South Carolina
South Carolina solar tax credit: how the 25% credit works
The statute, the limits, the form and three worked examples, plus what replaced the federal credit.
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South Carolina solar tax credit terms
| Term | What §12-6-3587 says |
|---|---|
| Amount | 25% of the costs of purchase and installation |
| Annual limit | The lesser of $3,500 per facility or 50% of your tax liability for the year |
| Carryforward | Excess above $3,500 carries forward up to 10 years |
| Ownership | The system must be owned by the taxpayer, on a facility in South Carolina |
| Certification | Certified for performance by the Solar Rating and Certification Corporation, or an equivalent the State Energy Office endorses |
| Timing | Not before installation is complete |
| What counts as the system | Controls, tanks, pumps, heat exchangers and other equipment used directly and exclusively for the solar system |
| What does not count | Land and structural elements of the building, such as walls and roofs |
| Form | TC-38, “Solar Energy Credit” |
| End date | none for solar (Act 47 of 2019 re-enacted it; only the geothermal part ends, on 1 January 2032) |
South Carolina Code §12-6-3587 and the SCDOR Tax Incentives manual, Ch. 2 Part G, retrieved 5 October 2026.
The $3,500 cap and the 50% liability limit
The annual limit has two parts, and the lower one wins. The first is $3,500 per facility. The second is 50% of your South Carolina income tax liability for that year. A household with $5,000 of state tax liability can use at most $2,500 that year, even if its credit is far larger.
The statute’s carryforward sentence reads: “If the amount of the credit exceeds three thousand five hundred dollars for each facility, the taxpayer may carry forward the excess for up to ten years.” The text speaks of the amount above $3,500.
If your claim in a year is held down by the 50% limit instead, confirm with SCDOR or your tax preparer how that unused part is carried. Our examples below assume it carries, and say so.
The credit is non-refundable in the sense that matters: it reduces tax you owe, and the statute gives no payment for credit you cannot use within the carryforward period.
South Carolina solar tax credit worked examples
Two example households. The system costs and tax liabilities are hypothetical inputs chosen to show the arithmetic, not South Carolina prices.
| Example | System cost (example) | SC tax liability (example) | Total credit (25%) | Most usable per year | Years to use it all |
|---|---|---|---|---|---|
| A: $20,000 system | $20,000 | $9,000 | $5,000 | $3,500 | 2 years |
| B: $30,000 system | $30,000 | $9,000 | $7,500 | $3,500 | 3 years |
| C: $30,000 system, lower liability | $30,000 | $4,000 | $7,500 | $2,000 | 4 years |
HyreSolar arithmetic on §12-6-3587. Assumes the same liability every year and that the unused amount carries forward each year. Your liability will change year to year.
Example A, year by year
Example A’s system costs $20,000 (an example input), so the credit is $5,000. With $9,000 of state tax liability, half is $4,500, so the $3,500 cap binds. Year 1: claim $3,500, $1,500 left. Year 2: claim $1,500, $0 left.
Example B doubles the wait: a $30,000 system (an example input) produces a $7,500 credit, used as $3,500, $3,500, $500 over 3 years. The credit is worth the same in total, but more of it arrives later.
Example C shows the liability limit at work. With $4,000 of liability, only $2,000 a year is usable, so a $7,500 credit takes four years.
A retired household with little South Carolina tax liability can find the credit worth much less than 25% in practice, which is worth knowing before you count it in a payback figure.
How to claim the credit on Form TC-38
The statute bars a claim before then. Use the tax year in which the system was finished.
Ask the installer for proof that the system is certified by the Solar Rating and Certification Corporation, or an equivalent the State Energy Office endorses.
Purchase and installation of the solar system itself. Leave out roof work, structural work and land, which the statute excludes.
Attach it to your South Carolina income tax return. SCDOR’s Tax Incentives manual points to Revenue Ruling #24-2 for questions and answers.
Keep a note of what you used each year and what remains, for up to 10 years.
South Carolina credit: what counts and what does not
Equipment “used directly and exclusively for the solar energy system”, plus installation.
The credit turns on ownership, not on how you paid. The leasing law itself exempts customer-owned systems financed by a third party.
The statute excludes “structural elements of the building such as walls and roofs”.
The system must be owned by the taxpayer.
The statute does not mention storage. Whether a battery counts as equipment used directly and exclusively for the solar system is not settled in the text; ask SCDOR or a tax preparer before you rely on it.
Federal solar tax credits for South Carolina homes in 2026
The federal Residential Clean Energy Credit (§25D) has ended for new systems. The IRS says §25D "is not available for any property placed in service after December 31, 2025." The test is the date the system was placed in service, not the date you signed or paid. What the end of 25D means.
The business credit, §48E, still exists for systems a company owns, including a leasing company’s system on your roof.
Leased and business systems may use §48E; it ends for wind and solar placed in service after 2027 where construction begins after 4 July 2026 (Form 3468 instructions; Notice 2025-42).
In a South Carolina lease, that credit belongs to the lessor and may be reflected in the lease price; it never reaches your own return. Section 48E explained.
A homeowner in 2026 therefore chooses between owning the system and claiming the 25% state credit, or leasing it from a certified lessor who may claim §48E. Ask any lease quote to say in writing who claims which credit.
Other South Carolina energy tax credits and forms
| Form | Credit | Who it is for | Status |
|---|---|---|---|
| TC-38 | Solar Energy Credit (§12-6-3587) | Taxpayers who own a qualifying system in SC | Available; no end date for solar |
| TC-54 | Clean Energy Credit | Businesses | Annual limit $500,000; carryforward 15 years; amount certified by SCDOR |
| TC-58 | Solar Energy Property Credit | Nonresidential systems of at least 1,900 kW | SCDOR lists it as repealed on 31 December 2024 |
Business owners: commercial solar in South Carolina.
Stacking the credit with utility rebates
Santee Cooper’s Solar Home rebate, $0.95 per watt AC up to 6 kW AC for customer-owned systems installed by a Santee Cooper Solar Electric Trade Ally, is the one utility rebate we verified.
The statute bases the credit on “costs incurred by the taxpayer”; whether a utility rebate reduces those costs is a question for your tax preparer, and conservative practice is to subtract it. All South Carolina incentives.
South Carolina city incentive pages
Questions
How much is the South Carolina solar tax credit?
Does the South Carolina solar credit have a lifetime cap?
Which form do I use to claim the SC solar credit?
Can I claim the South Carolina credit on a leased system?
When does the South Carolina solar tax credit expire?
Can I still get the 30% federal solar credit in 2026?
Does a home battery qualify for the South Carolina solar credit?
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