Investment tax credit (ITC)
South Carolina offers an Investment Tax Credit to manufacturers locating or expanding operations within the state. The credit provides a one-time reduction against a company’s corporate income tax based on its investment in new production equipment.
The credit equals a percentage of the company’s qualifying investment, determined by the applicable recovery period of the property under the Internal Revenue Code.
Who may qualify
The Investment Tax Credit is available to manufacturers that are:
- Locating operations in South Carolina; or
- Expanding existing manufacturing operations within the state.
The credit applies to qualifying investments in new production equipment.
Credit calculation
The credit equals up to 2.5% of a company’s investment in new production equipment. The actual percentage is based on the recovery period assigned to the property under the Internal Revenue Code.
The following table outlines applicable credit percentages:
| Recovery Period | Credit Value |
|---|---|
| 3 years | 0.5% |
| 5 years | 1% |
| 7 years | 1.5% |
| 10 years | 2% |
| 15 years or more | 2.5% |
The longer the recovery period assigned under federal tax rules, the higher the allowable credit percentage.
Credit usage and carryforward
The Investment Tax Credit may:
- Offset up to 100% of a company’s corporate income tax liability; and
- Be carried forward for up to 10 years if unused.
This allows manufacturers to apply the credit over time, subject to corporate income tax liability.
Frequently asked questions
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