2023 South Carolina Code of Laws › Title 12 - Taxation › Chapter 6 - South Carolina Income Tax Act › Section 12-6-3385. Income tax credit for tuition; definitions.

(A)(1)(a) A student is allowed a refundable individual income tax credit equal to fifty percent, not to exceed one thousand five hundred dollars in the case of both four-year institutions and two-year institutions, for tuition paid an institution of higher learning or a designated institution as provided in this section, during a taxable year. The amount of the tax credit claimed up to the limits authorized in this section for any taxable year may not exceed the amount of tuition paid during that taxable year.
(b) The maximum amount of credits allowed by this section for all taxpayers may not exceed forty million dollars in tax year 2018. For all tax years after 2018, the maximum amount of credits for all taxpayers may not exceed the maximum amount in tax year 2018, plus a cumulative amount equal to the percentage increase in the Higher Education Price Index, not to exceed more than three percent a year. If the total amount of credits claimed in a tax year exceeds the maximum amount, then the amount of each credit must be reduced proportionately.
(c) Notwithstanding any other provision of this section, the Revenue and Fiscal Affairs Office annually shall estimate a maximum credit that may be permitted under this section for a taxable year based on the number of taxpayers expected to claim the credit and the expected amount claimed. The Revenue and Fiscal Affairs Office shall certify the maximum credit to the Department of Revenue, and for the applicable taxable year, the maximum credit amount must not exceed the lesser of the certified estimate or the maximum amount set forth in subitem (a). If the certified estimate exceeds the maximum amount set forth in subitem (b), then the credit must be reduced by a pro rata amount that the certified estimate exceeds the maximum set forth in subitem (b).
(d) The Commission on Higher Education, the State Board for Technical and Comprehensive Education, and each public institution of higher learning, as defined in Section 59-103-5, must develop a plan to notify each student of the tax credit allowed by this section and shall promote resources that may be available on campus, or in the community, that would assist students in applying for the tax credit as applicable.
(2)(a) Tuition credits may not be claimed for more than four consecutive years after the student enrolls in an eligible institution.
(b) The credit period is suspended for a qualifying student required to withdraw from an institution of higher learning to serve on active military duty if the service member re-enrolls in an eligible institution within twelve months upon demobilization and provides official documentation from the Armed Forces to verify the dates of active duty military service.
(c) An extension of the credit period may be granted due to medical necessity as defined by the Commission on Higher Education.
(3) The credit may be claimed by the student or by an individual eligible to claim the student as a dependent on his federal income tax return, whoever actually paid the tuition. The department shall prescribe a form for claiming the credit.
(B) As used in this section:
(1) "Institution of higher learning" means a South Carolina public institution defined in Section 59-103-5 and an independent institution as defined in Section 59-113-50.
(2) A "designated institution" means a public or independent bachelor's level institution chartered before 1962 whose major campus and headquarters are located within South Carolina; or an independent bachelor's level institution which has attained 501(c)(3) tax status and is accredited by the Southern Association of Colleges and Secondary Schools or the New England Association of Colleges and Schools; or a public or independent two-year institution which has attained 501(c)(3) tax status. Institutions whose sole purpose is religious or theological training, or the granting of professional degrees do not meet the definition of "institution of higher learning" or "designated institution" as defined in this section.
(3) "Student" means an individual enrolled in an institution of higher learning:
(a) eligible for in-state tuition and fees as determined pursuant to Chapter 112 of Title 59 and applicable regulations;
(b) who at the end of the taxable year for which the credit is claimed has completed at least thirty credit hours each year, or its equivalent, as determined by the Commission on Higher Education, and who is admitted, enrolled, and classified as a degree seeking undergraduate or enrolled in a certificate or diploma program of at least one year;
(c) who, within twelve months before enrolling:
(i) graduated from a high school in this State;
(ii) successfully completed a high school home school program in this State in the manner required by law; or
(iii) graduated from a preparatory high school outside this State while a dependent of a parent or guardian who is a legal resident of this State and has custody of the dependent;
(d) not in default on a Federal Title IV or State of South Carolina educational loan, nor who owes a refund on a Federal Title IV or a State of South Carolina student financial aid program;
(e) who has not been adjudicated delinquent or been convicted or pled guilty or nolo contendere to any felonies or any alcohol or drug related offenses under the laws of this State, any other state or comparable jurisdiction, or the United States; except that a student who has been adjudicated delinquent or has been convicted or pled guilty or nolo contendere to an alcohol or drug related misdemeanor offense is ineligible only for the taxable year in which the adjudication, conviction, or plea occurred;
(f) who is in good standing at the institution attended;
(g) who is not a Palmetto Fellowship recipient;
(h) who is not a LIFE Scholarship recipient.
(4) "Tuition" means the amount charged, including required fees, necessary for enrollment. Higher education tuition at an independent institution means the average tuition at the four-year public institutions of higher learning as defined in Section 59-103-15(B)(2), but not more than the actual tuition charged. Before calculating the credit, there must be deducted from tuition any amounts received toward its payment by any other scholarship grants.
HISTORY: 1998 Act No. 418, Section 2; 1999 Act No. 100, Part II, Section 73; 2006 Act No. 386, Section 11.A, eff June 14, 2006; 2017 Act No. 40 (H.3516), Section 18.A, eff May 10, 2017.
Editor's Note
2006 Act No. 386, Section 11.B, provides as follows:
"This section takes effect upon approval by the Governor and applies to qualifying students required to withdraw from a qualifying institution to serve on active military duty on or after January 1, 2000."
2017 Act No. 40, Section 18.B, provides as follows:
"B. This SECTION takes effect upon approval by the Governor and applies to tax years beginning after 2017."
Effect of Amendment
2017 Act No. 40, Section 18.A, rewrote (A)(1), increasing the amount of the income tax credit for tuition for both four-year and two-year institutions.