Twenty-five percent, released $3,500 at a time
South Carolina offers a state income tax credit of 25 percent of the total system cost, up to a total credit of $35,000, claimed on Form TC-38 with your South Carolina return. The credit applies to system costs including panels, inverters, mounting equipment and labour.
The constraint is annual. A taxpayer may use only $3,500 of the credit in a year, or 50 percent of their state tax liability, whichever is less. The excess for each facility can be carried forward for 10 years.
Work through what that means for you specifically. If your annual South Carolina tax liability is modest, the 50 percent test bites before the $3,500 one does, and the credit is released more slowly than the cap alone suggests.
Over a 10 year carryforward a household using the full $3,500 each year realises $35,000. A household limited by liability to a smaller amount each year realises less, and may not exhaust the credit at all. That is the calculation that matters and it is about your return, not the panels.
This is a question for a tax advisor, not an installer
Ask a tax advisor to look at your recent South Carolina liability and estimate how much of the credit you would realistically use over the carryforward period. That is a short piece of work and it can change the decision.
Be careful with a savings projection that simply subtracts 25 percent of the system cost from the price. That is the headline, not the cash flow, and it ignores both the annual cap and your liability.
Ask any installer to show the credit as it would actually be received, year by year, rather than as a single deduction. An installer who works South Carolina seriously will not find that request unusual.
Ask also what happens if you sell the house before the carryforward is exhausted. That is a genuine question with a real answer, and it is far better raised now than discovered later.
And the change on the utility side
South Carolina no longer offers simple one-to-one retail net metering to new solar homes. The Energy Freedom Act, Act 62, signed on May 16, 2019, required the Public Service Commission to establish a solar choice metering tariff for customer-generators.
The Commission approved rates for Duke Energy Carolinas, Duke Energy Progress and Dominion Energy South Carolina that became available to consumers applying for new service on or after June 1, 2021, with the value of exported power tied to time-of-use rates.
Existing customers who enrolled earlier continue to receive one-to-one compensation into 2029 depending on when they initially enrolled. So a neighbour quoting you their payback is very likely describing an arrangement you cannot join.
Confirm with your own utility which arrangement applies to a new customer at your address, and ask your installer which one their projection assumes. If they cannot name it, the projection is not about your household.
The state credit, and how much of it you will actually use
South Carolina offers a state income tax credit of 25 percent of the total system cost, up to a total credit of $35,000, claimed on Form TC-38. That headline is genuinely generous and it is the main reason solar still works here now that the federal residential credit has gone.
The limit that decides what it is worth to you is annual. A taxpayer may use only $3,500 of the credit in a year, or 50 percent of their state tax liability, whichever is less, and the excess for each facility can be carried forward for 10 years.
So a household with modest South Carolina tax liability may not use the whole credit within the carryforward period. That is not a reason to avoid it, but it does mean the number in a sales presentation and the number you receive can differ substantially. Ask a tax advisor how much you would realistically realise given your own liability.
The 30 percent federal Residential Clean Energy Credit under Section 25D expired for property placed in service after December 31, 2025, so a cash or loan purchase now receives no federal credit. Section 48E survives at 30 percent for third-party owners under leases and power purchase agreements, so ask any such provider what they claim and what of that value reaches you.