South Carolina Business Tax Credits: Jobs, Research, Apprenticeship and How Credits Are Claimed

How South Carolina credits work

SCDOR splits credits into two kinds. Nonrefundable credits, on schedules numbered TC-, cannot reduce your tax below zero. Refundable credits, on schedules numbered I-, can. Almost every business credit is nonrefundable. You complete the TC schedule, carry the amount to the SC1120TC for a corporation or the SC1040TC for individuals, fiduciaries and partnerships, and enter the credit's three-digit code.

S.C. Code 12-6-3480 sets the ground rules. Where a credit is limited to a share of your tax, the limit is computed one credit at a time before the next credit is applied. You may apply credits in any order unless a statute says otherwise; the research credit, for example, applies only to tax remaining after all other credits. No credit can be used twice, and unless a statute provides otherwise, a credit must be used to the extent possible in the year it is generated and cannot be refunded. When carrying a credit forward, SCDOR asks for a schedule showing the year earned, the amount earned and the amount used each year.

For pass-through entities, SCDOR's guidance is that a partnership or S corporation uses credits against its own entity-level tax first, and passes what remains to owners, usually in proportion to ownership, on the SC1065 or SC1120S K-1. Once passed through, a credit cannot go back to the entity. An LLC follows its tax classification (S.C. Code 12-6-3310(C)).

H.4216 left business credits alone. But because many credits are capped at a share of the tax you owe, the lower 2026 individual rates also lower the most an owner can use in a year. More of a pass-through credit may end up carried forward, which makes the carryforward period worth knowing before you plan around a credit.

The jobs tax credit (TC-4 and TC-4SB)

The jobs credit in S.C. Code 12-6-3360 is limited to listed types of operations: manufacturing, tourism, processing, warehousing, distribution, research and development, corporate offices, qualifying service-related facilities, technology-intensive facilities, agribusiness and a few others. The statute says a corporate office includes general contractors licensed by the SC Department of Labor, Licensing and Regulation. Retail and general service businesses qualify only in Tier IV counties.

The service-related category is narrower than its name. It covers health care establishments in NAICS 621, 622 and 623, or else businesses with large net job increases at one location, from 175 jobs down to 25 jobs at high pay levels. Legal, accounting, banking, investment and retail businesses are excluded from it.

• Standard credit: the business must add 10 or more net new full-time jobs.
• Small business credit: a business with 99 or fewer employees qualifies with 2 or more net new full-time jobs, at the full amount if the new jobs pay at least 120% of the lower of state or county per capita income, otherwise at half.
• The credit runs for five years, beginning in year two after the job is created, as long as the job level is maintained.
• Full-time means at least 35 hours a week; two half-time jobs of at least 20 hours count as one. New jobs are measured by the monthly average of full-time employees subject to South Carolina withholding in the county, compared with the prior year. Jobs moved from another South Carolina location do not count.
• The credit is limited to 50% of the tax, carries forward 15 years, and outside Tier IV is capped at $5,500 per employee when combined with the Family Independence employer credit.

The research expenses credit (TC-18)

A taxpayer that claims the federal credit for increasing research activities under IRC Section 41 may also claim a South Carolina credit equal to 5% of its qualified research expenses made in South Carolina, using the federal definition of those expenses (S.C. Code 12-6-3415). The credit in any year cannot exceed 50% of the tax remaining after all other credits, and unused credit carries forward until the tax year beginning ten years after the expenses. The federal claim comes first; without it, there is no state credit.

The apprenticeship credit (TC-45)

Under S.C. Code 12-6-3477, as rewritten in 2024, an employer with an apprentice under an agreement registered with the U.S. Department of Labor's Office of Apprenticeship can claim the greater of the apprenticeship's cost or $1,000 per apprentice, up to $4,000 per apprentice, or $6,000 in the youth apprenticeship program. The apprentice must be employed for at least seven full months of the tax year, and the credit is allowed for no more than four years per apprentice. If the apprentice completes the program and stays on, the employer can claim $1,000 a year for up to three more years. The statewide total is capped at $5 million a year, and unused credit carries forward three years.

Other credits on the list

• Abandoned Building Revitalization Credit (TC-55): Act 227 of 2026 now requires the Notice of Intent to Rehabilitate to be filed before the building permit is obtained, and dropped the requirement that the building was previously used for income-producing purposes. Expenses incurred before a late notice do not qualify.
• Headquarters Credit (TC-8) and Capital Investment Credit (TC-11), aimed at headquarters facilities and manufacturing equipment.
• Angel Investor Credit (TC-56): repealed, with no claims for investments made after December 31, 2025.
• Renewable Natural Gas Credit: new under Act 225 of 2026 for tax years after 2025, certified by the South Carolina Energy Office.