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South Carolina Research Expenses Tax Credit
The South Carolina Research Expenses Tax Credit, governed by S.C. Code §12-6-3415 and administered by the South Carolina Department of Revenue, provides a 5% incentive on qualified research expenditures (QREs) conducted within the state. This nonrefundable credit offsets corporate income tax, corporate license fees, and individual income tax liabilities under Chapter 6. Businesses must claim the federal R&D credit under IRC §41 to qualify.
Credits are available to businesses performing qualified research activities in South Carolina that align with federal IRC §41 standards. Eligibility requires claiming the federal R&D credit for the same taxable year and attributing expenses to in-state research.
South Carolina’s Research Expenses Credit is straightforward compared to the federal calculation, with no state-level base amount or incremental requirement. The credit is calculated as 5% of qualified research expenses incurred in South Carolina, subject to the 50% liability limit after other credits.
South Carolina's R&D credit emphasizes in-state innovation with straightforward incentives, particularly benefiting manufacturing and growing sectors.
A South Carolina-based manufacturing firm recovered significant R&D incentives to fuel expansion.
The South Carolina Research Expenses Tax Credit is a 5% nonrefundable credit on qualified research expenditures conducted in the state, per S.C. Code §12-6-3415. It offsets income taxes and license fees, requiring a federal IRC §41 claim. Strike Tax helps maximize your benefits.
Eligible activities include developing or improving products, processes, techniques, formulas, or software within South Carolina, meeting federal four-part IRC §41 test (technological uncertainty, experimentation, etc.). Strike Tax identifies qualifying projects.
For $1 million in SC QREs, you could save up to $50,000 in state credits (before liability limit), stackable with federal benefits. Use Strike Tax’s R&D Credit Calculator for personalized estimates.
No, credits are nonrefundable but carry forward for up to 10 years. Small businesses may leverage federal payroll tax offsets for cash flow. Strike Tax optimizes multi-year strategies.
File Schedule TC-18 with your South Carolina tax return (e.g., SC1120 for corporations). Ensure federal Form 6765 compliance. Strike Tax handles documentation and filing.
Yes. The South Carolina credit is designed to supplement the federal credit and is based on the same underlying qualified research expenses in South Carolina. You still must follow federal rules for how the federal credit affects your deductions under section 280C. Strike Tax coordinates claims for maximum savings.
There is no separate state base calculation. The South Carolina credit is 5% of SC qualified research expenses, subject to the 50% liability limit and 10-year carryforward. Your base and fixed-base percentage still matter for calculating the federal credit, but not for the state amount. Strike Tax computes accurately.
No unique startup provisions at the state level. Qualification follows federal IRC §41 rules, including any applicable federal fixed-base phase-in. In-state focus benefits early-stage firms. Strike Tax advises on elections.
Retain records of QREs (wages, supplies, contracts) via time logs, invoices, and project descriptions. Federal Form 6765 has expanded reporting requirements in new Sections E and G. The exact Section G requirements depend on tax year, claim type, and your size or QRE level, so you should follow the current IRS instructions for the year you file. Strike Tax ensures audit-proof files.
As of the latest guidance, South Carolina’s Research Expenses Credit rules are stable: the credit remains 5% of South Carolina qualified research expenses with a 50% tax liability cap and 10-year carryforward. Other state incentives, like the long-standing Headquarters Credit (TC-8), can be claimed in combination, subject to general credit limitation and ordering rules. Strike Tax reviews for synergies.
Use our calculator to estimate your potential federal and state benefits.
Connect with us to find out how R&D tax credits can boost your organization’s bottom line.
The state of South Carolina offers a Research Expenses Credit that is calculated under similar requirements as IRC § 41. The credit is equal to 5% of the qualified expenditures attributed to South Carolina. A taxpayer may claim a credit against Individual, Corporate Income Tax, and Corporate License Fees. The South Carolina R&D credit is claimed using SC Schedule TC-18.
The credit claimed in a tax year cannot exceed 50% of the company’s tax liability for the year after all other credits have been applied.
There is a 10-year carryforward for any unused credit.
Learn more about South Carolina R&D Tax Credit law from the South Carolina Department of Revenue.
R&D Tax Credit Available:
Yes
Eligible Entities:
C-Corporation, S-Corporations, LLCs, Partnerships
Deadline for Tax Filing:
Due with South Carolina Tax Return
Data Required to Compute Credit:
Claim Period South Carolina Qualified R&D Expenses (QREs)
What Information is needed?
Current year South Carolina QREs
Federal Form 6765
Credit Carryforward?
10 Years (No carry-back)
To get an estimate of the potential value of your unclaimed R&D Tax Credits, try out our credit calculator.
Download our R&D Tax Credit Calculator for Android to see how much you can receive from your qualified R&D tax credit expenses.
The South Carolina Research Expenses Tax Credit is a 5% nonrefundable credit on qualified research expenditures conducted in the state, per S.C. Code §12-6-3415. It offsets income taxes and license fees, requiring a federal IRC §41 claim. Strike Tax helps maximize your benefits.
Eligible activities include developing or improving products, processes, techniques, formulas, or software within South Carolina, meeting federal four-part IRC §41 test (technological uncertainty, experimentation, etc.). Strike Tax identifies qualifying projects.
For $1 million in SC QREs, you could save up to $50,000 in state credits (before liability limit), stackable with federal benefits. Use Strike Tax’s R&D Credit Calculator for personalized estimates.
No, credits are nonrefundable but carry forward for up to 10 years. Small businesses may leverage federal payroll tax offsets for cash flow. Strike Tax optimizes multi-year strategies.
File Schedule TC-18 with your South Carolina tax return (e.g., SC1120 for corporations). Ensure federal Form 6765 compliance. Strike Tax handles documentation and filing.
Yes. The South Carolina credit is designed to supplement the federal credit and is based on the same underlying qualified research expenses in South Carolina. You still must follow federal rules for how the federal credit affects your deductions under section 280C. Strike Tax coordinates claims for maximum savings.
There is no separate state base calculation. The South Carolina credit is 5% of SC qualified research expenses, subject to the 50% liability limit and 10-year carryforward. Your base and fixed-base percentage still matter for calculating the federal credit, but not for the state amount. Strike Tax computes accurately.
No unique startup provisions at the state level. Qualification follows federal IRC §41 rules, including any applicable federal fixed-base phase-in. In-state focus benefits early-stage firms. Strike Tax advises on elections.
Retain records of QREs (wages, supplies, contracts) via time logs, invoices, and project descriptions. Federal Form 6765 has expanded reporting requirements in new Sections E and G. The exact Section G requirements depend on tax year, claim type, and your size or QRE level, so you should follow the current IRS instructions for the year you file. Strike Tax ensures audit-proof files.
As of the latest guidance, South Carolina’s Research Expenses Credit rules are stable: the credit remains 5% of South Carolina qualified research expenses with a 50% tax liability cap and 10-year carryforward. Other state incentives, like the long-standing Headquarters Credit (TC-8), can be claimed in combination, subject to general credit limitation and ordering rules. Strike Tax reviews for synergies.
