South Carolina Tax Incentives
Alternative Fuel Vehicle (AFV) Tax Credit
A state income tax credit equal to 20% of the federal fuel cell, advanced lean burn, HEV, and AFV credits is available to South Carolina resident taxpayers who are eligible for and claim the federal credits. If the amount of the credit exceeds the taxpayer's liability for the applicable tax year, any unused credit may be carried forward and claimed in the five succeeding taxable years. The state tax credit is calculated without regard to the phase out period limits of Internal Revenue Code Section 30(B)(f). (Reference South Carolina Code of Laws 12-6-3377)
Biofuels Production Tax Credit
An income tax credit is available to qualified ethanol and biodiesel producers for taxable years beginning after 2006 and before 2017. Corn-based ethanol and soy-based biodiesel producers are eligible for a tax credit of $0.20 per gallon of fuel produced. Producers using feedstocks other than corn or soy oil are eligible for $0.30 per gallon tax credit. An eligible production facility must be operating at a production rate of at least 25% of its name plate design capacity, before denaturing, on or before December 31, 2011. The credit is allowed for 60 months beginning with the first month for which the facility is eligible to receive the credit and ending not later than December 31, 2016. The credit may only be claimed if the facility maintains an average production rate of at least 25% of its name plate design capacity for at least six months after the first month for which it is eligible to receive the credit. Beginning January 1, 2017, the credit changes to $0.075 per gallon of fuel produced. (Reference House Bill 3649, 2008, and South Carolina Code of Laws 12-6-3600)
Biofuels Research and Development Tax Credit
For taxable years beginning after 2007 and ending before 2012, an income tax credit is available for up to 25% of qualified research and development expenditures, which include developing feedstocks and production processes for cellulosic ethanol and algae-derived biodiesel. Cellulosic ethanol is defined as fuel from ligno-cellulosic materials, including wood chips, corn stover, and switchgrass. (Reference South Carolina Code of Laws 12-6-3631
Biofuels Distribution Infrastructure Tax Credit
A taxpayer that constructs, installs, and places into service a qualified commercial facility for distribution or dispensing of renewable fuels in the state is eligible for an income tax credit of up to 25% of the construction and installation costs. Eligible property includes pumps, storage tanks, and related equipment used exclusively for distribution, dispensing, and storing renewable fuel. A qualified facility must clearly label the equipment used to store or dispense the fuel as being associated with the renewable fuel. The credit must be taken in three equal annual installments beginning with the taxable year in which the facility is placed into service. Renewable fuel is defined as ethanol fuel blends of 70% or greater (E70) dispensed at the retail level for use in motor vehicles, and pure ethanol or biodiesel fuel dispensed by a distributor or facility that blends these non-petroleum liquids with gasoline fuel or diesel fuel for use in motor vehicles. (Reference South Carolina Code of Laws 12-63-3610)
Biofuels Production Facility Tax Credit
A taxpayer that constructs and places into service a commercial facility for the production of renewable fuel is eligible for a tax credit of up to 25% of the cost of constructing or renovating a building and equipping the facility, not to exceed $1 million. Production of renewable fuel includes intermediate steps such as milling, crushing, and handling feedstock and the distillation and manufacturing of the final product. The entire credit must be taken in seven equal annual installments beginning with the taxable year in which the facility is placed in service. Renewable fuel is defined as liquid non-petroleum based fuel that can be placed in motor vehicle fuel tanks and used to operate on-road vehicles, including all forms of fuel commonly or commercially known or sold as biodiesel and ethanol. (Reference South Carolina Code of Laws 12-63-3610)
Alternative Fuel Tax
All fuels, including alternative fuels and alternative fuel blends, are exempt from the state sales and use tax. However, all fuels are subject to a state fuels user fee of $0.16 per gallon. Alternative fuels include butane, liquefied petroleum gas, and compressed natural gas. Blended fuels are defined as mixtures composed of gasoline or diesel fuel and another liquid, other than products such as carburetor detergent or oxidation inhibitor, which can be used as a fuel to operate a highway vehicle. (Reference South Carolina Code of Laws 12-28-110, 12-28-310, and 12-36-2120)
