North Carolina - Taxes | Tax Credits | Incentives | Infrastructure Assistance
South Carolina - Taxes | Tax Credits | Incentives | Technology Intensive Sales Tax Exemption | Financial Assistance Programs | Infrastructure & Training Incentives | Exemptions and Caps
Corporate Income Tax
Flat rate of 6.0% of net income allocable to the state in 2014 and the rate will decrease to 5.0% in 2015. The rate will potentially decrease to 4.0% in 2016 and 3.0% in 2017 if state revenue targets are met.
Sales & Use Tax
4.75% statewide with a local rate of 2.0% - 2.5% on transactions. The combined tax is not applicable to raw materials, containers, labels, packaging and shipping materials.
$1.50 per $1,000 and is applied to the greatest base determined as set forth in the law.
North Carolina does not impose an inventory tax.
North Carolina does not impose a state property tax.
Subject to local rates (county rates range 4.2-11 percent, city rates range 2.4-8 percent).
Rates assessed per $100 of 100 percent assessed value.
$1,000,000 / 100) * Combined Tax Rate = Annual City/County Tax Bill
[Combined tax rates range from .42-1.433 per $100 of 100 percent assessed value]
3.0%. Full exemption on sales and use tax for fuel and electricity sold to a manufacturer for use in connection with the operation of a manufacturing facility.
Piped natural gas: 4.7 cents for the first 200 therms and goes down to .3 in excess of 500,000 therms. Manufactuers are exempt.
$50,000 cap applies for call center operations
Unemployment Insurance Rate
Employers rate 0.07 percent to 6.91 percent
Taxable base $21,410
Research & Development Tax Credit
Credit equal to a percentage of qualified NC R&D expenses
- Small Business - 3.25 percent
- Tier 1 County - 3.25 percent
- Other - 1.25 - 3.25 percent (depending upon investment level)
20 percent tax credit for companies with NC university research expenses
May be used to offset up to 50 percent of state income tax or franchise tax after all other credits are applied
Carry forwards up to 15 years
NC Port Users Tax Credit
Possible eligibility for significant tax credits for companies that utilize the NC ports in Wilmington or Morehead City
Industrial Revenue Bonds
Maximum $10 million per project, $20 million per company
Business Energy Improvement Program
Low interest rates for energy conservation measures
Loans ranging from $100,000 to $500,000
Industrial Development Fund
Grants or loans for infrastructure spurring for job creation in select counties
Maximum of $5,000 per job or $500,000 per project
Requires local match.
Road Access Funds
State assistance on construction of access roads to a site
Locally approved improvements to existing road infrastructure, if required due to the scope of project area
North Carolina Infrastructure Assistance
Rail Industrial Access Program
Possible state funding for extensions or renovations of existing rail spurs
Possible improvements by local governments, such as street relocations, could reduce rail costs
State's portion not to exceed 50 percent of the total project cost
Approval of funds based on new jobs created, capital investment of project, amount of rail use and general impact of project on community and state
Industrial Extension Service
Services include training, lean manufacturing assistance, energy savings analysis, environmental/health/safety analysis, etc.
Job Creation Tax Credit
Credit amount per job dependent on Tier designation of county
Credits in four equal installments over four years.
Additional $1,000 incentive per job (five job requirement) in Urban Progress Zones and Agrarian Work Zones. If job filled by zone resident or a long-term unemployed worker, an additional $1,000 per job.
Tax Credit Per Job Creation:
$750 - Tier 3 County
$5,000 - Tier 2 County
$12,500 - Tier 1 County
North Carolina 2013 County Tier Designations:
EXAMPLE: Company A with 20 jobs relocating to City X
County X - Tier 2
City X - Urban Progress Zone (UPZ)
Minimum 10 jobs created and meets county wage standard
County X Tier 2 Job Tax Credit ... 10 jobs x $ 5,000 per job = $50,000
City X Urban Progress Zone Tax Credit...15 jobs x $ 1,000 per job = $15,000
Total Jobs Tax Credit for Company A locating within City X = $ 65,000 Investment Tax Credit
- 7 percent on all machinery & equipment invested in Tier 1 counties
- 5 percent on all machinery & equipment over $1 million threshold invested in Tier 2 counties
- 3.5 percent on all machinery & equipment over $2 million threshold invested in Tier 3 counties
Sales Tax Exemption for Large-Scale Data Centers
Qualified large data center projects investing in real and personal property exempt from sales and use taxes on machinery and equipment. However, a 1 percent privilege tax will be imposed on eligible data center purchases (maximum of $80 per item).
Qualified data center projects must make minimum real and personal property investment levels based on NC. Development Tier structure as follows:
Tier 1 county: a minimum of $150 million investment in real
and/or personal property within 5 years after construction begins.
Tier 2 and 3 counties: a minimum of $300 million investment in real and/or
personal property within 5 years after construction begins.
Corporate Income Tax
Flat rate of 5 percent of net income allocable to the state
Sales & Use Tax
6 percent statewide with a local rate of 1 percent or 2 percent on transactions
South Carolina does not impose a franchise tax
South Carolina does not impose an inventory tax
South Carolina does not impose a state property tax.
Subject to local rates (county rates range .41-1.93 percent, county and school rates range 4.07 percent)
South Carolina does not impose a manufacturing fuels tax
South Carolina does not impose a manufacturing equipment tax
South Carolina does not impose an electricity tax
South Carolina does not impose a natural gas tax
Unemployment Insurance Rate
Average tax rate of $234.00
Employers rate 2.7 percent; new to 5.4 percent (max)
Taxable base $7,000
Job Creation Tax Credit Program
- Credit per job depending on county designation
- 10 job minimum requirement
- Additional $1,000 per net new job, if located in "Multi-County Industrial Park"
- Can carry forward unused tax credits for 15 years
- Credits given for 5 years, beginning with years 2 through 6
- Manufacturing, processing, warehousing, distribution, tourism, or corporate office facilities eligible
Offsets corporate income tax liability up to 50 percent in a given year
Tax Credit per Job Creation
$8,000 - Tier IV
$4,250 - Tier III
$2,750 - Tier II
$1,500 - Tier I
South Carolina 2012 County Tier Designations:
EXAMPLE: Company A moves to tier II county
|Year 1||Establish Qualifications for Credit...|
|Five Year value - $1,375,000|
Corporate Headquarters Tax Credit Program
Standard Credit: 20 percent for headquarters related real property
- 40 new jobs minimum, 20 at staff level
- Can be used to offset remaining corporate income tax with 10-year carry-forward
Enhanced Credit: 20 percent credit for headquarters-elated personal property
- Minimum 75 new HQ or R&D jobs
- Average wage 1.5 times the state average wage
- Can be used to offset remaining corporate income tax with 15-year carry-forward
EXAMPLE: Company B constructs $10 million facility, including headquarters office Value of total facility ($10,000,000) x percentage of facility dedicated to HQ (.25) = $2,500,000
$2,500,000 x 20 percent credit (.20) = $500,000 Total Credit Value
Technology Intensive Sales Tax Exemption
"Technology intensive" new and/or expanding facilities in South Carolina may be exempt from some sales and use taxes when the new and/or expanding facility meets certain investment and job creation requirements. For a company to qualify for these exemptions, the new and/or expanding facility must:
- Qualify as a "technology intensive facility" as the term is defined in the S.C. jobs tax credit statute;
- Invest at least $300 million in property at the facility over a five-year period, 60 percent of which must be spent on computer equipment;
- Create at least 100 new jobs with an average wage that is at least 150 percent of the state per capita wage within a five-year period.
Items exempt from sales and use tax include computer equipment, electricity used by the facility, and equipment and raw materials.
Once qualified for this exemption, all future computer equipment purchases are exempt.
Child Care Program Tax Credit
An amount equal to 50 percent of investment but not more than $100,000 for costs incurred in establishing a child care program and 50 percent of the child care payments made not to exceed $3,000 for each participating employee per year
Offsets corporate income tax liability up to 50 percent in a given year; unused credits can carry forward up to 10 years
Research & Development Tax Credit
Credit against corporate income tax liability equal to 5 percent of qualified R&D expenditures
Credit limited to 50 percent of liability remaining after all other credits have been applied; must be used before a taxable year beginning 10 years or later from the date of qualified expenditure
Local Property Tax Incentives
To offset local property tax liability, a company may take advantage of one of two incentive programs. Depending upon total investment, a company may qualify for either a five-year abatement of a portion of property taxes or by agreement with the appropriate county, a fee-in-lieu-of-taxes arrangement. Other unique options might be considered depending on a project's size and scope.
Property Tax Abatements:
- $50,000 minimum investment required
- Abates county's operating mileage for first five years
- Generally saves 20-25 percent
- Eligible companies involved in manufacturing, R&D, corporate HQ, corporate offices, or warehouse & distribution are eligible; if other than manufacturing & R&D, companies must create at least 75 new jobs or 150 substantially equivalent jobs
Fee-in-Lieu of Property Taxes:
- Negotiated with the county councils
- Property tax reduction of 30-45 percent
- For manufacturers, may lower assessment ratio from 10.5 percent to as low as 6 percent on real and personal property for manufacturers
- For HQ and corporate offices, the assessment ratio may be reduced from 10.5 percent to as low as 6 percent on personal property
- Must be a manufacturer, warehouse and distribution, or a corporate office / HQ
- May negotiate a locked or a five-year adjustable mileage rate for 20 years
Minimum 10 net new jobs with healthcare benefits.
Enterprise Program Job Development Credit
Quarterly cash refund of employee payroll tax for up to 15 years
Requires application and discretionary approval
Value based on individual employee wage rates and county development designation
Value ranges from 2-5 percent of actual payroll
Eligible costs include utility system upgrades, site/building improvements, pollution control equipment and approved training costs
Requires company to create a minimum 10 net new jobs with healthcare benefits; have a positive cost/benefit to state and locality; be financially viable and credit worthy; pay wages equal to or above the county per capita rate
Supplemental Economic Development Fund
Access to highway funds specifically designated for economic development.
$18 million set aside annually to be used exclusively for the improvement of highways essential to economic development projects.
Can be used for the construction of new or improved roads for the benefit of new or expanding businesses.
Enterprise Zone Retraining Credits
Negotiated incentive with S.C. Coordinating Council
Cash match up to $2,000 per employee over five years to retrain existing production employees
readySC Worker Training Assistance
Free recruitment, screening, testing and pre-employment training when hiring
On-the-job reimbursement possible when hiring fewer than 15 employees
Other Employee Recruiting and Training Providers
S.C. Employment Security Commission
Local technical colleges continuing education programs
Workforce investment boards
Industrial Revenue Bonds
Low-cost, tax-exempt financing for qualified manufacturing companies
Used for acquisition of land, construction of buildings, improvements to real property, and acquisition of new machinery
Maximum of $10 million per project
Cannot exceed $20 million in expenditures over six-ear period
Tax-Increment Financing for Redevelopment Areas
Financing authorized for municipalities to improve areas within their boundaries
Incorporated municipalities issue obligations for redevelopment of their blighted areas or threatened blighted areas.
Obligations and interest rates are determined by the governing body of the municipality, must mature within 30 years
Eligible projects include buildings; improvements to streets, water, or sewer; parking.
South Carolina Resources Authority
Created to assist local governments in financing water and sewer projects in rural South Carolina
Benefits businesses by enabling the local governments to provide the utility structure needed for the operation of business and industrial facilities
Acts as an infrastructure bank for composite revenue bonds, loans or grants to any county, municipality, special purpose/service district, commission of public works and any private nonprofit water and/or sewer company
Property Tax Exemptions
All inventories (raw materials, work-in-progress and finished goods)
All intangible property
All pollution control equipment
Sales Tax Exemptions
Manufacturers receive sales tax exemptions on machinery and equipment, research and development machinery and equipment, repair parts, materials that will be part of an integral part of the finished product, manufacturing electricity, and pollution control equipment
All industries on packaging materials and long distance telecommunications services, including 800 services
Note: Materials handling equipment is exempt from sales taxes for manufacturing or distribution project investing $35 million or more
Sales Tax Caps
$300 maximum sales tax cap on the sale or lease of aircraft, motor vehicles, motorcycles, boats, recreational vehicles and other items.