On Oct. 3, 2018 the South Carolina legislature overrode Gov. Henry McMaster’s veto of Senate Bill 1043. The bill amends South Carolina’s Abandoned Buildings Revitalization Act to extend the effective dates of various tax credit provisions until Dec. 31, 2021, clarifies the Textiles Communities Revitalization Act, and adds a new agribusiness credit.
Amended tax credits and incentives
Highlighted tax credit program changes are as follows:
- Abandoned Buildings Revitalization Act: Tax credits for the redevelopment of abandoned buildings or certified historic structures are extended until Dec. 31, 2021, from Dec. 31, 2019, for eligible building sites placed in service after June 30, 2018. The bill specifies how eligible buildings may be redeveloped and subdivided, and how unused credit amounts may be carried forward to future eligible tax years.
- Textiles Communities Revitalization Act: The definition of ‘textile mill site’ is amended for purposes of the tax credit’s inclusion of the textile manufacturers’ land, mills and other improvements. The definition of ‘rehabilitation expenses’ is amended to include additional expenses or capital expenditures incurred in the redevelopment of textile mills such as demolition costs and environmental remediation.
- Tax credits for certain agribusinesses and service-related facilities: In tax years beginning after 2017 and ending before 2028, eligible agribusinesses and service-related facilities may receive a new income tax credit or a credit against employee withholding if the taxpayer increases, by more than 15 percent in a single calendar year over the base year, its purchases of certified South Carolina grown agricultural products. The bill amends and outlines additional limitations on eligibility for the tax credit, and how the credit is calculated.
- Job development credits: For purposes of the jobs development credits, the job and per capita income net increase thresholds defined by “qualifying service-related facility” in the jobs tax credit is amended to more taxpayer-friendly thresholds as follows:
- 125 jobs at a single location (reduced from 175)
- 100 jobs at a qualifying vacant location (reduced from 150)
- 75 jobs at a location where the average cash compensation level of more than 1.5 time the lower of state per capita income or per capita income in the county where the jobs are located (reduced from 100)
Additionally, and subject to the discretion of the Coordinating Council for Economic Development, certain legal, accounting, banking, investment services, or retail sales businesses operating at a single facility may also qualify as a service-related facility.
Takeaways
Senate Bill 1043 provides opportunities and incentives for real estate developers, textile manufacturers and agricultural businesses to invest in developing, upgrading and rehabilitating distressed properties in South Carolina. In addition to extending the effective dates for certain tax credits, the bill also expands the eligibility of other tax credits. Taxpayers interested in taking advantage of South Carolina tax credits and incentives, or that have questions on how the tax credits are calculated, should speak with their state tax advisers.
