South Carolina Legislators Approve Changes to Corporate Tax Laws to Spur Corporate Headquarters and Advance Energy Facility Recruitment

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On June 27, South Carolina House Bill 4087 (H.4087), was ratified by the SC Legislature and sent to Governor Henry McMaster's desk for signature. The bill eliminates impediments to recruiting corporate headquarters and advanced energy facilities, two of the target industries in the South Carolina Department of Commerce's recently unveiled strategic plan, Launch to Legacy.  

The legislation enhances Job Development Credits ("JDCs") by allowing capital spent on operating leases to meet the requirements of a "qualified expenditure." Under South Carolina Code Section 12-10-80, a business may claim job development credits against its withholding on its quarterly state withholding tax return for the amount of job development credits allowable pursuant to Section 12-10-80 and the revitalization agreement with the South Carolina Coordinating Council for Economic Development. Further, to claim a job development credit, the qualifying business must incur qualified expenditures at the project.   

To be considered "qualified expenditures," they must be incurred during the term of the revitalization agreement, authorized by the revitalization agreement, and used for specific purposes (training costs, facilities, improvements to utilities, acquisition or improvement of property, transportation infrastructure improvements, construction or improvements to real property or fixtures, training for employees, apprenticeship programs, etc.). This bill will allow more start-ups and white-collar jobs to locate in the busier metro areas of our state and fuel the evolving knowledge economy in South Carolina.  

Some other notable amendments to the Economic Development Code sections:   

• Expands the type of worker counted in the total amount of jobs created by extending the definition to include remote workforce.  

• Removes all data center restrictions, like the incentives moratorium and prohibition of sales tax exemptions.  

• Makes it easier for companies to qualify for the corporate income tax credit as a corporate headquarters. 

• Reduces capital investment requirement for recycling companies applying for the recycling facility tax credit.  

• Enhances the retraining credit to allow warehouse/distribution employees to qualify, increases the types of retraining programs that are eligible, and transfers the approval of all retraining programs to the State Tech Board 

 
Overall, these are welcomed changes for South Carolina Economic Developers and will support the progress of the state's strategy and keep it as one of the nation's top-ranked states for doing business.  

The Maynard Nexsen Economic Development practice group regularly engages with the firm’s award-winning Government Affairs team to provide insight on legislation which can impact clients and the overall economic opportunities across the Southeast.