Low taxes always surface as a key benefit for operating a business in South Carolina. Below, you’ll find a breakdown of taxes your company can expect.
Corporate Income Tax
Companies pay a state corporate income tax on income allocated to South Carolina operations (interest, dividends, royalties, rents, property sale gains and losses, and personal services income) and income apportioned to the operations (based on payroll, property, and sales factors with S.C. sales being double-weighted). A 5% corporate income tax rate applies to the sum of these incomes, and the resulting figure forms the company’s state corporate income tax.
Corporate Franchise Tax and License Fee
All companies must pay an annual state corporate franchise tax. The rate equals one mill ($0.001) per dollar of a proportion of total paid-in-capital and paid-in-surplus (earned surplus is not included), plus an annual $15 license fee. For multi-state corporations, the license fee is determined by apportionment in the same manner employed in computing apportioned corporate income.
Taxes on real property (land and buildings) and personal property (machinery and equipment) for manufacturers are only levied by a local (county and/or city) government. Personal property can depreciate annually (beginning the 1st year) at a rate established by state law. Generally, this rate is 11% per year and depreciates to a residual level of 10% of the original property value. Real and personal property for manufacturers are assessed at 10.5% of fair market value. A local millage rate applies to the assessed value of all property to determine the value of the tax. Millage rates are determined annually by local governments and include a school operating portion (approximately 67%) and a county operating portion (approximately 33%).
South Carolina requires a 6% state tax on sales and usage. Some counties (by approval of a majority of county voters) assess an additional 1% local sales tax for county capital projects (passed in 2008) and 1% for general use. (The latter percentage, however, is offset by a state-mandated credit to real property taxes.)