Short answer. South Carolina is a flat 5 percent of all your qualified research expenses made in South Carolina, with no base to subtract, so it rewards total in-state research rather than only the growth. You must claim the federal credit first. It is non-refundable, capped at half your tax per year, and carries forward 10 years.
Key facts
| Rate | 5% of in-state QRE (no base subtraction) |
|---|---|
| Refundable | No (max 50% of tax per year) |
| Carryforward | 10 years |
| Precondition | Claim the federal Section 41 credit first |
| Statute / form | S.C. Code 12-6-3415; Schedule TC-18 |
A flat 5 percent, no base
South Carolina rewards your total in-state research, not just the increase.
The credit is 5 percent of your qualified research expenses made in South Carolina. There is no base amount and no incremental calculation, so it applies to all of your in-state qualified research rather than only the growth over prior years. That makes it simpler to compute than most state credits, and it can favor a company with steady research that would show little increase under an incremental method.
You have to claim the federal Section 41 credit first. The qualified expense definition follows Section 41, limited to research conducted in South Carolina.
A 50 percent annual ceiling
How much you can use in a year is capped.
The credit cannot exceed half of your remaining South Carolina tax liability after other credits in any single year. It offsets South Carolina income tax and the corporate license fee. A large credit is used across several years rather than all at once.
Non-refundable, 10-year carryforward
The rest banks for later.
The credit is not refundable, but unused credit carries forward up to 10 years. It is claimed on Schedule TC-18, filed with the South Carolina return, under S.C. Code section 12-6-3415. A pre-profit company carries the whole amount forward.
More on South Carolina's R&D credit
The full state overview, the federal Section 41 work it builds on, and related state guides:
Sources
Every claim on this page traces to a primary authority. Each source below is independent and verifiable.
- South Carolina Code 12-6-3415 (research expenses credit) - South Carolina General Assembly
- South Carolina Schedule TC-18, Research Expenses Credit - South Carolina Department of Revenue
- 26 U.S.C. ยง 41 (credit for increasing research activities) - Cornell Law School, Legal Information Institute
- IRS, About Form 6765 - Internal Revenue Service
Get documentation built to survive an exam
R&D Binder produces the federal Section 41 binder and the South Carolina state workpaper from one engagement, both built to survive an exam.