Foreign Trade Zone 21, comprising more than 8,000 acres (3,238 hectares) of space.
- The South Carolina State Ports Authority serves as the grantee of FTZ 21.
- FTZs are restricted-access sites that allow businesses to store and process goods or raw materials duty and quota free until they're transported into the Customs territory of the United States or into another NAFTA country (Canada and Mexico).
- To learn more about FTZs and the sites located in the Charleston region, please contact Suzan Carroll-Ramsey at the Port of Charleston, or visit the Port of Charleston's site relevant to FTZs.
Revolving Loan Fund
- The Berkeley-Charleston-Dorchester Council of Governments' Revolving Loan Fund (RLF) is a locally controlled source of capital that assists start-up and growing businesses whose projects help improve the Charleston region's economy.
- The primary purpose of the RLF is job creation and retention in the region.
- The RLF is used as "gap financing," meaning that RLF loans are used to leverage private-sector loans and investments to help fulfill an applicants capital needs.
- Eligible uses of loans include the purchase of machinery, equipment, real estate and inventory, as well as the improvement of real estate and building facilities.
- Loans can be used to provide permanent working capital on a limited basis.
Urban Renewal Community
- The Department of Housing and Urban Development (HUD) has designated Charleston a "Renewal Community," eligible to share in an estimated $17 billion in tax incentives to stimulate job growth, promote economic development and create affordable housing.
- As a result of this Renewal Community designation, certain areas of Charleston receive regulatory relief and tax breaks to help local businesses provide more jobs and promote community revitalization.
- This area includes portions of the Charleston Digital Corridor's Gateway, University and Wharf Districts, plus the Navy Yard at Noisette, allows new and existing businesses to take advantage of wage credits, tax deductions, capital gains exclusions and bond financing to stimulate economic development and job growth.