New developments in South Carolina (Senate Bill 1043) will affect eligibility requirements for the Job Development Credit and introduce a new Agribusiness Service-Related Facility Credit. Below is a summary of the updates.
Agribusiness Service-Related Facility Credit
This new credit is effective for tax years beginning after 2017. Entities fitting the description of an eligible agribusiness facility may receive a credit if they increase their annual purchases of agricultural products certified as South Carolina-grown by at least 15% over an established base year. This credit may be either taken as an income tax credit or against employee withholding and may not exceed $100,000 in any tax year. The credit may be carried forward five years. Any entity wishing to apply for the credit must apply to the Coordinating Council for Economic Development (“Council”) in the calendar year after the increase in purchases occurs.
Job Development Credit Requirements for Service-Related Facility
The Job Development Credit (JDC) is one of the main discretionary incentive tools for the South Carolina Council. The JDC is available to eligible companies creating and maintaining a certain number of net new jobs within a five-year period. The amount of the JDC can vary greatly depending on the size and location of a potential project. The credit is based on the amount of capital expenditures and leverages individual withholding taxes to reimburse for those costs.
Recent legislation amended the existing wage and job creation requirements for the JDC in connection with a Qualifying Service-Related Facility:
- 125 jobs at a single location (reduced from 175 jobs);
- 100 jobs at a single location comprised of a building or portion of a building that has been vacant for at least 12 consecutive months before the taxpayer’s investment (reduced from 150 jobs);
- 75 jobs at a single location and the jobs that have an average cash compensation level of more than 1.5 times the lower of state per capita income or per capita income in the county where the jobs are located (reduced from 100 jobs);
- 50 jobs at a single location and the jobs that have an average cash compensation level of more than 2 times the lower of state per capita income or per capita income in the county where the jobs are located; or
- 25 jobs at a single location and the jobs that have an average cash compensation level of more than 2.5 times the lower of state per capita income or per capita income in the county where the jobs are located.
This recent legislation also expanded the list of business activities that may qualify for the JDC. The JDC could be available to those businesses engaged in legal, accounting, banking, or investment services, including a business identified under North American Industry Classification System (NAICS) Section 55; however, these businesses must meet additional criteria, and the approval of a JDC is at the sole discretion of the South Carolina Council.
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