Overview
South Carolina has aggressively courted data centers with a suite of tax exemptions and negotiated property tax deals, including a sales tax exemption on data center equipment and electricity for facilities meeting $50 million investment and job creation thresholds. At the same time, the state’s largest public utility has imposed service agreement requirements for large loads, and a sweeping prefiled bill would prohibit all incentives and mandate energy and water independence. Local governments have begun to add infrastructure capacity verification requirements for new data center zoning approvals.
Incentives
Sales & Use Tax Exemption for Qualifying Data Centers
South Carolina exempts sales and use tax for computers, computer equipment, software, and electricity used within a qualifying data center.[1] To qualify, a facility must meet a technical standard (concurrently maintainable power and cooling with redundant capacity and multiple distribution paths) and investment and job thresholds.
- $50 million in capital investment over five years (or $75 million aggregate when multiple taxpayers invest together)
- At least 25 full-time jobs paying 150% of per-capita income (state or county, whichever is lower), maintained for three consecutive years after certification[1]
- The exemption applies only to electricity used in the data center itself, not administrative or non-data center uses[1]
- The Department of Revenue’s Revenue Ruling #13-5 provides operational guidance on notification, certification, and clawback if thresholds are not met[2]
- The exemption sunsets for new certifications after December 31, 2031, but certified facilities continue to receive the exemption for 10 additional years (through 2041)[1]
Fee-In-Lieu of Property Tax (FILOT)
South Carolina law allows counties to negotiate fee-in-lieu of property tax agreements for qualifying projects, replacing standard property taxes with a negotiated fee.[3] FILOT agreements can reduce assessment ratios and stabilize millage, offering significant savings for capital-intensive data center campuses.
- Minimum investment threshold of $2.5 million (or $1 million in high-unemployment counties)[3]
- Terms are negotiated locally and can vary widely by county
Job Development Credits
South Carolina offers job development credits for qualifying projects that meet minimum job and investment thresholds under revitalization agreements.[4] Credits are applied against withholding taxes and may be claimed for up to 15 years once the state certifies compliance.
Requirements and Conditions
Santee Cooper Large Load Service Agreement
Santee Cooper — South Carolina’s largest public utility — requires data centers with monthly maximum demand greater than 1,000 kW to enter a service agreement under its Large Light and Power Rate Schedule L-25.[5] The agreement can include payment guarantees, cost-recovery terms for utility investments, and operational requirements set at the utility’s discretion. This effectively creates a large-load gating mechanism for new data centers in Santee Cooper territory.
Local Zoning
Gaffney Infrastructure Verification Requirement
Gaffney adopted a new Industrial District 2 (ID-2) zoning classification for data centers in January 2026.[7] Applicants must provide written verification from the Gaffney Board of Public Works that power and water infrastructure are sufficient to support the facility. This reflects a growing municipal trend toward infrastructure-capacity gating for large data centers.
What to Watch
- Proposed Data Center Responsibility Act: A prefiled 2025 bill (H. 4583) would prohibit all state and local incentives for data centers, mandate complete energy independence, require closed-loop cooling with zero net water withdrawal, impose strict liability for environmental damage, and mandate high on-site staffing ratios.[6] As of December 2025, the bill is prefiled and referred to committee. Track its 2026 legislative status and any narrower successor bills.
- Utility large-load rulemakings: Confirm whether Duke Energy Carolinas or Dominion Energy South Carolina have adopted large-load data center rate classes or cost allocation rules similar to Santee Cooper’s L-25.
Sources
[1] South Carolina General Assembly, “S.C. Code Ann. § 12-36-2120 (Sales and Use Tax Exemptions), item (79),” accessed January 9, 2026, https://www.scstatehouse.gov/code/t12c036.php.
[2] South Carolina Department of Revenue, “SC Revenue Ruling #13-5: Datacenter Computers, Computer Equipment, Computer Hardware and Software, and Electricity (Sales and Use Taxes),” June 7, 2012, https://dor.sc.gov/sales-use-tax-datacenter-computers-computer-equipment-computer-hardware-and-software-and-electricity (accessed January 9, 2026).
[3] South Carolina General Assembly, “S.C. Code Ann. § 4-12-30 (Fees in Lieu of Taxes),” accessed January 9, 2026, https://www.scstatehouse.gov/code/t04c012.php.
[4] South Carolina General Assembly, “S.C. Code Ann. § 12-10-80 (Job Development Credits),” accessed January 9, 2026, https://www.scstatehouse.gov/code/t12c010.php.
[5] South Carolina Public Service Authority (Santee Cooper), “Rate Schedules for 2025,” adopted December 9, 2024, https://www.santeecooper.com/Rates/Rate-Study/_pdfs/12-09-24-Rate-Schedules-for-2025.pdf (accessed January 9, 2026).
[6] South Carolina General Assembly, “H. 4583: The South Carolina Data Center Responsibility Act,” prefiled December 16, 2025; text as of December 17, 2025, https://www.scstatehouse.gov/sess126_2025-2026/bills/4583.htm and https://www.scstatehouse.gov/sess126_2025-2026/prever/4583_20251217.htm (accessed January 9, 2026).
[7] Scott Morgan, “Gaffney approves new zoning rules for data centers,” South Carolina Public Radio, January 6, 2026, https://www.southcarolinapublicradio.org/sc-news/2026-01-06/gaffney-approves-new-zoning-rules-for-data-centers (accessed January 9, 2026).