Solar energy credit
South Carolina offers a Solar Energy Tax Credit to encourage company investment in renewable energy systems at facilities they own within the state.
The credit provides a reduction against income taxes equal to 25% of the costs incurred for the purchase and installation of a qualifying solar energy system.
Eligible systems
The credit applies to the purchase and installation of a solar energy system, including a small hydropower system, used for:
- Heating water
- Space heating
- Air cooling
- Energy efficient daylighting
- Heat reclamation
- Energy-efficient demand response
- Generation of electricity
The system must be installed in or on a facility in South Carolina that is owned by the company claiming the credit. The credit cannot be claimed before installation of the system is complete.
Credit amount and limitations
The Solar Energy Tax Credit equals 25% of the qualifying system costs. However, the credit is subject to the following limitations: The credit may not exceed $3,500 for each facility or 50% of the company’s income tax liability for the taxable year, whichever is less.
If the full credit cannot be used in the year it is earned, unused credits may be carried forward for up to 10 years.
What qualifies as a system
For purposes of this credit, a “system” includes:
- Controls
- Tanks
- Pumps
- Heat exchangers
- Other equipment used directly and exclusively for the solar energy system
A system does not include:
- Land
- Structural elements of a building such as walls or roofs
- Equipment ordinarily contained in the structure
Certification requirement
To qualify for the credit, the solar energy system must be certified for performance by:
- The nonprofit Solar Rating & Certification Corporation; or
- A comparable entity endorsed by the State Energy Office.
Certification is required to ensure the system meets performance standards.
Frequently asked questions
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