Biomass Energy Tax Credit (Corporate)

March 28, 2022


In 2007 South Carolina enacted the Energy Freedom and Rural Development Act (S.B. 243), which amended previous legislation concerning a landfill methane tax credit. The original legislation, enacted in 2006, allows a 25% corporate tax credit for costs incurred by a taxpayer for the use of landfill methane gas to provide power for a manufacturing facility. The 2007 amendments allow taxpayers a credit against the income tax and/or license fees for 25% of the purchasing and installation cost of equipment used to create heat, power, steam, electricity, or another form of energy. Fuels used by the equipment must be for commercial use and consist of at least 90% biomass resources.

In 2011, the South Carolina Department of Revenue issued a private ruling that the tax credit could be applied to an individual's income taxes. Specifically, a limited liability company (LLC) utilizing the biomass tax credit is allowed to pass through the credit to the shareholders of an S Corporation owning 60% of the parent LLC, provided there are at least four shareholders and that all are residents of South Carolina. Costs incurred by a taxpayer must be certified by the State Energy Office, in consultation with the South Carolina Department of Agriculture and the South Carolina Institute for Energy Studies, in order to qualify for the credit.

The tax credit for all expenditures is limited to $650,000 per taxpayer year and may not exceed 50% of a taxpayer's liability for that year. Unused credits may be carried forward for 15 years. For a fiscal year, all claims may not exceed $650,000 and must apply proportionately to all eligible claimants. To obtain the maximum amount of credit available, the taxpayer must submit a request for credit to the State Energy Office by January 31st for all qualifying equipment placed in service in the previous calendar year. The State Energy Office must notify the taxpayer that it qualifies for the credit and the amount of credit allocated to the taxpayer by March 1st of that year.

For purposes of this credit, a biomass resource means non-commercial wood, by-products of wood processing, demolition debris containing wood, agricultural waste, animal waste, sewage, landfill gas, and other organic materials, not including fossil fuels. "Commercial use" means a use intended for the purpose of generating a profit. A "manufacturing facility" means an establishment where tangible personal property is produced or assembled.

Program Overview

Implementing Sector: State
Category: Financial Incentive
State: South Carolina
Incentive Type: Corporate Tax Credit
Web Site:
Administrator: South Carolina Department of Revenue
Start Date: 1/1/2007
Eligible Renewable/Other Technologies:
  • Biomass
  • Combined Heat & Power
  • Landfill Gas
  • Anaerobic Digestion
Incentive Amount: 25% of eligible costs
Maximum Incentive: $650,000 per year; credit may not exceed 50% of tax liability
Carryover Provisions: Excess credit may be carried forward for 15 years


This program has 1 incentives
Technologies: Biomass, Combined Heat & Power, Landfill Gas, Anaerobic Digestion
Sectors: Industrial
Parameters: The incentive is 25.00 %


Name: S.C. Code § 12-6-3620
Date Enacted: 06/22/2006
Effective Date: 01/01/2007


Name: Public Information
Organization: South Carolina Energy Office
Address: 1200 Senate Street
Columbia SC 29201
Phone: (803) 737-8030

This information is sourced from DSIRE; the most comprehensive source of information on incentives and policies that support renewables and energy efficiency in the United States. Established in 1995, DSIRE is operated by the N.C. Clean Energy Technology Center at N.C. State University.