Solar energy system credit
South Carolina provides an income tax credit for companies that purchase and install qualifying solar energy or small hydropower systems at facilities they own in the state.
The credit equals 25% of qualifying purchase and installation costs, subject to annual credit limits.
Overview
South Carolina’s Solar Energy System Credit provides an income tax credit for companies that purchase and install qualifying solar energy or small hydropower systems at facilities they own in the state. The credit is designed to help offset a portion of the cost of systems used for activities such as heating, cooling, energy-efficient daylighting and electricity generation. Qualifying systems must meet applicable use, ownership and certification requirements, and the credit cannot be claimed until installation is complete.
Eligible systems
- Heating water
- Space heating
- Air cooling
- Energy-efficient daylighting
- Heat reclamation
- Energy-efficient demand response
- Generation of electricity
What qualifies as a system
A qualifying solar energy system may include:
- Controls
- Tanks
- Pumps
- Heat exchangers
- Other equipment used directly and exclusively for the solar energy system
The system does not include land, structural elements of a building such as walls or roofs, or equipment ordinarily contained in the structure.
Credit details
The Solar Energy System Credit equals 25% of qualifying purchase and installation costs.
The amount claimed in a tax year may not exceed:
- $3,500 for each qualifying facility
- 50% of the company’s income tax liability for the taxable year
If the full credit cannot be used in the year it is earned, unused credits may be carried forward for up to 10 years.
The credit cannot be claimed until installation of the qualifying system is complete.
Certification requirements
Qualifying solar energy systems must meet applicable performance certification requirements.
Depending on the type of system, acceptable documentation may include:
- Solar Rating & Certification Corporation certification for qualifying solar hot water systems
- A utility interconnection agreement for qualifying grid-connected photovoltaic systems
- State Energy Office certification documentation for qualifying off-grid systems
Companies should retain required certification and purchase and installation records with their tax records.
Looking for the Solar Energy Property Credit?
The Solar Energy Property Credit (TC-58) has expired for new qualifying investments. It remains available only to taxpayers who qualified before December 31, 2024. Companies with previously qualifying property may still be eligible to claim remaining installments or carryforward amounts.
Claiming the credit
The South Carolina Department of Revenue (SCDOR) administers the Solar Energy System Credit. Companies claim the credit using Form TC-38 with the applicable South Carolina income tax return.
Solar systems also must meet applicable certification requirements established under state law, with certification resources available through the South Carolina Energy Office.
SCDOR resources
Solar Energy System Credit requirements and guidance
