The Greenville Area Development Corporation (GADC) was created by Greenville County to act as the County’s agent for economic development and has the sole ability to negotiate property tax-based incentives.
Manufacturing Property Tax Exemption/Assessment Ratio Reduction – Statutory
Beginning in 2018, a new manufacturing property tax exemption will be phased in equally over 6 years. It will reduce the 10.5% default assessment ratio to 9%, or a reduction of 0.25% each year until full exemption goes into effect in the 2023 property tax year. The exemption is a reduction in a manufacturer’s property tax liability for all property (real and personal) that is not subject to a negotiated fee-in-lieu of tax (a FILOT). The manufacturer’s filing of the PT-300A is the application for this exemption.
Beyond this new program, a qualifying company may take advantage of one of two potential County incentive programs. Depending on total investment, a company may qualify for either a five-year statutory abatement of a portion of property tax or, by agreement with the County, a negotiated fee-in-lieu-of-tax (FILOT) arrangement. Other unique options can be considered as a method to further reduce liability and is dependent on new capital investment and new job creation.
Property Tax Abatement – Statutory
South Carolina provides a property tax abatement to new or existing companies making new capital investments in the state.
- Reduce tax burden when new assets are at their greatest value
- Approximately 20% – 25% tax reduction annually for 5 years on new capital investment
- Invest greater than $50,000 in new capital expenditures in one year
- Company must be involved in manufacturing, research and development, corporate headquarters, or distribution/warehouse facilities
- If other than manufacturer or R&D, must create at least 75 new jobs
- File tax return/PT-300 to SC Dept. of Revenue; deduction is automatic.
(See SC Department of Revenue website for more information: www.sctax.org)
- The abatement is given for 5 years – years 2 through 6 and is a waiver of the County’s operating portion (presently 67.3 mills) of property tax.
Property Tax: Value x Assessment Ratio x Millage
Tax Example: (assumes manufacturer & non-depreciable asset)
$10 Million investment x 10.5% assessment ratio x .3250 average millage rate = $341,250 annual tax (before abatement)
Abatement Savings Example:
$10 Million investment x 10.5% assessment ratio x .0673 millage abatement = $70,665 annual abatement savings of $353,325 over 5 years
Estimated taxes after the abatement in Year 1 would be $270,585. (This example does not take into account the new manufacturing property assessment ratio reduction mentioned above.)
Note: Besides the abatement, SC provides the following property tax exemptions – All inventories (raw materials, work-in-progress and finished goods), all intangible property, and all pollution control equipment.
Greenville County also has the option to extend this 5-year property tax abatement to an unrelated purchaser of real property that has formerly received the benefit of the abatement. Certain conditions for new employment and investment may apply.
Fee-in-Lieu of Property Tax – Negotiated
A company may also negotiate with the Greenville Area Development Corporation for a Fee-in-Lieu of Property Taxes (FILOT) agreement with final review and consent determined by the Greenville County Council.
- Reward substantial investment by reducing tax burden over the long-term while simultaneously insulating the qualified company from any annual property tax increases for either 5-year increments or the full length of the agreement.
- Approximately 42% tax reduction annually from 20 up to 30 years on new capital investment occurring in a 5-year investment window.
- Company must be manufacturer, warehouse/distributor or an office/headquarters
- Commit to significant new investment over 5 years
- Project must be competitive with other locations
- May lower assessment ratio from 10.5% to as low as 6% on real and personal property for manufacturers.
- For distribution, headquarters and corporate offices, the assessment ratio can be reduced from 10.5% to as low as 6% on personal property since non-manufacturing real property is already assessed at 6%.
- May lock millage rate from 20 up to 30 years or adjust it every 5 years. Historical millage increase has been about 1.5% annually and is dedicated largely to Greenville County School System operations.
- A Bond/Incentive attorney must prepare legal documents for GADC submission to Greenville County for review and final approval. Please allow 8-weeks for the process with County Council once negotiated arrangements have been reached with GADC.
- Greenville County may also further reduce annual real and personal property tax liability for qualifying companies.
Industrial Revenue Bond – Negotiated
For small manufacturers, the IRB is the lowest cost means to finance a new operation or an expansion due to tax-exempt status of the bond (loan). It can be used for the acquisition of land, the construction of buildings, improvements to real property and the acquisition of new machinery. The maximum bond issuance is $10 million; Investment cannot exceed $20 million in expenditures 3+/- years.
Jobs Tax Credit – Statutory
The Jobs Tax Credit is a valuable financial incentive that rewards new and expanding companies for creating jobs in South Carolina. In order to qualify, companies must create and maintain a certain number of net new jobs in a taxable year. The number of new jobs is calculated as the increase in the average monthly employment from one year to the next.
- South Carolina rewards companies for job creation by reducing corporate income tax liability
Requirements and Corresponding Values:
– File form TC-4 or TC-4SB with corporate tax return to the SC Dept. of Revenue. See www.sctax.orgfor more information.
- For companies involved in manufacturing, processing, warehousing, distribution, tourism, or considered a corporate office facility (HQs), bank or qualified technology intensive facility, increase annual average monthly employment by 10 or more new full-time jobs.Credit of $1500 annually for 5 years for each new job; $2500 when located in a Multi-County Business Park
Note: Technology Intensive Facilities as defined by NAICS codes:
5114 – database and directory publishers
5112 – software publishers
54151 – computer systems design and related services
541511 – custom systems programming services
541512 – computer systems design services
541711 – research and development in biotechnology
541712 – research and development in physical, engineering and life sciences
518210 – data processing, hosting, and related services
9271 – space research and technology
51811- internet service providers with web search portals
- “Small Business” – For companies involved in manufacturing, processing, warehousing, distribution, tourism, or considered a corporate office facility (HQs), bank or qualified technology facility and employing corporation-wide 99 or less employees, create 10 net new jobs as noted III.a.1) above or increase annual average monthly employment by 2 or more new full-time jobs.Credit of $1500 annually for 5 years for each new job with gross wages that equal or exceed $28.50 per hour (120% of the state’s per capita of $23.75/hr); $2500 when located in a Multi-County Business Parkor $750 annually for 5 years for each new job that pays less than $28.50; $1750 when located in a Multi-County Business Park
- Service-related facilities – must be either (a) operations defined by NAICS Manual Section 62, subsectors 621, 622, or 623 (healthcare); (b) operations defined by NAICS Sector 4881, subsector 488190 (air transportation); or (c) accomplish one of the following during a given year: Create 175 jobs at a single location; or Create 150 jobs at a single location comprised of a building or portion of a building that has been vacant for at least 12 consecutive months prior to the taxpayer’s investment; or Create 100 jobs with an average salary 1.5 times the State of South Carolina’s per capita income ($71,253); or Create 50 jobs, with an average salary 2 times the State of South Carolina’s per capita income ($95,004); or Create 25 jobs, with an average salary 2.5 times the State of South Carolina’s per capita income ($118,755). Note: A qualified service-related facility may not be engaged in legal, accounting, banking, investment services or retail services.
If meeting one of the above requirements, service-related companies are also eligible for a credit of $1500 annually for 5 years for each new job or $2500 per job when located in a Multi-County Business Park.
- Offsets corporate income tax liability up to 50% in a given year
- Can carry forward unused credits for 15 years
- Credits are given each year for five years beginning with years 2 through 6
100 Employee Manufacturer to create 50 jobs
50 jobs x $1500 = $75,000 annual value
5 year value = $375,000
Corporate Headquarters Credits – Statutory
Income tax credits to partially reimburse for real and personal property expenditures associated with new corporate headquarters related jobs.
Job Development Credit – Negotiated
The Job Development Credit (JDC) is a discretionary, performance-based incentive that rebates a portion of new employees’ withholding taxes that can be used to address the specific needs of individual companies. JDCs are approved on a case-by-case basis by the S.C. Coordinating Council for Economic Development. To qualify, a company must meet certain business requirements and the amount a company receives depends on the company’s pay structure and location. Qualified companies will receive a percentage of each eligible individual employee’s personal income tax returned to them as a cash rebate in either quarterly or annual payments. Depending on salary values, this could be as much as 5% of annual payroll.
Would you like more information about Greenville’s taxes and incentives?
Please contact GADC for more details, or learn more about the business climate in Greenville, SC.