H 4164

South Carolina General Assembly
126th Session, 2025-2026
Bill 4164
Indicates Matter Stricken
Indicates New Matter
(Text matches printed bills. Document has been reformatted to meet World Wide Web specifications.)
A bill
TO AMEND THE SOUTH CAROLINA CODE OF LAWS BY ADDING SECTION
12-6-3531 SO AS TO ALLOW A TAX CREDIT TO A TAXPAYER THAT INVESTS IN A COMMUNITY
DEVELOPMENT CORPORATION OR IN A COMMUNITY FINANCIAL INSTITUTION.
Be it enacted by the
General Assembly of the State of South Carolina:
SECTION 1.  Article 25, Chapter 6, Title 12 of the S.C. Code is
amended by adding:
    Section
12-6-3531. (A)(1) A taxpayer may
claim as a credit against his state income tax, bank tax, or premium tax
liability thirty-three percent of all amounts invested in a community
development corporation or in a community development financial institution. A
taxpayer that makes a cash donation to a certified community development
corporation or community development financial institution may claim a credit
equal to fifty percent of the donation.
       (2)
To qualify for this credit the taxpayer must obtain a certificate from the
South Carolina Department of Commerce certifying that the entity into which the
funds are invested is a community development corporation or a community
development financial institution and certifying that the credit taken or
available to that taxpayer will not exceed the annual aggregate dollar
limitation of all those credits as provided in subsection (B). A taxpayer who
invested in good faith in a certified corporation or institution may claim the
credit provided in this section, notwithstanding the fact that the
certification is later revoked or not renewed by the department.
    (B)
The total amount of credits allowed pursuant to this section may not exceed in
the aggregate fifteen million dollars for all taxpayers and all taxable years
and three million dollars for all taxpayers in one taxable year.
    (C) The
Department of Commerce shall authorize the tax credits each year on a first-come,
first-served basis. A single community development corporation or community
development financial institution may not receive more than twenty-five percent
of the total annual tax credits authorized pursuant to this section. Twenty-five
percent of annual tax credits must be held in a reserve account during the
first three quarters of each tax year and made available exclusively to small,
rural-based, community development corporations. During the first three
quarters of any tax year, an individual community development corporation or a
community development financial institution must not be authorized to receive
more than fifteen percent of the statewide total annual credits.  During the
fourth quarter of each tax year, all remaining tax credits are available to all
certified community development corporations or community development financial
institutions.
    (D)
The department shall monitor the investments made by taxpayers in community
development corporations and community development financial institutions as
permitted by this section and shall perform the functions as provided in
subsections (A) and (C).
    (E)
If the amount of the credit determined, pursuant to subsection (A), exceeds the
taxpayer's state tax liability for the applicable taxable year, the taxpayer
may carry over the excess to the immediately succeeding taxable years. However,
the credit carry-over may not be used for a taxable year that begins on or
after three years from the date of the acquisition of stock or other equity
interest that is the basis for a credit pursuant to this section. The amount of
the credit carry-over from a taxable year must be reduced to the extent that
the carry-over is used by the taxpayer to obtain a credit provided for in this
section for a later taxable year.
    (F) The
department must not authorize any tax credits after the annual aggregate
limitation set forth in subsection (B) has been reached.
    (G) Banks
and financial institutions with tax liabilities in this State may invest in
community development corporations and community development financial
institutions incorporated pursuant to the laws of this State, up to a maximum
of ten percent of a chartered bank or financial institution's total capital and
surplus.
    (H)  For
purposes of this section:
       (1)
"Community development corporation" means a nonprofit corporation which:
  (a)
is chartered pursuant to Chapter 31, Title 33;
  (b)
is tax exempt pursuant to Section 501(c)(3) of the Internal Revenue Code of
1986, as amended;
  (c)
has a primary mission of developing and improving low-income communities and
neighborhoods through economic and related development;
  (d)
has activities and decisions initiated, managed, and controlled by the
constituents of those local communities;
  (e)
has a primary function of developing projects and activities designed to
enhance the economic opportunities of the people in the community served,
including efforts to enable them to become owners and managers of small
businesses and producers of affordable housing and jobs in the community
served;
  (f)
does not provide credit, capital, or other assistance from public funds in an
amount greater than twenty-five thousand dollars at one time or in one
transaction. The department may adjust that dollar amount in the manner
provided in Section 37-1-109; and
  (g)
is not a nonprofit organization with the sole purpose of providing housing to
neighborhoods or technical assistance to other nonprofit organizations.
    (2) "Community
development financial institution" means an organization that:
  (a)
has a primary mission of promoting community development by providing credit,
capital, or development services to small businesses or home mortgage
assistance to individuals including, but not limited to, capital access
programs, microlending, franchise financing, and guaranty performance bonds;
  (b)
maintains, through representation on its governing board, accountability to
persons in need of the institution's services;
  (c)
is not an agent or instrumentality of the United States, or of a state or
political subdivision of a state nor maintains an affiliate relationship with
any of them;
  (d)
maintains a goal of providing a majority of its services to low-income individuals,
minorities, females, or rural areas;
  (e)
provides capital and technical assistance to small and micro businesses or
mortgage assistance to individuals;
  (f)
does not provide credit, capital, or other assistance in an amount greater than
two hundred fifty thousand dollars at one time or in one transaction. That
dollar amount may be adjusted in the manner provided in Section 37-1-109;
  (g)
has been certified or recertified as a community development financial
institution as provided in this chapter; and
  (h)
may be a federally chartered or state-chartered financial institution holding
company which qualifies as a community development financial institution only
if the holding company and the subsidiaries and affiliates of the holding
company collectively satisfy the requirements of this section.
SECTION 2.  Unless
reauthorized by the General Assembly, the provisions of this act shall
terminate on June 30, 2030, and this act and all other laws and regulations
governing, authorizing, and otherwise dealing with community development
corporations and community development financial institutions are deemed
repealed on that date.
SECTION 3.  This act takes effect upon approval
by the Governor and first applies to credits earned and certificates issued,
and the administration thereof, after 2024. Any credits earned and certificates
issued, and the administration thereof, before 2025 must be claimed in
accordance with the provisions of Section 12-6-3530 as it existed on June 30,
2023. However, any credits earned, and certificates issued before 2025 must
count toward the aggregate credit limit for all taxpayers in all calendar years
set forth in Section 12-6-3531(B).
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This web page was last updated on March 06, 2025 at 11:12 AM