South Carolina Issues Guidance on New Pregnancy Resource Tax Credit

COLUMBIA, S.C. – The South Carolina Department of Revenue on June 9 released official guidance and a detailed timeline for the state’s new Pregnancy Resource Tax Credit, establishing the application process for both charitable organizations and donors ahead of the 2025 tax year. The move provides the first concrete operational details for taxpayers following the signing of the "Pregnancy Resource Act" (S.32) into law on May 18, 2026.

The new nonrefundable income tax credit is designed to provide a dollar-for-dollar reduction in state tax liability for individuals and businesses that make voluntary cash contributions to eligible charitable organizations. The credit is available for tax years beginning in 2025 and extending through 2030.

The underlying legislation aims to financially support organizations that provide services related to child and maternal care, as well as those assisting victims of human trafficking. According to the guidance detailed in the Department of Revenue's Information Letter #26-14, this includes entities such as pregnancy resource centers, crisis pregnancy centers, and maternity homes.

For charitable organizations to become eligible to receive these tax-credit-associated donations, they must first seek certification from the SCDOR. This is an annual requirement. The department has set a firm deadline of July 31 for organizations to submit their application, Form I-68, for the 2025 and 2026 tax years. To qualify, an organization must be a registered 501(c)(3) entity under the Internal Revenue Code and meet the specific mission criteria outlined in the act. The SCDOR will then review the applications and publish a definitive list of certified eligible charitable organizations no later than August 17, 2026.

This certification list is a critical component of the program, as taxpayers will only be able to claim a credit for contributions made to organizations that appear on it. This two-step verification process—first certifying the organization, then approving the donor's credit—is intended to ensure funds are directed as the legislature intended and to provide a clear framework for compliance.

For taxpayers, the process of claiming the credit involves more than simply making a donation. After contributing to a state-certified organization, donors must submit a separate application to the SCDOR to have their tax credit approved. The application window for donors opens on September 1, utilizing Form TC-68A, the Application for Pregnancy Resource Tax Credit.

The SCDOR has clarified that it will approve credits based on the information provided in the application. However, all claimed credits remain subject to potential audit and review during the standard tax return examination process. This places the onus on taxpayers to maintain meticulous records of their contributions and the state's approval of their credit.

The credit is nonrefundable, a key detail for tax planning. This means the credit can reduce a taxpayer’s liability to zero, but any credit amount exceeding the total tax owed will not be returned to the taxpayer as a refund. This differs from refundable credits, which can result in a payment to the taxpayer even if no tax is owed. Businesses structured as pass-through entities, such as S corporations and partnerships, can also utilize the credit, which would then flow through to the individual owners' tax returns. These entities must include their Federal Employer Identification Number (FEIN) on the application.

The implementation of this tax credit introduces a significant new consideration for year-end tax planning in South Carolina. Both individual philanthropists and corporate donors now have a new, state-endorsed incentive to support a specific category of non-profits. For the qualifying non-profits, the credit offers a powerful new fundraising tool, but one that is contingent on navigating the administrative requirements and meeting the July 31 deadline.

This new tax credit presents a valuable opportunity for South Carolina businesses and individuals to align their charitable giving with their tax strategy. However, the process is more complex than a standard deduction. In our experience, multi-step compliance processes like this one—requiring certification for the charity and a separate pre-approval for the donor—often create pitfalls. Businesses, particularly pass-through entities, must carefully track documentation and ensure the credit is properly allocated to partners or shareholders. The nonrefundable nature of the credit also requires careful planning to ensure the donor has sufficient tax liability to utilize it fully. Navigating these state-specific credits while maintaining federal compliance is precisely the kind of challenge where professional guidance is critical. For businesses looking to incorporate this new credit into their financial planning, the team at C&S Finance Group LLC provides expert tax preparation and compliance services to ensure all requirements are met. Contact C&S Finance Group LLC at csfinancegroup.com to discuss your specific situation.

The next several weeks are critical for the program's inaugural year. Charitable organizations interested in participating must prepare and submit their certification applications before the end of July. Taxpayers, in turn, should monitor the SCDOR website for the publication of the approved organization list in mid-August, which will guide their contribution decisions for the remainder of the year. The opening of the donor application portal on September 1 will mark the final step before taxpayers can secure the credit for their 2025 returns.