Agribusiness Certified SC Tax Credit

Do you purchase South Carolina grown agriculture products? If so, you may now be able to receive a SC tax credit for those purchases.

In tax years beginning after 2017 and ending before 2028, agribusiness operations and agricultural packaging operations who increase their purchases of agricultural products certified by the SC Dept. of Agriculture as South Carolina grown by 15% over their base year may be eligible to claim a SC tax credit against income tax or employee withholding tax. Agricultural packaging operations are those who use technology to enclose, protect or preserve agricultural products for distribution, storage, sale and use. This would include the design, evaluation and production of packages used for agricultural products (SC Code Sec. 12-6-3360). The maximum credit a taxpayer may receive in a year is $100,000. The maximum amount of credits allowed for all SC taxpayers applying is $500,000 in 2018, $1,000,000 in 2019, $1,500,000 in 2020 and $2,000,000 after 2020. For example, in 2018 if five taxpayers apply for $100,000 each then the available credits for 2018 will be exhausted and no further applicants will receive credits. Companies must exceed $100,000 of products certified as SC grown in their base year to be eligible for the credit.

Packaging operations that are interested in claiming the credit should submit an application to the Coordinating Council for Economic Development after the calendar year that the increase of purchases occurs. The Coordinating Council determines the allocation of the credits. The application should include documentation of the base year purchases along with documentation of the increase of purchases over the base year. The base year is the total dollars of certified agricultural products purchased from January 1st to December 31st of the same year. The base year is recalculated each calendar year.

As we approach the first year of applications, taxpayers should begin analyzing their purchases of certified agricultural products in order to maximize the credit.

Full SC code here. Search the page for 12-6-3378 for more information on the credit.

Sarah Windham
Partner, DHG Tax
tax@dhg.com