Are R&D Tax Credits Available in South Carolina?
Yes. The state of South Carolina provides the Research and Development (R&D) Tax Credit for increasing qualifying research activities. South Carolina leverages of Internal Revenue Code Section 41 regarding qualified expenditures but calculates the credit based solely on expenditures incurred in South Carolina.
- The Applicable South Carolina code section is S.C. Code Section 12-6-3415.
- Research must be conducted within the state of South Carolina.
- The SC R&D Tax Credit is 5% of the qualified research expenditures that occurred in SC.
- The R&D Tax Credit taken in any one taxable year cannot exceed 50% of a taxpayer's liability.
- SC allows a 10-year carryforward period for any unused R&D Tax Credit.
South Carolina R&D Tax Credit Case Study
A manufacturing company in SC creating specialized parts for the automotive industries took a credit for the past two years when it designed a highly specialized prototype. This project involved a multi-year study covering the tax years 2013 and 2014.
The Company qualified for the federal R&D Tax Credits of $213,867 and an additional $116,263 in South Carolina state R&D Tax Credits.
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FEDERAL
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SOUTH CAROLINA
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Year
|
Total QREs
|
Credit
|
Total QREs
|
Credit
|
||
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2014
|
$1,357,500
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$125,906
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$1,357,500
|
$61,250
|
||
|
2013
|
1,100,250
|
87,961
|
1,100,250
|
55,013
|
||
| Total | $2,457,750 | $213,867 | $2,457,750 | $116,263 | ||
You can read more about this South Carolina tax credit case study here.