LEARN MORE ABOUT ENHANCED STATE TAX CREDITS FOR SMALL BUSINESSES

South Carolina small business owners can help their bottom lines with two tax credits increased this year by state lawmakers.

If you own a business that employs apprentices or develops abandoned buildings, the SCDOR wants you to know about two tax credits whose benefits were enhanced by state lawmakers this year.

Even if you don't qualify for those credits, the state offers South Carolina's 479,000 small business owners an assortment of tax credits to help lower tax bills in 2024 and beyond.

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Recently enhanced tax credits:

• Apprenticeship Income Tax Credit
• • What's new? In May, the South Carolina Legislature increased Income Tax credit benefits for South Carolina businesses hiring apprentices.
  • • The credit previously offered up to $4,000 over four years for each apprentice registered with the U.S. Department of Labor. However, the maximum allowable credit per apprentice has been increased to $6,000 for a youth apprentice and $4,000 for a standard apprentice.
    • The credit is now equal to the cost of the apprenticeship or $1,000, whichever is greater, for each employed apprentice.
    • Businesses can continue claiming a credit of $1,000 for three additional years if the apprentice has completed the program and remains an employee of the business.
    • Legislators have capped total benefits for the credit at $5 million per year.
  • How to claim: Use the TC-45 to claim the credit. An updated version of the TC-45 with the modified credit amounts will be available in January 2025.

• Abandoned Buildings Revitalization Credit:
• • What's new? New legislation has increased the benefits for those developing abandoned buildings from $500,000 to $700,000 per site per year. The credit also extends the sunset provision until 2035. The SCDOR will accept an amended Notice of Intent to Rehabilitate until October 15, 2024. For more details, see Information Letter #24-6.

Here are some other credits small business owners may be able to claim:

• Small Business Jobs Credit: Qualifying business taxpayers with 99 or fewer employees worldwide who increase employment in South Carolina by at least two or more full-time jobs in a year can take a credit against South Carolina Individual Income Tax, Bank Tax, or Insurance Premium Tax. The credit is limited to 50% of the tax liability and has a 15-year carryforward.
• • How to claim: Use the TC-4SB.
• Accelerated Small Business Jobs Credit: Similar to the Small Business Jobs Credit, this credit is taken in the year the jobs are created. The credit amounts per job created are based on county location and gross wages. The credit is limited to 50% of the tax liability and has a 15-year carryforward.
• • How to claim: Use the TC-4SA.
• Formerly Incarcerated Apprenticeship Credit and Veterans Apprenticeship Credit: Taxpayers who employ a formerly incarcerated individual or a veteran of the U.S. Armed Services as a new employee in an apprenticeship validated by the U.S. Department of Labor are eligible for a tax credit of $1,000-3,000, depending on the year of apprenticeship. The credits are available for employees hired from January 1, 2022 to December 31, 2026. The credit can be used for Corporate or Individual Income Tax, Bank Tax, Savings and Loan Tax, Corporate License Fee or Insurance Premium Tax.
• • How to claim: Submit an application for each apprentice on MyDORWAY, then use the TC-64 or TC-65. You must complete a new application on MyDORWAY for each tax year in which you are claiming the credit.
• Credit for state contractors subcontracting with socially and economically disadvantaged small business: Taxpayers who have a contract with the state of South Carolina and who subcontract with a socially and economically disadvantaged small business are eligible for a credit equal to 4% of the payments to the subcontractor. The credit can be used for Corporate or Individual Income Tax. It is limited to $50,000 per year and cannot exceed 10 years of claims.
• • How to claim: Use the TC-2.

All South Carolina tax credits related to small businesses are nonrefundable, meaning they cannot reduce your tax liability below zero. Each of these credits applies to specific circumstances. Review the facts in your situation to see if any of the credits detailed above apply.

For more complete details about all South Carolina tax credits, including those listed above, visit dor.sc.gov/taxcredits.

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