Perhaps the greatest strengths of Rock Hill USA are the many incentives available to entrepreneurs and organizations that greatly reduce the cost of doing business in today's marketplace.
South Carolina's philosophy is to offer a fair, stable and reasonable tax structure that allows businesses to grow and prosper. Conservative fiscal management and taxation policies create a climate that encourages growth while maintaining a balanced budget. Rock Hill, York County and South Carolina have various incentive programs that add to the positive business climate. These incentives are designed mainly to reduce tax liability in the most significant state and local applications such as corporate and personal income tax, sales tax and local property tax.
- In South Carolina, only local government levies property taxes.
- There is no tax, state or local, on inventories or intangibles in South Carolina.
- York County has the ability to negotiate local property taxes from a 10.5% assessment rate down to a 6% assessment rate or a 43% reduction.
State of South Carolina Incentives
Corporate Headquarters Credits
A corporation establishing a corporate headquarters in South Carolina, or adding to an existing corporate headquarters, is entitled to a credit against corporate income and license taxes. The credit is equal to 20% of the (a) qualifying real property costs incurred in the design, preparation and development of either establishing or expanding a corporate headquarters, and (b) direct construction or direct lease costs for the first five years of operations for the headquarters. In order to quality for the credit, the headquarters or expansion must result in the creation of forty (40) new headquarters function jobs or research and development related functions and services, twenty (20) of which are executive, administrative or professional jobs. The qualifying real property costs involved must be at least $50,000.
Corporate Income Tax
South Carolina has the lowest corporate income tax rate in the Southeast and one of the lowest in the nation. South Carolina income tax is imposed upon South Carolina taxable income of domestic and foreign corporations. South Carolina collects at a 5% corporate income tax rate. *Partnerships are not subject to South Carolina corporate income taxes. *Corporate Income Tax Exemptions - insurance companies, certain non-profit corporations organized for the purpose of providing water supply and/or sewage disposal, banks, building and loan associations and certain electric cooperatives *An “S” corporations is exempt to the extent it is exempt from federal corporate income tax.
Enterprise Program (Jobs Development Credits) Personal Income Tax
Personal income is tiered in SC based on earned income, however most employees at the $30,000 annual salary range would be subject to a 7% assessment. For qualified companies, upon successful application and approval, the SC Coordinating Council for Economic Development establishes a Revitalization Agreement for Jobs Development Credits. This program allows eligible companies to retain a portion of the employee state tax withholding, ranging from 2 to 5 percent of wages and to use these funds for fixed capital investments, e.g. land and building, leasehold improvements, expansions and other non-personal investment. Machinery and equipment (FF&E) purchases are specifically excluded from eligible expenditures. The program allows an eligible company to accrue JDC's for a period of 10 years and is also qualified based on the development status of the particular county.
Sales Tax - Manufacturer's Exemption
South Carolina imposes a sales and use tax of 5%, the proceeds of which are used exclusively to fund the public school system. The sales tax applies to all retail sale, lease and rental of tangible personal property. SC exempts any applicable sales tax for purchases that are an integral part of the manufacturing process including raw materials, machinery and equipment for manufacturing, electricity used for manufacturing, packaging materials and other products as allowed by law. York County has leveraged a 1% additional tax, recently renewed by county voters, to improve roads throughout the county. York County’s total sales tax rate is 6%.
South Carolina Jobs Tax Credits
Corporate Income Tax levied in South Carolina is 5% and is based on a tripartite formula of sales, payroll and asset with sales in SC double-weighted. Compared to North Carolina’s 7% corporate income tax rate, there is an immediate savings in SC. In addition, SC allows qualified and eligible companies a Jobs Tax Credit up to $2,500 per job in York County. To be eligible,the minimum number of jobs created is 10 net new jobs in one year. The credit is per job, per year for five years and is applied towards the corporate income tax in SC and cannot equal more than 50% of any one year's liability. There is a 15 year carry forward for unused credits.
Fee-in-Lieu of Taxes
For eligible and qualified companies,York County is potentially able to provide as much as a 43% property tax reduction for a 30-year period through the Fee-in-Lieu of Taxes program. Assuming a minimum net-taxable investment of $10 million, York County may be willing to reduce applicable real and personal tax assessment rates from 10.5% (for manufacturing) to 6% for a 30-year period. Another benefit to this program is the elimination of any annual property tax increases since rates can be frozen for five year increments during the 30-year agreement.
Local Property Tax
Real and personal property used in business are subject to property tax levied by local governments. Although property tax is collected locally, the South Carolina Department of Revenue (DOR) generally oversees property tax collections to ensure equitable and uniform assessment throughout the state. The Department of Revenue appraises manufacturing and distribution facilities. There is no state or local tax on intangibles or inventories. The calculation of property taxes involves the following three elements: *Valuation *Assessment Ratio: The assessment ratio, established in the State Constitution to ensure stability, is 10.5% for manufacturing property (in the absence of a fee-in-lieu agreement) and 6% for commercial real property. Commercial personal property is assessed at 10.5%. The valuation is multiplies by this ratio to produce the “assessed value” of a particular piece of property. Taxes are levied based upon this assessed value. *Millage: Each taxing jurisdiction determines on an annual basis the number of mills required to apply to the total assessed value of property subject to taxation within its jurisdiction in order to raise the money it needs to operate for the next year. (Each jurisdiction also takes other sources of revenue into account in making this determination.) The 2005 average Rock Hill millage rate is 384 mills. *Exemptions: Inventories and intangible property are exempt from property taxation.
Any manufacturing company that invests in land, building, and machinery and equipment, with a sum of $50,000 or greater, is eligible for an abatement of city and county property taxes. A distribution company may be eligible for abatement if the project creates 75 or more new jobs. The abatement stands for five (5) years and does not affect the depreciation value of the property. The abatement must be filed, in the same tax year as the purchase was made, to the Department of Revenue.
Old Town Incentives
Old Town Facade Rehabilitation Grant Program
To improve the appearance and condition of the historic buildings in Old Town, the City of Rock Hill may provide a reimbursement grant for 25% of the cost of front, rear, and side facade improvements. The planned improvements are subject to review and approval. All commercial properties are eligible to apply. For more information, please review the Facade Rehabilitation Grant Program Application.
Old Town Jumpstart Main Street Program
To assist start-up and established retail and restaurant businesses thrive in Old Town, the City of Rock Hill and the Old Town Association may provide a reimbursement grant for 50% of the cost (subject to eligibility, funding limits, and other policies) of marketing and advertising expenses. The marketing efforts to be employed are selected by the business. The marketing should attract customers and visitors to Old Town and to the businesses. The grant amount is agreed upon based on submittal of a marketing plan and budget. See the Jumpstart Main Street Program Application for details.
Old Town Tax Credits
Where appropriate, the City of Rock Hill will work with developers to access federal and/or state tax credits associated with historic buildings, the redevelopment of former textile industry buildings, affordable housing, and investment in low-to-moderate income census tracts. The tax credits can be used to attract equity funds needed for (re)development activities.
Old Town Tax-Increment Financing (TIF)
For larger redevelopment and new construction projects and other public improvements, TIF funds may be used to leverage private investment by supporting the cost of public infrastructure, such as lighting, utilities, landscaping, parking, road improvements, etc. TIF districts are active in certain locations in Old Town.