South Carolina · research and development · SC-RD-001
Research Expenses Credit
Publication revised September 24, 2026. Sourcebook page 245.
Credit amount / calculation
5% of South Carolina qualified research expenses; limited to 50% of remaining tax liability; 10-year carryforward.
Business fit and eligible activity
Businesses claiming the federal research credit can claim a South Carolina production, routine quality control and an equipment purchase alone do not qualify.
Illustrative business benefit
A hardwood mill spends $320,000 on a documented project to improve recovery from low-grade logs using scanner changes, controlled test runs, software adjustments, and revised sawing patterns. Assume $200,000 is ultimately treated as the relevant qualified or excess research base. At 5%, the state credit would be about $10,000 before program caps and tax-liability limits. The company would need records showing the uncertainty, alternatives tested, people involved, and results - not simply a year-end estimate of 'engineering time.'
Timing / first action
Tax-year claim: document the eligible expense, hire or placed-in-service date and meet any separate certification deadline. Identify the technical uncertainty and start contemporaneous project records before trying to calculate the credit. credit for in-state research. Qualified research activity. Ordinary
Official sources
Related programs
Abandoned Building Revitalization Credit
Credit based on qualified rehabilitation expenditures
Useful where a mill rehabilitates a qualifying abandoned industrial building; notice must precede expenditures.
Capital Investment Credit
0.5% to 2
Directly relevant to mills placing qualified manufacturing and productive equipment in service.
Employer Child Care Program Credit
50% of eligible child-care startup costs
Forest-products employers establishing or operating qualified child care programs can claim a state credit.
Clean Electricity Investment Credit (Internal Revenue Code §48E)
Generally
Potentially relevant when a forest-products facility owns qualifying zero-emission generation or energy-storage property.
Credit for Increasing Research Activities (Internal Revenue Code §41)
Regular research-credit method
A sawmill, secondary manufacturer or biomass business can qualify when it performs genuine technological experimentation to improve a product or process.
Rehabilitation Credit (Internal Revenue Code §47)
Generally
A forest-products company rehabilitating a certified historic mill or industrial building for income-producing use may qualify.