Key figures
South Carolina accounting
2026, with sources
A 5% income tax and a license fee on one return
South Carolina taxes corporations at 5% of South Carolina taxable income. The same return, Form SC1120, carries the corporate license fee and the annual report, and is due on the 15th day of the fourth month after year end, so April 15 for a calendar-year company. An extension is requested on Form SC1120-T, with any tax due paid by the original date.
Federal taxable income is the starting point, adjusted on the return’s Schedules A and B. Bonus depreciation under Section 168(k) is one of the federal provisions South Carolina specifically does not adopt, so depreciation is recomputed for the state return every year an asset is on the books.
Conformity stuck at 2024
South Carolina updates its conformity date by statute each year. The 2025 bill, S. 507, moved it to December 31, 2024. The 2026 bill, H. 3368, which would have adopted the federal changes made in 2025, failed in the Senate on March 31, 2026, so the Department’s guidance is that 2025 federal changes are backed out of South Carolina returns until the Legislature acts.
For a startup this mainly means domestic research costs. A company that expenses $500,000 of engineering salaries federally under Section 174A capitalizes and amortizes them for South Carolina under the pre-2025 rules, which creates a state deferred tax asset and, for a profitable company, real cash tax.
Apportionment and the services question
A business that mainly sells goods apportions on the sales factor. A business whose income comes from other sources, such as software and services, apportions using a gross receipts fraction. Either way the result is a single factor of receipts, and payroll and property in the state do not enter it.
Receipts from services are sourced to South Carolina to the extent the income-producing activity is performed here, a rule that is neither market-based nor classic cost of performance. A company with engineers in Greenville serving customers nationwide should expect the Department to ask where the activity that produces its revenue takes place.
Deadlines
- 15th day of the 4th month after year end (April 15)Corporate income tax return, with the annual report and license feeForm SC1120
- The original due dateTentative return and extension requestForm SC1120-T
The federal baseline
This page covers what South Carolina adds. The federal rules underneath it apply here too.
Common questions
Does South Carolina follow the 2025 federal tax law?
Not yet. South Carolina conforms to the Internal Revenue Code as amended through December 31, 2024, and the Department of Revenue’s Information Letter #26-4 says the 2025 federal changes, including domestic research expensing, are not adopted until the Legislature acts. H. 3368, which would have moved conformity to December 31, 2025, failed a Senate vote on March 31, 2026. Until that changes, research costs expensed federally under Section 174A are backed out on the South Carolina return.
How are our SaaS receipts sourced in South Carolina?
South Carolina sources receipts from services to the state to the extent the income-producing activity is performed here, rather than by where the customer is. The statute does not define “income-producing activity”, and courts and the Department have reached customer-location results in some industries, so a SaaS company should document the method it uses.
Accounting next door
- GAGeorgia accountingGeorgia taxes C-corporations at a flat 4.99% for 2026, apportions on gross receipts alone, adds a net worth tax capped at $5,000, and decouples from bonus depreciation and Section 174A.
- NCNorth Carolina accountingNorth Carolina taxes C-corporations at 2.00% for 2026 on a single, market-sourced sales factor, but its 2026 conformity update decoupled from federal R&D expensing and it still adds back 85% of bonus depreciation.
Founder guides on this
- R&D taxThe R&D tax credit and Section 174A for startupsEngineering salaries can earn a federal R&D credit against payroll tax, and Section 174A lets you deduct US research again. What qualifies, what to track.
- US GAAPUS GAAP for early-stage startups, in plain EnglishAccrual accounting, revenue recognition (ASC 606), leases (ASC 842), stock compensation and capitalized software: what each means for a small company.
- The closeWhy startups should close their books every monthA monthly close turns a bank balance into numbers an investor, an auditor or a 409A firm will accept. What it is, and why it gets expensive to skip.
More of the South Carolina guide
- ReceivablesReceivables and sales tax in South CarolinaSales tax registration, economic nexus, whether SaaS is taxable, and collecting from customers
- PayablesPayables and contractors in South CarolinaPaying vendors and contractors: 1099 filing, use tax, contractor tests and withholding
- PayrollPayroll taxes and employer rules in South CarolinaWithholding, unemployment insurance, paid leave, minimum wage and the rules on paydays
- ComplianceCompliance and filings in South CarolinaRegistering to do business, annual reports, franchise tax and the filing calendar
- AdvisoryAdvisory: credits and decisions in South CarolinaCredits, incentives and the decisions that are cheaper to get right the first time
Sources
Checked against each agency’s own page on . Rates and thresholds change, usually on January 1.
General information for US companies, not tax, legal or accounting advice for yours. Rules and thresholds change; confirm the specifics with a CPA or the agency before you act on them.