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Due to a host of favorable characteristics, from reliable infrastructure to diverse professional resources, South Carolina has established a reputation as a prime business location. The state's draw is further enhanced as a result of tax incentives for certain business expenditures, such as job creation.
State Income Tax
South Carolina has the lowest corporate income tax rate (5%) in the Southeastern United States. Corporations engaged in multi-state activities are taxed only on the portion of income derived from doing business in South Carolina.
Job Tax Credit
The Jobs Tax Credit is a financial incentive that rewards new and expanding technology based companies for creating jobs in the state. A company must create and maintain at least 10 net new jobs in a taxable year to qualify.
Corporate Headquarters Credit
South Carolina provides a credit against corporate income tax or license fees to offset the costs of starting, expanding, or relocating a national or regional corporate headquarters facility to the state. The credit is equal to 20% of real property costs, construction costs, or lease costs for the initial 5 years of operation for the headquarters. To qualify, the facility must have a minimum of 40 employees.
Research and Development Credit
The Research and Development Credit rewards companies for increasing research and development activities. South Carolina offers a credit equal to 5% of the taxpayer's qualified expenditures for these activities made in the state, and unused credits may be carried forward for 10 years from the date of the qualified expenditure.
Property Tax Incentives
In South Carolina, only local governments levy property taxes. There is no state tax on real and personal property. To offset property tax liability, qualified companies may take advantage of one of two incentives programs. Depending on the total investment, a company may qualify for either a five-year abatement of a portion of property tax or, by agreement of the county, a fee-in-lieu of taxes.
Enterprise Zone
The Enterprise Program is substantially different from the state's other tax incentives because it provides companies with funds to offset the cost of locating or expanding a business facility in the state.
Job Development Credit
The Job Development Credit provides qualifying technology based companies with funds to offset the cost of locating or expanding a business in the state. Companies retain a portion of their employees' state withholding taxes, lowering the effective cost of investment and increasing profitability.
Qualified companies creating a minimum of 10 full-time jobs and providing health care benefits are eligible for cash reimbursements on capital expenditures including land, building, site development or infrastructure, as well as training costs and employee relocation expenses for technology intensive facilities. The actual value of the credit varies.
Job Retraining Credit
Businesses may be eligible for a refund of up to $500 per employee per year for retraining for the purpose of remaining competitive or introducing new technologies. To qualify, the company must meet various application and program requirements.
Sales Tax
South Carolina imposes a 6% sales tax on the gross proceeds of sales of every person engaged in the business of selling tangible personal property at retail. Sales tax exemptions include: equipment used in research and development, packaging materials, equipment used in the manufacturing process, raw materials, select pollution control equipment, electricity and fuels used in the manufacturing process, and long distance telecommunications.
Business License Abatement
NEXT and the City of Greenville worked together to develop a business license abatement incentive for specific types of technology businesses who are new to the City of Greenville. New qualifying businesses will receive an abatement in the following manner: 100% for the first taxable year of operation; 66% for the second taxable year; and 33% for the third taxable year. Please contact City of Greenville, Business License Office.
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