Business taxes
South Carolina Corporate Income Tax and the Annual Corporate License Fee
A C corporation doing business in South Carolina pays income tax at 5% of its South Carolina taxable income, which starts from federal taxable income. Every corporation, S corporations included, also pays an annual license fee of $15 plus $1 for each $1,000 of capital stock and paid-in surplus, with a $25 minimum. H.4216 changed individual rates for 2026; it did not change either corporate charge.
- Corporate income tax is 5% of South Carolina taxable income (S.C. Code 12-6-530). H.4216 did not amend it.
- The annual license fee is $15 plus $1 per $1,000 (or fraction) of capital stock and paid-in surplus, minimum $25 (S.C. Code 12-20-50).
- S corporations pay the license fee with the SC1120S even though their income generally passes through to shareholders.
- An LLC pays the license fee only if it is taxed as a corporation.
- Estimated payments are required once the expected income tax, after credits, is $100 or more.
Who this applies to
- C corporations transacting or conducting business in South Carolina
- S corporations, including LLCs that elected S corporation status
- Out-of-state corporations with South Carolina business activity that must apportion income
- New corporations that have not yet filed an initial report
Who this may not apply to
- LLCs taxed as partnerships or disregarded entities (they file SC1065 or report on the owner's return)
- A corporation whose only contact with South Carolina is registration with the Secretary of State (excluded from the license fee)
- Banks, insurers and utilities, which have their own tax or fee regimes
Two separate charges on one return
South Carolina taxes corporations in two ways, and they are easy to blur because they are paid together. The corporate income tax is a tax on profit. The license fee is a tax on capital: it is measured by what shareholders have put into the company, not by what the company earned, so it is owed in a loss year too. The SCDOR treats the license fee as due with the return or extension request, and an extension of time to file does not extend the time to pay either one.
The corporate income tax
S.C. Code 12-6-530 imposes a 5% tax on the South Carolina taxable income of every corporation, and any other entity taxed at corporate rates for federal purposes, that transacts, conducts or does business in the state or has income within it. The statute defines doing business broadly, as any activity for financial profit or gain.
- Starting point: federal taxable income, adjusted by South Carolina modifications. South Carolina does not follow federal bonus depreciation, which is the adjustment most small corporations notice first.
- Return: SC1120, due the 15th day of the fourth month after the tax year ends. C corporations file every year, even with no income or activity in the period.
- Extension: paying the balance through MyDORWAY submits the extension request automatically; on paper, use SC1120-T. There is no extension of time to pay.
- Electronic mandate: a corporation that owes $15,000 or more in a filing period must file and pay electronically. The SCDOR's corporate FAQs state a $500-per-period penalty until it does.
Multistate corporations
A corporation doing business both inside and outside South Carolina first allocates certain nonbusiness income directly, then apportions the rest. According to the SCDOR, manufacturers and sellers of tangible goods generally use a sales-based ratio, while most service, financial and contracting businesses use a gross receipts ratio. Railroads, telephone, pipeline, airline and shipping companies use special methods. Members of a consolidated group each compute their own ratio.
The annual license fee
S.C. Code 12-20-50 sets the fee at $15 plus $1 for each $1,000, or fraction of $1,000, of capital stock and paid-in or capital surplus. Paid-in surplus means all surplus other than earned surplus, so retained earnings are not part of the base. The figures come from the corporation's applicable financial statement and are measured as of the first day of the taxable year in which the annual report is filed. The fee is never less than $25.
| Capital stock plus paid-in surplus | Computation | Annual fee |
|---|---|---|
| $1,000 | $15 + $1 = $16, below the minimum | $25 |
| $10,000 | $15 + $10 | $25 |
| $100,000 | $15 + $100 | $115 |
| $250,500 | $15 + $251 (fraction rounds up) | $266 |
| $1,000,000 | $15 + $1,000 | $1,015 |
Who pays it
- Generally every domestic corporation and every foreign corporation qualified to do business in South Carolina, according to the SCDOR's corporate FAQs.
- S corporations: the license fee is due with the SC1120S, even though the S corporation's income generally passes through to shareholders. The 5% income tax applies to an S corporation only on income taxed at the entity level.
- LLCs: an LLC not taxed as a corporation is exempt. An LLC that elects corporate treatment files a CL-1 and pays the fee.
- Excluded: a corporation whose only contact with South Carolina is registration with the Secretary of State, and the organizations listed in S.C. Code 12-20-110.
The initial fee and the CL-1
A new corporation pays a one-time $25 initial license fee. Most pay it with their formation or authority filing at the Secretary of State. A corporation that did not, files the CL-1 with the SCDOR and pays within 60 days after it first does business or uses capital in South Carolina (S.C. Code 12-20-40).
Final returns
The SCDOR explains that a license fee is generally not required on a final return, because the fee is paid a year in advance. A corporation that dissolves or withdraws with the Secretary of State after its accounting period has ended still files a final return.
A new 2026 exclusion for venture-backed companies
Act 243 of 2026 added an exclusion to the license fee base. A corporation headquartered in South Carolina may exclude the first $50 million of equity contributions from qualifying entities, which include certain venture capital funds, accredited investors and private investment firms. It needs a certificate from the South Carolina Research Authority and must file an annual report with the SCDOR. SCDOR Information Letter 26-23 gives the effective date as July 1, 2026, applying to tax years beginning after July 1, 2026.
Estimated payments
A corporation must make estimated payments if its estimated tax, meaning income tax less credits, is $100 or more. Installments are due by the 15th day of the fourth, sixth, ninth and twelfth months of the tax year. The SCDOR prefers payment through MyDORWAY; paper payments use the SC1120CDP. S corporations follow the same schedule for any entity-level tax.
What H.4216 did and did not change
H.4216 (Act 110, signed 30 March 2026) rewrote individual income tax for 2026. We read the act and SCDOR Information Letter 26-23, its summary of the session's legislation. Neither amends the 5% corporate rate in 12-6-530 or the license fee in Chapter 20, apart from the separate Act 243 exclusion above. Owners of a C corporation still feel H.4216 on their personal returns, through salaries and dividends, but not on the corporate return itself.
Haigler CPA Group prepares SC1120 and SC1120S returns, computes the license fee from your balance sheet, and handles apportionment when a corporation works across state lines. If the SCDOR sends a notice about a missing license fee or a failure to file, we can respond for you as your representative.
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Sources
- SCDOR — C Corporation (rate, due dates, license fee, estimated tax)
- SCDOR — S Corporation
- SCDOR — Corporate FAQs
- S.C. Code Title 12, Chapter 20 (Corporate License Fees)
- S.C. Code Title 12, Chapter 6 (Section 12-6-530, corporate income tax)
- SCDOR — SC Information Letter #26-23, Tax Legislative Update for 2026
- SC Legislature — H.4216 (Act No. 110 of 2026)
South Carolina publishes new guidance and local governments change their rates, so check the source pages for anything that has moved since the date above. The information on this site is general in nature and is not tax, legal, or accounting advice for your situation. Tax law changes and the right answer depends on facts we would need to review with you. Please speak with a qualified professional before acting on anything you read here.
Questions people ask about this
Does an S corporation pay the South Carolina license fee?
Yes. The license fee is due with the SC1120S. The S corporation's income generally passes through to shareholders, but the fee is measured by capital stock and paid-in surplus, not income, so it applies regardless.
Does my LLC owe the corporate license fee?
Only if it is taxed as a corporation. An LLC taxed as a partnership or disregarded for income tax is exempt. An LLC that elects corporate or S corporation treatment files a CL-1 and pays the fee.
Is retained earnings part of the license fee base?
No. The base is capital stock plus paid-in or capital surplus, which the statute defines as all surplus other than earned surplus. Retained earnings are earned surplus.
Did H.4216 lower the corporate income tax rate?
No. H.4216 changed individual rates and deductions for 2026. The corporate rate in S.C. Code 12-6-530 remains 5%, and the license fee formula in 12-20-50 was not changed by that act.
Does a corporation pay the license fee in a year it lost money?
Yes. The fee is a tax on capital, not profit. The minimum is $25 a year, and larger companies pay $15 plus $1 per $1,000 of capital stock and paid-in surplus.
Keep reading
- SC bonus depreciation addbackSouth Carolina does not allow federal bonus depreciation under IRC Section 168(k). In the year an asset is placed in service, you add back the difference between your federal depreciation and the depreciation you would have claimed without bonus, then take extra South Carolina depreciation in the later years of the same recovery period. The asset carries a higher South Carolina basis until it is fully depreciated or sold.
- SC conformity to federal tax lawSouth Carolina adopts the Internal Revenue Code as it stood on a fixed date, currently December 31, 2024, minus a list of sections it never adopts. The 2026 Legislature did not move that date, so the federal changes enacted in July 2025 are not part of South Carolina law, and returns that claim them need state adjustments. Separately, H.4216 decoupled individuals from federal deductions starting in 2026.
- Active trade or business incomeSouth Carolina lets owners of sole proprietorships, partnerships, S corporations and LLCs taxed as one of those choose a 3% rate on active trade or business income instead of the regular individual rates. Individuals elect it each year on Form I-335; a qualifying partnership or S corporation can instead elect to pay the 3% tax itself, computed on Form I-435. H.4216 did not amend the statute, but SCDOR has not yet said how the election fits the new 2026 rate structure.
- LLC vs. S Corporation Taxes in South CarolinaAn LLC and an S corporation are not two competing entities — one is a state-law structure, the other a federal tax election, and most South Carolina owners can have both. What changes is how much of your profit is exposed to self-employment tax.
- SC business license taxSouth Carolina has no statewide business license. Cities and counties that choose to levy one charge a business license tax, an excise on the privilege of doing business that is measured by gross income, not profit. Since Act 176 standardized the rules, every jurisdiction that levies it uses a May 1 to April 30 license year, an April 30 renewal date, a standard application and a common class schedule, but each sets its own rates.
- South Carolina tax guideHow South Carolina taxes income, businesses and property, and what the Charleston area adds on top, with the state or local source beside every rule.
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