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South Carolina solar energy and geothermal tax credit open

Administered by the South Carolina Department of Revenue (Schedule TC-38).

South Carolina gives a state income tax credit of 25% of the cost of buying and installing a solar energy system, or a geothermal heat pump at your residence. The credit used in any year is capped at $3,500 per facility and at 50% of that year's state income tax; the rest carries forward for up to 10 years. You claim it on Schedule TC-38 with your return.

source · verified 13 October 2026 · amounts in US dollars

What it pays

Yearly limit, claimed on Schedule TC-38
UpgradeConditionUp to
Solar energy system25% of purchase and installation cost; per facility, per year$3,500
Geothermal heat pump25% of cost; ENERGY STAR; installed on or after 1 January 2016; one facility$3,500
50% limit
The credit claimed in a year may not exceed 50% of your South Carolina income tax liability for that year.
carry forward
Unused credit carries forward for up to 10 years.
when
In the year installation is complete; not before.
what counts
The system's controls, tanks, pumps, heat exchangers and other equipment used directly for it, not land, walls, roofs or other structure.

Who is eligible

who
Individual or corporate taxpayers who own the system, installed in or on a facility they own in South Carolina.
certification
Solar must be certified by the SRCC or a comparable entity; a utility interconnection agreement counts as certification.
off-grid
Systems not connected to the grid need the Energy Office's Certification for PV Systems form.
federal credit
The federal Residential Clean Energy Credit (25D) ended for systems placed in service after 31 December 2025.

Where the application goes

File Schedule TC-38 with your South Carolina return and enter the credit on the SC1040TC; keep the certifications with your tax records.

Where the application goes
If this is youApply here
Schedule TC-38dor.sc.gov

The thing most pages get wrong

Pages that sum up the credit as '25% up to $3,500' leave out the second limit: the credit 'may not exceed $3,500 for each facility or 50% of the taxpayer's tax liability for that year, whichever is less.' A household with a small state tax bill claims less each year and carries the rest forward.

Geothermal heat pumps count

The same schedule gives the 25% credit for a ground-source heat pump at your residence that meets ENERGY STAR requirements, installed on or after 1 January 2016, limited to $3,500 a year and to one facility.

No federal credit to add

The federal credits for solar and geothermal ended for systems placed in service after 2025, so the state credit is the tax incentive left.

Sources