South Carolina has been gaining a lot of attention recently due to its presidential election primaries. But there are other aspects of the state that are interesting as well. The “Palmetto” State is known for its shoreline of beaches and islands, in addition to its rich history of plantations and involvement in the Civil War. Its warm weather and green surroundings are not the only things encouraging more people to migrate to the state. The beautiful town of Kiawah Island is a personal annual family vacation spot of mine as well.
Business Climate
South Carolina is a beneficiary of foreign direct investment that boosts its job growth. The State has attracted marquee companies to invest manufacturing facilities in South Carolina through its ability to provide suitable locations, existing infrastructure and a skilled workforce.
The State employs a technical college system and the Apprenticeship Carolina program, which allows students and young adults to apprentice with participating companies across a diverse array of industries ranging from advanced manufacturing to hospitality and health care. A few of the companies that have invested in the state within the last decade are: Boeing, BMW, Volvo Cars and Daimler Vans.
All these factors in collaboration with the government’s reliable and predictable tax regulations create a business friendly environment for investors. The steady economy is attributed to the continuing expansion of its manufacturing and service industries.
Tax Climate
According to the Tax Foundation’s 2016 State Business Tax Climate Index, South Carolina ranks 36th out of 50 states. The State imposes a flat rate of 5% in corporate income tax, which is the 12th lowest among states that levy this type of tax. South Carolina’s state and local corporate income tax collections per person were $54 in 2012 which ranked 6th lowest nationally.
South Carolina’s personal income tax is comprised of six brackets starting at 0% and having a top rate of 7%. The State’s top rate ranks 12th highest among states that levy an individual income tax. South Carolina’s state and local income tax collections per person were $659 in 2012 which ranked 16th lowest in the nation.
Tax Credits & Incentives
The state of South Carolina offers many tax credits and incentives; however in this blog, we will only focus on a few. If you would like to view an extended list of tax credits, click here to view a publication from the Department of Revenue.
South Carolina has three different employment tax credits. The employment tax credits are as follows: the “traditional” annual job tax credit, the annual small business job tax credit, and the accelerated small business job tax credit.
In General these tax credits are used against corporate, individual, bank and insurance tax liabilities. The basic credit amounts to $1,500-8,000 per year for each new, full-time job created. The credit amounts are categorized into four tiers (designated by each county) with poorer counties receiving higher credits. There is a limitation of use for 50% of the taxpayer’s tax liability and can also be carried forward for 15 years. The differences among these three methods to consider are as follows:
“Traditional” Job Credit:
- No company size requirement.
- Requires an increase of 10* for the monthly average of full-time employees for the tax year. (* Exceptions: 20 for new hotels, and 25-175 for qualifying service related facilities)
- Can be claimed from Years 2-6 after job creation in Year 1, if jobs are maintained.
Annual Small Business Job Tax Credit:
- A small business has 99 or less employees worldwide.
- Requires an increase of 2* for the monthly average of full-time employees for the tax year. (* Exceptions: 20 for new hotels, and 25-175 for qualifying service related facilities)
- Can be claimed from Years 2-6 after job creation in Year 1, if jobs are maintained.
- May be subject to a 50% tax credit amount limitation if the taxpayer pays gross wages per job below 120% of the county or state average per capita income (whichever is less).
Accelerated Small Business Job Tax Credit:
- A small business has 99 or less employees worldwide.
- Requires an increase of 2* for the monthly average of full-time employees for the tax year. (* Exceptions: 20 for new hotels, and 25-175 for qualifying service related facilities)
- Can be claimed from Years 1-5 with job creation in Year 1 if jobs are maintained.
- May be subject to a 50% tax credit amount limitation if the taxpayer pays gross wages per job below 120% of the county or state average per capita income (whichever is less).
Random Facts
- The first battle of the Civil War took place at Fort Sumter.
- The world’s smallest police station is in Ridgeway. It’s about as big as a toll booth and was in full use from 1940-1990. The new, upgraded post office is right beside it.
- There are no major professional sports teams in South Carolina.
- Morgan Island, aka Monkey Island, is an uninhabited island that is home to the only free-ranging colony of rhesus macaque monkeys in the United States. There are around 3,500 monkeys on the island.
- Sumter has the largest Gingko farm in the world.
