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Community Development (CD) Tax Credit

Background & History

The South Carolina Community Economic Development Act of 2000 was authorized to support community-based, non-profit organizations that focus on improving quality of life and creating economic opportunity in low-income communities. In addition to creating the Community Economic Development Fund grant program, the legislation also authorized $5 million in South Carolina Community Development Tax Credits for eligible investments and contributions to certified organizations. In 2017, all $5 million credits authorized in 2000 were exhausted. An additional $1 million in CD Tax Credits were allocated in 2019.


Current Legislation

2019 CD Tax Credit Usage

Article 12, Section 12-6-3530 was amended and signed into law on May 16, 2019. An additional $1 million in Community Development (CD) Tax Credits were allocated.

A taxpayer may claim as a credit against their state income tax, bank tax, or premium tax liability 33% of all equity investments and 50% all cash donations to certified Community Development Corporations (CDCs) and Community Development Financial Institutions (CDFIs).

For more information on reservation process visit How It Works

$0 in credits claimed*

$1,000,000 in credits available


Overview

Article 12, Section 12-6-3530

  • $1 million in CD Tax Credits are available.

  • A taxpayer may claim as a credit against his/her state income tax, bank tax, or premium tax liability 33% of all equity investments and 50% all cash donations to a certified CDC or CDFI.

    • A taxpayer may carry over the tax credit to succeeding years. The credit may not be used for a taxable year that begins on or after three years from the date of the investment/donation.

  • Tax credits are authorized on a first-come, first-serve basis based on when Tax Credit Reservation Form is received.

  • A single CDC or CDFI may not receive more than 25% of the total annual tax credits authorized.

    • During the first three quarters of each tax year, a CDC or CDFI may not receive more than 15% of the statewide total annual credits (For 2019, $150,000).

    • During the fourth quarter, all remaining tax credits will be available.

  • During the first three quarters of each tax year, 25% of tax credits will be held in reserve for small, rural-based community development corporations.

    • Small, rural definition: The organization must have an operating budget less than $650,000 AND physical address of organization must be located in a Tier III or Tier IV County designated by SC Department of Revenue.

    • All remaining tax credits will be released during the fourth quarter.

  • Returns on investments in a CDC or CDFI, including the value of any tax credits authorized, may not exceed the total amount of initial investment. Additionally, equity investments, which are the basis for the tax credit cannot be redeemed less than five years from time of investment.

 

BACKGROUND & HISTORY     |     HOW IT WORKS     |     CERTIFIED CDCs & CDFIs     |     SC COMMERCE CERTIFICATION