Property Tax Valuation & Tax Assessment Ratios
The value of real and personal property used in manufacturing operations is established by the South Carolina Department of Revenue. Tax assessment ratios are applied to the fair market value of real property and vary by classification set forth by State law. The state law states that only a local government is allowed to levy property taxes. A company’s property tax liability is a function of: Property Value x Assessment Ratio x Millage.
The fair market value is determined by real property being appraised, while tangible personal property is recorded at cost and then depreciated based on a statutory depreciation rate for manufacturers. Rates established in the South Carolina Constitution then assess the fair market value. The local millage rate is applied to the assessed value to determine the property taxes. Millage rates in South Carolina are site-specific and set by the local government each year.
Some properties may be tax property exempt, which may include inventories (raw materials, work-in-progress, finished goods), intangibles (stocks, dividends, interest), and pollution control equipment. An abatement may also be offered. An abatement is a partial property tax exemption and may be made available to manufacturing, research, and development, corporate headquarters, office and distribution facilities that meet certain requirements.
A Fee-in-Lieu of Property Tax agreement may also be negotiated at the discretion of the local government and governmental entities. Such an agreement can drastically reduce property tax liability. An investment as low as $2.5 million can begin negotiations within the county for FILOT agreements. Great savings for industries can occur by lowering the tax assessment ratio in creating this sort of 20-year tax incentive. The ratio can be lowered from the standard 10.5% to rates as low as 6%. Abatement may not be applied in Anderson County if an industry chooses a FILOT agreement.
Fee in Lieu of Property Taxes (FILOT)
Industries investing as little as $2.5 million in Anderson County may negotiate for a Fee-in-Lieu-of Property Taxes or FILOT. A FILOT agreement may result in savings of up to 40% of property taxes otherwise due.
Special Source Revenue Credit (SSRC) or Infrastructure Credits
Additionally, in connection with a FILOT, the county may issue an SSRC or provide the industry with a FILOT credit. The SSRC allows the County to generate revenue for infrastructure that enhances the creation, development, or expansion of a project. This revenue helps new or expanding industries offset the cost of overhead for establishing business and creating jobs with wages above the county average.
Multi-County Industrial Parks (MCIP)
The Multi-County Industrial Parks agreement has two functions. The first function being that Anderson County may enter into an agreement with an adjoining county, which causes projects to be placed into a concept known as a “multi-county industrial park.” This function enables Anderson County to offer the Infrastructure Credits referred to above. In addition, the second use of the MCIP applies to the negotiated fee agreements and allows the industry to qualify for a jobs tax credit. Namely, a jobs tax credit is based at the rate of $1,000 per new job that is created.
Property Tax Abatements
For non-FILOT projects, new manufacturing facilities, and additions of buildings, land, or equipment costing at least $50,000 in a calendar year to existing manufacturing facilities are exempt from the county’s portion of the tax levy for a time period of five years.
State Tax Incentives
The Job Development Credit (JDC) is available through state legislation for qualified projects creating jobs in South Carolina. As a result, eligible companies may retain a percentage of their employee’s state withholding for up to ten years. The state legislation offers several other incentives as an option for a new or expanding economic development project. In particular, this is a negotiation with the South Carolina Department of Commerce and the Coordinating Council for Economic Development (CCED).
South Carolina’s ReadySC Training Program is one of the most comprehensive and successful programs in the US. Its structure and content serve as a model for other state programs throughout the state and the country. Candidates are taught the skills necessary to gain and retain employment in some of the world’s leading industries.
Anderson County also offers several other employee training programs. Anderson County has several options for gaining and training additional individuals within the community. Those options are available through programs with the Anderson County Workforce Development, Tri-County Technical College, and SCWorks. Additionally, the Upstate also has programs available for workforce education and training.
Visit the South Carolina Department of Revenue to view more tax incentives. Additionally, South Carolina has several options for incoming businesses and expanding industries. As a result, there is a variety of combinations useful to industries involved in any particular field. Tax incentives may slightly vary throughout the state; however, many can be utilized in conjunction with each other.
Please contact our office to further discuss your opportunities if you have any questions about tax incentives, credits, employee training, or FILOT agreements in Anderson County. Anderson County Economic Development will help you determine which tax incentives will work best for your business or help your industry in searching for a perfect business site. Also, please contact us if you represent an existing Anderson County business considering expansion and need more information about tax incentives.