SC Department of Revenue
Exemptions and Exclusions


Exemptions and Exclusions

Generally, all retail sales are subject to the sales and use tax. However, there are a number of sales exempt from the tax, most notably, certain items used in farming and manufacturing, medicines sold by prescription and sales to the federal government. Items excluded from the sales and use tax primarily include sales of goods for resale. Other excluded items include certain property used in the manufacturing process, materials used to ship manufactured goods for sale and items brought into the state which are for use outside the state. In addition, sales to individuals 85 or older are excluded from 1% of the tax. The following items are exempt from sales and use tax:
In determining whether a transaction is taxable, you must first determine whether the transaction is subject to the tax. For example, all retail sales in South Carolina are subject to the sales tax, but not wholesale sales. Having determined that a transaction is subject to the tax (i.e. a retail sale) - and therefore not excluded from the tax - it must be determined if the transaction is exempted from the tax.

More on Exclusions

Exclusions from the sales and use taxes are to be liberally construed. In other words, if there is doubt concerning whether a particular transaction is subject to tax, then the tax is not to be imposed.

The exclusions are found in several sections of the law and concern a variety of transactions. The list below provides the code section in which the exclusion is found and a brief explanation of the exclusion.

Code Section  Explanation



Transmission of computer database information by a cooperative service when assembled by and for the exclusive use of the members of the cooperative service.
12-36-90(1)(c)(iii)            The withdrawal from inventory of tangible personal property for use in replacing a defective part under a warranty, maintenance, or similar service contract if tax was paid on the sale or renewal of the contract and the customer is not charged for labor or material when the part is replaced.
12-36-90(2)(h) Sales of property that are actually charged off as bad debts or uncollectible accounts for state income tax purposes.
12-36-90(2)(i) Interest, fees, or charges imposed on a customer for late payment of a bill for electricity or natural gas.
12-36-90(2)(l ) Sales of tangible personal property to a person engaged in the business of servicing a warranty, maintenance, or similar service contract for use in replacing a defective part under the contract if tax was paid on the sale or renewal of the contract and the customer is not charged for labor or material when the part is replaced.
 12-36-110(2) Sales of tangible personal property to a manufacturer or construction contractor when the property is partially or completely fabricated or manufactured in South Carolina by the manufacturer or construction contractor and transported out of state and assembled, installed or erected at the out-of-state job site.
12-36-120(1) Sales of property to a licensed retailer or another wholesaler for resale. This does not include sales to users or consumers not for resale.
12-36-120(2)  Sales of property to a manufacturer or compounder as an ingredient or component part of the tangible personal property or product manufactured or compounded for sale.
12-36-120(3)  Sales of property “used directly” in manufacturing, compounding or processing tangible personal property into products for sale. Regulation 117-174.30 provides that property is “used directly” if it comes into direct contact with the product being manufactured and contributes to bring about a chemical or physical change in the product.
12-36-120(4) Sales of materials, containers, cores, labels, sacks or bags used incident to the sale and delivery tangible personal property, or used by manufacturers, processors and compounders in shipping tangible personal property.
12-36-120(5) Sales of food or drink products to licensed retail merchants for use as ingredients in preparing ready to eat food or drink sold at retail.
12-36-140(C) Purchases of tangible personal property from outside the state and transported to South Carolina for storage and for the exclusive purpose of subsequently transporting it outside of South Carolina for first use outside of South Carolina.
12-36-140(C) Purchases of tangible personal property from outside the state and transported to South Carolina for the purpose of first being manufactured, processed or compounded into other tangible personal property that will be transported and used solely outside of South Carolina.
12-36-140(C)(1) Purchases of tangible personal property from outside the state and transported to South Carolina for storage and for the exclusive purpose of subsequently transporting it outside of South Carolina for first use outside of South Carolina.
12-36-140(C)(2) Purchases of tangible personal property from outside the state and transported to South Carolina for the purpose of first being manufactured, processed, or compounded into other tangible personal property that will be transported and used solely outside of South Carolina.
12-36-140(C)(3) Purchases of tangible personal property for the purpose of being distributed as cooperative direct mail promotional advertising materials by means of interstate carrier, a mailing house, or a United States Post Office to residents of this State from locations both inside and outside the State.

NOTE: There is one other partial exclusion provided under the law. Taxable sales to individuals 85 years of age or older are taxed at 5%, not the full rate of 6%.  This exemption applies even if other sales tax exemptions are in place.

More on Exemptions

Unlike exclusions, which are liberally construed in favor of the taxpayer, exemptions are strictly construed against the taxpayer. Therefore, to enjoy an exemption, a taxpayer must fall squarely and clearly within the exemption.

There are two types of exemptions provided under the sales and use tax law:  (1) partial exemptions and (2) full exemptions. Partial exemptions are those that limit or “cap” the amount of tax and are found in §12-36-2110. The 1% local option sales and used tax does not apply to sales that are subject to a cap. There also is a partial exemption for people 85 years old and older who are exempt from paying the 1% sales tax imposed by the Education Improvement Act of 1984 as found in §12-36-2620.

There are many full exemptions, which are found in §12-36-2120 and §12-36-2130.

Full Exemptions

For discussion’s sake the following exemptions can be divided into the following categories:

• Government

• Business

• Agricultural

• Educational

• General Public Good

• Alternative Energy

NOTE:  These exemptions are not categorized as such in the law.  These categories have been developed simply for discussion

Government Related Exemptions


12-36-2120 (1)                                

Transactions that are prohibited from being taxed by U.S. or State Constitutional provisions or federal or state law

Sales to the federal government

12-36-2120(22) Material necessary to assemble missiles
12-36-2120(25) Sales of cars and motorcycles to nonresident military personnel
12-36-2120(29) Federal government contracts – property that passes to the government
12-36-2120(30) Supplies purchased by State General Services Division for resale to State agencies
12-36-2120(46) War memorials and monuments
12-36-2120(48) Solid waste disposal collection bags required under a solid waste disposal plan of a county or other political subdivision
12-36-2120(60) Lottery tickets sold pursuant to Chapter 150 of Title 59 (South Carolina Education Lottery Act)
12-36-2120(61) Copies of, or access to, legislation or other informational documents provided to the general public or any other person by a legislative agency when a charge for these copies is made reflecting the agency’s cost of the copies
12-36-2120(68) Any property sold to the public through a sheriff’s sale as provided by law

Business Related Exemptions


 12-36-2120 (9)                             

Coal, coke, or other fuel for manufacturers, transportation companies, electric power companies, and processors
12-36-2120(11) Toll charges between telephone exchanges, certain access charges, charges for telegraph messages, and automatic teller machine transactions
12-36-2120(13) Fuel and other supplies for consumption on ships on the high seas
12-36-2120(14) Wrapping paper, containers, etc., used incident to the sale and delivery of tangible personal property
12-36-2120(15) Motor fuel taxed under the motor fuel user fee law
12-36-2120(17) Machines used in manufacturing, processing, recycling, compounding, mining, or quarrying tangible personal property for sale. This includes certain machines used to prevent or abate air, water, or noise pollution caused by machines used in manufacturing, processing, recycling, compounding, mining, or quarrying tangible personal property for sale 
12-36-2120(19)  Electricity used to manufacture, process, mine, or quarry tangible personal property for sale or used by cotton gins to manufacture tangible personal property for sale
12-36-2120(20) Railcars and locomotives
12-36-2120(21) Certain vessels and barges (more than 50 tons burden)
12-36-2120(24) Laundry supplies and machinery used by a laundry or drycleaning business. This exemption does not apply to coin operated laundromats
12-36-2120(31) Vacation time sharing plans and exchange of accommodations in which the accommodation to be exchanged is the primary consideration
12-36-2120(34) 50% of the gross proceeds of a modular home regulated under
12-36-2120(35) Movies sold or rented to movie theatres
12-36-2120(36) Tangible personal property delivered out of state by South Carolina retailers
12-36-2120(37) Petroleum asphalt products transported and used outside South Carolina
12-36-2120(40) Shipping containers used by international shipping lines under contract with the State Ports Authority
12-36-2120(42) Depreciable assets as part of a sale of an entire business
12-36-2120(43) Supplies, equipment, machinery, and electricity for use in filming/producing motion pictures
12-36-2120(49) Postage purchased by a person engaged in the business of selling advertising services for clients consisting of mailing advertising material through the United States mail
12-36-2120(50) The following items when used by a qualified recycling facility: recycling property, electricity, natural gas, fuels, gasses, fluids and lubricants, ingredients or component parts of manufactured products, property used for the handling or transfer of postconsumer waste or manufactured products or in or for the manufacturing process, and machinery and equipment foundations
12-36-2120(51) Material handling systems and material handling equipment used in the operation of a distribution facility or a manufacturing facility of a taxpayer that invests at least $35 million in South Carolina 
12-36-2120(52) Parts and supplies used by persons engaged in the business of repairing or reconditioning aircraft owned by or leased to the federal government or commercial air carriers. This exemption does not extend to tools and other equipment not attached to or that do not become a part of the aircraft
12-36-2120(53) Motor vehicle extended service and warranty contracts
12-36-2120(54) Clothing and other attire required for working in a class 100 or better clean room environment (as defined in Federal Standard 209E)
12-36-2120(55) Audiovisual masters made or used by a production company
12-36-2120(56) Machines used in research and development
12-36-2120(58) Cooperative direct mail promotional advertising materials and promotional maps, brochures, pamphlets, or discount coupons for use by nonprofit chambers of commerce or nonprofit convention and visitor bureaus
12-36-2120(59) Facilities transmitting electricity that are transferred, sold or exchanged by an electrical utility, municipality, electric cooperative, or political subdivision to a limited liability company subject to regulation under the Federal Power Act and formed to operate or to take functional control of electric transmission assets
12-36-2120(62) 70% of the gross proceeds of the rental or lease of portable toilets
12-36-2120(64) Sweetgrass baskets made by artists of South Carolina using locally grown sweetgrass
12-36-2120(65) Computer equipment used in connection with a technology intensive facility (defined in South Carolina Code §12-6-3360(M)(14)(b)) or used in connection with a manufacturing facility meeting specific investment and job requirements
12-36-2120(66) Electricity used by a technology intensive facility as defined in Code Section §12-6-3360(M)(14)(b) and qualifying for the sales tax exemption provided pursuant to item (65) of this section, and the equipment and raw materials including, without limitation, fuel used by such qualifying facility to generate, transform, transmit, distribute, or manage electricity for use in such a facility
12-36-2120(67) Effective July 1, 2011, construction material used in the construction of a single manufacturing or distribution facility, or one that serves both purposes, with a capital investment of at least $100 million at a single site in South Carolina over an 18 month period, or effective November 1, 2009, construction materials used in the construction of a new or expanded single manufacturing facility where at least $750 million is invested in real or personal property and creates at least 3,800 full-time new jobs.
12-36-2120(69) Sale or renewal of a warranty, maintenance, or similar service contract for tangible personal property if the sale or purchase of the tangible personal property covered by the contract is exempt or excluded from the sales or use tax
12-36-2120(70) Gold, silver or platinum bullion or any combination; coins that are or have been legal tender; and currency.
12-36-2120(73) Amusement park rides; parts, machinery and equipment used to assemble, operate and make up amusement park rides; and performance venue facilities and any related or required machinery, equipment and fixtures. A $250 million investment and creation of 250 full-time jobs and 500 part-time or seasonal jobs over a 5 year period is required.

Tangible personal property purchased by a certified motion picture production company for use in connection with the filming or production of motion pictures in South Carolina for a company



Agricultural Exemptions

 12-36-2120 (4)                          Livestock
12-36-2120(5)  Feed used to produce and maintain livestock
12-36-2120(6)  Insecticides, chemicals, fertilizers, soil conditioners, seeds, or seedlings, or nursery stock used in the production of farm products
12-36-2120(7) Containers and labels used in preparing agriculture products for sale or preparing turpentine gum, gum resin, and gum spirits of turpentine for sale
12-36-2120(16) Farm machinery
12-36-2120(18) Fuel used to cure agriculture products
12-36-2120(23) Farm products sold in their original state of production when sold by the producer
12-36-2120(32) Electricity and gas used in the production of livestock and milk
12-36-2120(44) Electricity used to irrigate crops
12-36-2120(45) Building materials, supplies, fixtures, and equipment used to construct commercial housing for poultry or livestock

Educational Exemptions

12-36-2120 (3)                             Textbooks, books, magazines, periodicals, newspapers, and access to on line information used in a course of study or for use in a school or public library. These items may be in printed form or in alternative forms such as microfilm or CD ROM. Communication services and equipment subject to tax under South Carolina Code §§12-36-910(B)(3) and 12-36-1310(B)(3) are not exempt.
12-36-2120(8) Newspapers, newsprint paper, and the SC Department of Agriculture Market Bulletin
12-36-2120(10)(a) Meals or food used in furnishing meals to K-12 students in schools (not for profit)
12-36-2120(26) Television, radio, and cable TV supplies, equipment, machinery, and electricity
12-36-2120(27) Zoo plants and animals
12-36-2130(2) Exhibition rentals for museums (charitable, eleemosynary, or governmental museums)

 General Public Good Exemptions

12-36-2120(10) (b)                                    Meals provided to elderly or disabled persons at home by nonprofit organizations
12-36-2120(10)(c) Food sold to nonprofit organizations or food sold or donated by the nonprofit organization to another nonprofit organization
12-36-2120(10)(d) Meals or foodstuffs prepared or packaged that are sold to public or nonprofit organizations for congregate or in-home service to the homeless or needy or disabled adults over 18 or individuals over 60. This exemption only applies to meals and foodstuffs eligible for purchase under the USDA food stamp program.
12-36-2120(12) Water sold by public utilities and certain non-profit corporations
12-36-2120(28) Medicine and prosthetic devices sold by prescription; certain diabetic supplies sold to diabetics under the written authorization and direction of a physician; certain free samples of medicine and certain medicine donated to hospitals; prescription medicine and radiopharmaceuticals used in treating cancer or rheumatoid arthritis, including prescription medicines to relieve the effects of treatment; prescription medicines used to prevent respiratory syncytial virus; disposable medical supplies, such as bags, tubing, needles, and syringes, dispensed by a pharmacist by prescription of a licensed health care provider for the intravenous administration of a prescription drug (only for treatment outside of a hospital, skilled nursing facility, or ambulatory surgical treatment center); and prescription medicine dispensed to Medicare Part A patients in a nursing home.
12-36-2120(33) Residential electricity and fuel
12-36-2120(38) Hearing aids
12-36-2120(39) Concession sales by nonprofit organizations at festivals
12-36-2120(41) Sales by nonprofit organizations
12-36-2120(47) Goods sold to nonprofit hospitals that primarily treat children at no cost to the patient
12-36-2120(57) Annual sales tax holiday on the first Friday, Saturday, and Sunday in August for personal use clothing, clothing accessories, footwear, computers, printers, printer supplies, computer software, bath wash cloths, blankets, bed spreads, bed linens, sheet sets, comforter sets, bath towels, shower curtains, bath rugs, pillows, pillow cases, and school supplies
12-36-2120(63) Medicine and medical supplies, including diabetic supplies and diabetic diagnostic and testing equipment, sold to a health care clinic providing free medical and dental care to all patients
12-36-2120(74) Durable medical equipment and related supplies as defined under federal and state Medicare and Medicaid laws if (a) paid directly by funds of South Carolina or the United States under the Medicare and Medicaid programs, (b) state and federal law prohibits the payment of the sales and use tax, and (c) the sale is by a provider with a South Carolina retail license whose principal place of business is in South Carolina.
 12-36-2120(75) Unprepared food that lawfully may be purchased with United States Department of Agriculture food coupons. This exemption does not apply to local taxes unless the local tax specifically exempts the sale of such food
12-36-2120(76) Annual sales tax holiday on the Friday and Saturday after Thanksgiving for handguns (as defined in Code Section 16-23-10(1)), rifles and shotguns

Alternative Energy Exemptions

12-36-2120 (71)                         Any device, equipment, or machinery that is (a) operated by hydrogen or fuel cells, (b) used to generate, produce, or distribute hydrogen and designated specifically for hydrogen applications or for fuel cell applications, and (c) used predominantly for the manufacturing of, or research and development involving hydrogen or fuel cell technologies.
12-36-2120(72) Building material used to construct a new or renovated building in a research district and machinery or equipment located in a research district. The sales tax that would have been assessed must be invested by the taxpayer in hydrogen or fuel cell machinery or equipment located in the same research district within 24 months of the exempt purchase.


The S.C. Department of Revenue strives to make our website broadly accessible and is continuously working on improvements.
If you have problems accessing this website or suggestions on how to improve the accessibility of this site, please contact

Disclaimer and Copyright Information
Privacy Statement

Home / Contact DOR