Potential tax breaks in SC could extend to companies including remote workers based in NC and GA

Sen. Tom Davis, a Republican from Beaufort, is seen standing at his desk in the Senate chambers on the opening day of the 2024 session in Columbia, South Carolina. He is engrossed in reading paperwork. The photograph, taken by Mary Ann Chastain, captures the senator in action, fully immersed in his duties.

South Carolina businesses now have the opportunity to include employees working from home in neighboring North Carolina and Georgia when applying for tax breaks. This legislation aims to make it simpler for companies to qualify for specific incentives.

Companies can include remote workers in their workforce numbers and claim tax breaks on corporate income taxes as long as these workers pay income taxes in the Palmetto State.

South Carolina officials are being granted potential new economic development tools through a bill. These tools will aid in attracting new industries, corporate headquarters, and recycling companies. This includes companies that are involved in harvesting battery metals for the electric vehicle industry.

The option for remote workers was recently added by a Senate panel to a tax-credit bill that was overwhelmingly passed by the House in April.

In response to the remote work trend spurred by the COVID-19 pandemic, Sen. Tom Davis introduced a proposal aimed at reflecting this shifting work landscape.

According to the Beaufort Republican, although individuals who work from home in a neighboring state may not contribute to the economy of South Carolina by spending their paychecks in local establishments, they also do not burden local governments by requiring police or fire protection, or enrolling their children in local schools.

The amended bill will be reviewed by the entire Senate Finance Committee on Tuesday.

‘Practically never used’

The legislation also simplifies the process for companies to fulfill the requirements of two underutilized programs that offer special tax incentives to corporate headquarters and recycling facilities that choose to establish themselves in the state.

According to Burnie Maybank, a lawyer and former state Department of Revenue director who specializes in negotiating incentive deals for companies, the reason why the practice of using this particular incentive is rare is because very few people actually qualify for it.

Only 26 companies were eligible as state headquarters for the fiscal year that ended in June.

If a company decides to invest $50,000 in constructing or expanding its regional or national headquarters building in South Carolina, and creates at least 40 administrative job positions related to the facility, it will be eligible to utilize 20% of the costs to reduce its state income tax payment.

In an office setting, acquiring an additional 20% credit to cover expenses on furniture and computers has proven to be more challenging. To qualify for this credit, a company must have a minimum of 75 new employees.

The extra jobs requirement has been eliminated in this bill, aiming to make the deal more appealing and attract a greater number of companies to establish their headquarters here.

The legislation expands the scope of recyclable items that qualify for tax credits at recycling facilities. In addition to the existing items, batteries and solar panels are now included on the list. Moreover, the legislation lowers the investment threshold for a facility from $300 million to $150 million.

According to the financial estimates included in the bill, the Commerce Department has reported a total of eight projects that have committed to investments of at least $100 million within the past five years. Under the proposed legislation, companies would be eligible to receive a 30% credit on their investment. For instance, if a facility costs $150 million to construct, the credit would amount to $45 million.

The SC Daily Gazette recently reported that companies in North Carolina and Georgia may soon be able to count remote workers as part of their tax breaks. This potential development could have significant implications for businesses in these states, as it would provide an opportunity to include remote employees when calculating tax benefits.

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