South Carolina R&D Tax Credits

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.

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Learn more about South Carolina R&D Tax Credit law from the South Carolina Department of Revenue. 

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R&D Tax Credit Available:

Yes

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Eligible Entities:

C-Corporation, S-Corporations, LLCs, Partnerships

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Deadline for Tax Filing:

Due with South Carolina Tax Return

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Data Required to Compute Credit:

Claim Period South Carolina Qualified R&D Expenses (QREs)

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What Information is needed?

Current year South Carolina QREs

Federal Form 6765

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Credit Carryforward?

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10 Years (No carry-back)

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The R&D tax credit equals:

• 5% of qualified South Carolina research expenditures.

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Specific Items to Note:

• For a taxpayer to qualify for the credit, the taxpayer must claim a federal income tax credit pursuant to Internal Revenue Code §41 for increasing research activities for the taxable year.
• In general, South Carolina credits must be used in the year they are earned, as much as possible based on your tax liability. The Research Expenses Credit is limited to any remaining tax liability after all other credits have been applied (last in the ordering rules).
• A taxpayer may file an amended tax return for a year that is out of statute to claim a credit that can be carried forward one or more open years. The credits carried forward must be reduced by the amount that could have been used in the years out of statute.