South Carolina's R&D credit is a flat 5% of your in-state research.

Rate	5% of in-state QRE (no base subtraction)
Refundable	No
Carryforward	10 years
Statute	S.C. Code 12-6-3415
Form	Schedule TC-18

The credit is the federal research credit, narrowed to South Carolina. The mechanics:

• Rate. 5 percent of your qualified research expenses made in South Carolina. There is no base amount and no incremental calculation, so the credit applies to all of your in-state qualified research, not just the increase over prior years.
• Federal claim required. You must claim the federal Section 41 credit for the year to take the South Carolina credit.
• South Carolina-only. Only research expenses made in South Carolina count. Expenses for research done elsewhere do not, even where the federal definition would include them.
• Same expense definition as federal. Qualified research expenses follow IRC Section 41: wages for qualified services, supplies, and contract research. The work that supports your federal claim supports the South Carolina claim, limited to the in-state portion.
• A 50 percent ceiling per year. The credit cannot exceed half of your remaining South Carolina tax liability after other credits in any single year.
• Nonrefundable, with carryforward. The credit offsets South Carolina income tax (and the corporate license fee). It is not refundable, but unused credit carries forward up to 10 years.

The credit is claimed on Schedule TC-18, filed with the South Carolina return, under S.C. Code section 12-6-3415.

R&D Binder produces federal Section 41 documentation from your GitHub commit history. The binder is what supports your federal Form 6765 and, starting tax year 2026, the mandatory Form 6765 Section G appendix. Because South Carolina uses the same Section 41 expense definition, that same evidence supports the South Carolina credit for the portion of the work done in South Carolina.

The South Carolina state credit workpaper is a $995 add-on to the standard binder engagement. It produces:

• A South Carolina-attributable QRE breakdown: wages, supplies, and contractor expenses tied to research made in South Carolina, using the same business-component partition as the federal binder.
• The flat 5 percent credit computed on that in-state QRE total, with no base subtraction.
• A usage note: the 50 percent annual ceiling and the 10-year carryforward, so your CPA can plan how the credit is absorbed.
• Filing notes for your CPA: that the credit goes on Schedule TC-18 and which return it attaches to.

We do not file Schedule TC-18 or sign the South Carolina return. That stays with your CPA, the same way federal Form 6765 does. R&D Binder produces the workpaper; your CPA files.

If you operate in more than one state, additional state workpapers are $995 each. Most states with an R&D credit track the federal QRE definition closely, so the marginal cost per state is low once the federal binder is complete.

A worked example. A Charleston SaaS company with 12 engineers, $2.4M in qualifying wages (the federal QRE pool), and 9 engineers doing their research in South Carolina.

• Federal Section 41 credit. Computed on the full $2.4M federal QRE pool through Form 6765, claimed by the CPA. R&D Binder produces the binder, QRE workpaper, and Form 6765 Section G appendix.
• South Carolina credit. Computed on the in-state portion. Allocate roughly $1.8M to South Carolina ($2.4M times the 9/12 engineer ratio, refined by each employee's actual research location). At a flat 5 percent with no base subtraction, the credit is about $90,000.
• Nonrefundable, used over time. The credit offsets South Carolina tax, capped at half the year's liability, with the rest carried forward up to 10 years. A pre-profit company carries the whole amount forward; a profitable one absorbs it over a few years.
• Total engagement cost. SaaS Standard tier ($4,995, 6 to 25 FTE) plus the South Carolina state workpaper add-on ($995). Total $5,990.

The engineer allocation is specific to each company; the numbers above are illustrative. Because South Carolina has no base subtraction, the in-state credit is often larger relative to spend than an incremental state's. The CPA files both returns. R&D Binder never appears on the federal or South Carolina return.

If the South Carolina Department of Revenue examines a return on which the research credit was claimed, the substantiation expected is the same kind the IRS expects under federal Section 41: business-component identification, four-part-test rationale, contemporaneous evidence, and QRE allocation by employee, contractor, and supplies, plus support that the research was done in South Carolina. The binder R&D Binder produces is built to that standard from the federal side, and the South Carolina workpaper inherits the same business-component structure and adds the in-state allocation.

Our standard scope ends at delivering the binder and the state workpaper. Audit-defense engagement for a South Carolina Department of Revenue examination is a separate scope at $250 per hour, scoped per incident. We do not represent before the Department; that remains your CPA's responsibility or your tax controversy attorney's.

• S.C. Code section 12-6-3415 (Tax credit for research and development expenditures), the flat 5 percent rate on qualified research expenses made in South Carolina, the federal Section 41 definition, the requirement to claim the federal credit, and the 50 percent annual limitation. South Carolina General Assembly, Title 12 Chapter 6.
• South Carolina Department of Revenue, Schedule TC-18, Research Expenses Credit, the form on which the credit is computed and claimed, including the 10-year carryforward.
• South Carolina Department of Revenue, income tax credit guidance for the research expenses credit.
• IRS Form 6765 (federal Credit for Increasing Research Activities) and Internal Revenue Code Section 41, the federal definition South Carolina incorporates.

This page is general informational content, not tax advice for any specific taxpayer. The South Carolina credit is administered by the South Carolina Department of Revenue. The rate, the limitation, and the carryforward reflect S.C. Code section 12-6-3415 and Department of Revenue guidance as of June 2026. Confirm current figures and deadlines with your CPA or the Department before filing.

• The Section 41 four-part test
• What is a qualified research expense (QRE)?
• Form 6765 and Section G
• California R&D credit
• Idaho R&D credit
• Illinois R&D credit
• Indiana R&D credit