Job development credit
South Carolina’s Job Development Credit is a discretionary, performance-based incentive that can reimburse qualifying companies for approved project costs associated with locating or expanding in the state.
Unlike the statutory Job Tax Credit, which reduces certain tax liabilities based on qualifying job creation, the Job Development Credit uses a portion of employee withholding to reimburse approved project expenditures. Eligibility and program terms are determined through the South Carolina Coordinating Council for Economic Development (Coordinating Council).
Overview
The Job Development Credit is part of South Carolina’s Enterprise Program and is administered by the South Carolina Coordinating Council for Economic Development (Coordinating Council).
Qualifying companies enter into a Revitalization Agreement with the Coordinating Council that establishes project-specific investment, employment and reimbursement terms. The program is discretionary, and approval is based on the project and negotiated incentive terms.
Basic eligibility
To be eligible to apply, a company generally must:
- Qualify as an eligible business under the Enterprise Program
- Create at least 10 new full-time jobs within the required project period
- Meet applicable investment requirements established in the Revitalization Agreement
- Provide qualifying employees with required health care benefits
- Receive approval from the Coordinating Council
Current Commerce guidance says qualifying employees must receive a comprehensive health plan and that the company must pay at least 50% of an eligible employee’s health plan premium.
How the credit works
Once a company meets the employment and investment requirements established in its Revitalization Agreement, the Coordinating Council certifies the company to begin claiming Job Development Credits.
The credit is claimed against South Carolina employee withholding and may be used to reimburse approved project expenditures. A company may generally claim credits for no more than 15 years under current law, although the Coordinating Council may establish a shorter collection period in the Revitalization Agreement.
Source of funds
Job Development Credits are claimed against South Carolina personal income tax withholding associated with qualifying employees. Employees continue to receive full credit for the amount withheld, so participation in the program does not reduce their wages or the withholding credited to them.
The amount a company may collect is subject to the terms of its Revitalization Agreement and applicable program limits. The Coordinating Council generally caps annual collections at no more than $3,250 per qualifying employee.
Eligible project costs
Current law allows qualifying expenditures for things such as:
- Training costs and facilities
- Acquisition and improvement of real property
- Utility improvements
- Transportation infrastructure
- Certain environmental compliance improvements
- Certain employee relocation expenses
- Financing costs associated with qualifying expenditures
- Certain export training, apprenticeship and quality-improvement programs
The exact eligible expenditures are established in the company’s Revitalization Agreement.
Credit amount
The amount of Job Development Credit available to an approved company varies based on factors including employee wages, project location, applicable county tier and the terms established in the company’s Revitalization Agreement.
The credit is calculated using a portion of the South Carolina personal income tax withholding associated with qualifying new employees. The percentage available generally increases with employee wage levels and may be affected by the county in which the project is located.
The Coordinating Council determines the maximum reimbursement available for each approved project and establishes the applicable collection terms in the Revitalization Agreement.
Application and approval
Companies must apply to the South Carolina Coordinating Council for Economic Development and receive approval before participating in the Job Development Credit program.
If approved, the company enters into a Revitalization Agreement with the Coordinating Council that establishes the project’s minimum investment and employment commitments, qualifying expenditures, collection period and maximum reimbursement amount.
Ready to apply?
Contact an SC Commerce incentives expert to begin the Job Development Credit application process.
Claiming the credit
Once a company has been approved for the Job Development Credit and meets the requirements established in its Revitalization Agreement, the Coordinating Council certifies the company to begin claiming credits.
Job Development Credits are claimed through the South Carolina Department of Revenue using the applicable withholding tax filing process. Companies must continue to meet the employment, investment and reporting requirements established in their Revitalization Agreement while receiving the credit.
Compliance and reporting
Companies receiving Job Development Credits must maintain required employment and investment levels and remain current on South Carolina taxes.
Companies must also:
- Make payroll books and records available to the Coordinating Council and SCDOR upon request
- Provide required documentation concerning employee withholding, credits claimed and use of reimbursements
- File an annual sources-and-uses report with the Coordinating Council and SCDOR by June 30 following the calendar year in which credits are claimed, unless an extension is approved
SCDOR audits qualifying businesses claiming more than $10,000 in a calendar year at least once every three years.
