How did South Carolina's 2020-2025 credit and deduction for uncompensated clinical preceptors work?

Plain-English summary

South Carolina Revenue Ruling #20-2 explains a temporary individual income tax credit and deduction for uncompensated clinical preceptors. The program applied for tax years 2020 through 2025 and was repealed January 1, 2026.

An eligible preceptor had to be a South Carolina-licensed physician, physician assistant, or nurse practitioner whose practice consisted of at least 30% Medicaid-insured, Medicare-insured, and self-pay patients combined. The individual had to supervise at least two qualifying clinical rotations without other compensation. A business entity could not claim the benefit.

A qualifying rotation required at least 160 hours of instruction for the same student from a qualifying South Carolina institution in emergency medicine, obstetrics and gynecology, family medicine, pediatrics, general surgery, psychiatry, or internal medicine. Hours from different students could not be combined, and multiple preceptors could not combine hours for one rotation. Concurrent students could generate separate rotations when each independently received 160 hours.

The first four rotations were credit-eligible, but a preceptor serving only one rotation received no credit. After completing four rotations and reaching the annual credit maximum, rotations five through ten generated an income deduction. No benefit was available beyond ten rotations.

At full phase-in for 2024 and 2025, a physician received $750 per rotation when the qualifying patient percentage was 30% to 49%, or $1,000 per rotation at 50% or more. A physician assistant or nurse practitioner received $500 or $750 per rotation, respectively. Those per-rotation amounts applied both to the first four credit rotations and the next six deduction rotations.

Each credit and deduction amount was divided equally: 50% in the service year and 50% in the following tax year. The credit was nonrefundable, could offset no more than 50% of remaining tax liability after other credits, and unused credit could carry forward within the ten-year period measured from the year earned.

What this means for you

Preceptors who served through 2025

The ruling says repeal prevents new credits or deductions from being earned after December 31, 2025, but does not eliminate a remaining second-year installment or an allowed credit carryforward from earlier service. Preserve the institution's documentation and the records supporting patient mix, hours, students, clinical setting, licensing, and lack of compensation.

Physicians

A physician could precept medical-school, physician-assistant-program, and advanced-practice-nursing-program rotations. The fully phased annual maximum for four credit rotations was $3,000 at the 30%-49% patient level or $4,000 at 50% or more; up to six additional rotations produced maximum deductions of $4,500 or $6,000.

Physician assistants and nurse practitioners

These professionals could precept physician-assistant or advanced-practice-nursing rotations, but not medical-school-required rotations. Fully phased four-rotation credit maximums were $2,000 at the 30%-49% patient level and $3,000 at 50% or more; six additional rotations produced maximum deductions of $3,000 or $4,500.

Common questions

Q: Could a paid clinical instructor qualify?
A: No. The preceptor could not otherwise be compensated for providing the required qualifying rotation.

Q: Could an out-of-state school's rotation qualify?
A: No. The student had to be enrolled in a qualifying South Carolina public teaching institution or independent institution of higher learning.

Q: Could 80 hours for one student and 80 for another be combined?
A: No. One preceptor had to provide at least 160 hours to the same student for a qualifying rotation.

Q: How was the credit claimed?
A: On Form TC-62 with the individual income tax return. Supporting documents were retained rather than filed unless requested.

Q: Did repeal erase previously earned amounts?
A: No. The ruling says repeal did not affect remaining installments or the carryforward period for credit already earned.

Citations and references

• S.C. Code Ann. § 12-6-3800 — preceptor credit and qualifying rotations
• S.C. Code Ann. § 12-6-1140(14) — deduction for additional rotations
• S.C. Code Ann. §§ 40-47-20(34) and 40-47-910(6) — physician and physician-assistant definitions
• S.C. Code Ann. §§ 40-33-20(40) and 40-33-30 — nurse-practitioner definition and licensing
• S.C. Code Ann. § 59-113-50 — independent institution definition cited by the ruling

Source

• Landing page: SC Advisory Opinion Search
• Original PDF: RR20-2.pdf

Original ruling text

STATE OF SOUTH CAROLINA

DEPARTMENT OF REVENUE
300A Outlet Pointe Blvd., Columbia, South Carolina 29210
P.O. Box 125, Columbia, South Carolina 29214-0575

SC REVENUE RULING #20-2

SUBJECT:

Service as a Preceptor for Clinical Rotations – New Credit and Deduction
(Individual Income Tax)

EFFECTIVE DATE:

Tax years 2020 through 2025

REPEAL DATE:

January 1, 2026

REFERENCES:

S.C. Code Ann. Section 12-6-1140(14) (Supp. 2019)
S.C. Code Ann. Section 12-6-3800 (Supp. 2019)

AUTHORITY:

S.C. Code Ann. Section 12-4-320 (2014)
S.C. Code Ann. Section 1-23-10(4) (2005)
SC Revenue Procedure #09-3

SCOPE:

The purpose of a Revenue Ruling is to provide guidance to the public. It
is an advisory opinion issued to apply principles of tax law to a set of
facts or general category of taxpayers. It is the Department’s position
until superseded or modified by a change in statute, regulation, court
decision, or another Department advisory opinion.

GENERAL OVERVIEW
Code Section 12-6-3800 provides an income tax credit to an eligible physician, physician assistant,
or advanced practice nurse practitioner who serves as a “preceptor” for qualifying clinical rotations
required by a medical school, physician assistant program, or advanced practice nursing program.
A credit is allowed for up to four qualifying rotations served during the calendar year. Code
Section 12-6-1140(11) provides a deduction for up to six additional qualifying rotations after the
preceptor has served four qualifying rotations and reached the credit maximum. The preceptor
credit and preceptor deduction are phased in over five years in equal and cumulative installments
beginning in tax year 2020. The amount of credit and deduction for each qualifying clinical
rotation served depends on the calendar year the rotations are served, the professional designation
of the preceptor (e.g., physician, physician assistant), and the preceptor’s practice percentage of
Medicaid insured, Medicare insured, and self-pay patients.
The purpose of this advisory opinion is to provide general guidance and examples regarding the
credit and the deduction provisions. For reference, tables are provided for each type of preceptor
that lists the maximum five year phase-in credit amounts and deduction amounts for each tax year.
NOTE: Both the income tax credit and the deduction for service as a preceptor for clinical
rotation are repealed January 1, 2026.

PART 1 - PRECEPTOR DEFINITIONS AND QUALIFICATIONS 1
1.

Q. What is the definition of a “preceptor”?
A. A preceptor is defined as a physician, physician assistant, or advanced practice nurse
practitioner who provides supervision and instruction during student clinical training
experiences and is otherwise not compensated for doing so, and provides a minimum of
two required qualifying clinical rotations within a calendar year. Code Section 12-63800(A)(3).

2.

Q. What are the definitions of “physician,” “physician assistant,” or “advanced practice
nurse practitioner”?
A. While Code Section 12-6-3800 does not define the terms “physician,” “physician
assistant,” or “advanced practice nurse practitioner,” 2 it is reasonable for the
Department to look to the definitions in Title 40, “Professions and Occupations;”
Chapter 47, “Physicians and Miscellaneous Health Care Professionals;” and Chapter 33,
“Nurses.” Accordingly, for preceptor credit purposes, “physician,” “physician
assistant,” and “nurse practitioner” are defined as follows:

3.

a.

“Physician” means a doctor of medicine (“MD”) or doctor of osteopathic medicine
(“DO”) licensed by the South Carolina Board of Medical Examiners. See Code
Section 40-47-20(34).

b.

“Physician Assistant” (“PA”) means a health care professional licensed by the
South Carolina Board of Medical Examiners to assist in the practice of medicine
with a physician supervisor. See Code Section 40-47-910(6).

c.

“Nurse Practitioner” (“NP”) means a registered nurse who has completed an
advanced formal education program at the master’s level or doctoral level
acceptable to the South Carolina Board of Nursing, and who demonstrates
advanced knowledge and skill in assessment and management of physical and
psychosocial health, illness status of persons, families, and groups. The nurse
practitioner must be actively licensed as a nurse practitioner by the South Carolina
Board of Nursing. See Code Sections 40-33-20(40) and 40-33-30.

Q. Which medical professionals qualify for the preceptor income tax credit?
A. To qualify for the preceptor credit, the medical professional (as defined in Question 2)
must meet the following requirements:
a.

The individual is a physician or physician assistant licensed by the South Carolina
Board of Medical Examiners or a nurse practitioner licensed by the South Carolina
Board of Nursing;

1

The qualifications in Questions 1 – 13 also apply to the income tax deduction allowed for serving additional
qualifying rotations as a preceptor. See Code Sections 12-6-1140(14) and 12-6-3800(E).
2
The terms “advance practice nurse practitioner” and “advanced practice registered nurse” are both used in the
statute. A nurse practitioner is a category of “advance practice registered nurse” listed in Code Section 40-33-20(5).
The term “nurse practitioner” is used in this advisory opinion when referring to an advanced practice nurse
practitioner or advanced practice registered nurse preceptor.

2

4.

b.

The individual’s practice consists of 30% or more of Medicaid insured, Medicare
insured, or self-pay 3 patients;

c.

The individual serves as preceptor for two or more qualifying clinical rotations
during the calendar year; and

d.

The individual is not otherwise compensated for serving as preceptor for the
required rotation.

Q. What are examples of health professionals who do not qualify for the credit?
A. Examples of health professionals who do not qualify for the credit because they do not
meet the statutory requirements of a preceptor (see Question 3) or because they do not
perform a qualifying type of clinical rotation (see Question 5) are: (a) a professional
whose practice is less than 30% of a combined total of Medicaid insured, Medicare
insured, or self-pay patients; (b) a university teacher or a hospitalist whose paid job
duties include clinical rotation instruction; (c) a retired physician; (d) a chiropractor, a
dentist, or a veterinarian; or (e) other categories of an “advance practice registered
nurse” (a certified nurse midwife, a clinical nurse specialist, or a certified registered
nurse anesthetist).

5.

Q. What is a qualifying clinical rotation?
A. A qualifying “medical school-required clinical rotation,” “physician assistant programrequired clinical rotation,” or “advanced practice nursing program-required clinical
rotation” is defined as a clinical rotation established for a public teaching institution or
an independent institution of higher learning that:
a.

Is established for a student who is enrolled in a South Carolina public teaching
institution or an independent institution of higher learning, 4 including medical
school, a physician assistant program, and an advanced practice nursing program
and

b.

Includes 160 hours or more of instruction in one of the following clinical settings
under the guidance of a physician, physician assistant, or nurse practitioner:
• emergency medicine
• obstetrics and gynecology
• family medicine
• pediatrics
• general surgery
• psychiatry
• internal medicine

3

For purposes of this advisory opinion, a self-pay patient is a person not covered by private insurance, Medicare, or
Medicaid.
4
For this purpose, “independent institution of higher learning” has the same meaning as provided in Code Section
59-113-50, i.e., an independent eleemosynary junior or senior college in South Carolina whose major campus and
headquarters are located within South Carolina and which is accredited by the Southern Association of Colleges and
Secondary Schools. The term also includes an independent bachelor's level institution chartered before 1962 whose
major campus and headquarters are located within South Carolina.

3

6.

Q. Who can serve as preceptor for each type of clinical rotation?
A. A physician may serve as preceptor for medical school-required clinical rotations,
advanced practice nursing program-required clinical rotations, and physician assistant
program-required clinical rotations.
A physician assistant or nurse practitioner may only serve as a preceptor for advanced
practice nursing or physician assistant-required clinical rotations; they may not serve as
a preceptor for medical school-required clinical rotations. Code Section 12-6-3800(B)
and (C).

7.

Q. Is a medical professional providing clinical rotations only for students enrolled in outof-state schools eligible for the credit?
A. No.

8.

Q. Is a medical professional who serves without compensation as a preceptor for students
from a South Carolina qualifying institution and who provides clinical instruction for
students from a non-South Carolina based program for compensation in the same tax
year eligible for the preceptor credit?
A. Yes. The medical professional is a “preceptor” for qualifying students he serves without
compensation and is eligible for the preceptor credit, providing all other credit
requirements are met. The answer does not change if qualifying and non-qualifying
students are with the preceptor during separate timeframes or concurrently.

9.

Q. Is a preceptor allowed a credit for each qualifying student instructed concurrently in the
same clinical rotation?
A. Yes. A preceptor is eligible for a credit for each qualifying student participating in the
same clinical rotation, providing all other credit requirements are met for each student.
For example, a qualifying preceptor instructs two qualifying students in an internal
medicine clinical setting. Both students are under the preceptor’s instruction from 8 am
to 5 pm each weekday for four weeks (each student is instructed 40 hours per week for
four weeks). Since the preceptor instructs each student 160 total hours during the year,
the preceptor is eligible for two credits during the calendar year the clinical rotations are
served.

10. Q. Is a credit allowed if a medical professional combines his clinical service hours for
    multiple students to meet the 160 hour required clinical rotation requirement?
    A. No. A preceptor must precept the same student for 160 hours to meet the credit
    requirement. A medical professional cannot combine student service hours to create
    credit eligibility.

4

For example, a physician instructs one qualifying student in an emergency medicine
clinical setting two weeks in the spring (the student receives 80 hours of instruction) and
instructs another qualifying student in the same clinical setting two weeks in the fall (the
student receives 80 hours of instruction). While the physician has instructed two students
in a clinical rotation for a combined total of 160 hours, he cannot combine the clinical
service hours to meet the 160 hour credit requirement. The physician does not meet the
definition of “preceptor” and, therefore, is not eligible for the credit this year.

11. Q. Can multiple preceptors combine their individual service hours to qualify for the credit?
    A. No. Only one individual is allowed to serve as a preceptor for the same clinical rotation.
12. Q. Can a partnership, corporation, or other business entity claim the credit?
    A. No. The credit is earned and claimed by the qualifying individual preceptor.
13. Q. How does a preceptor determine if the 30% or 50% practice requirement for Medicare,
    Medicaid, or self-pay patients is met each year?
    A. The determination is made each calendar year based on a reasonable method supported
    by the preceptor’s books and records (e.g., based on patient head count, number of
    patient visits, total patient hours, patient revenue, etc.). A preceptor may determine the
    patient practice requirement at either the beginning of each tax year (based on prior
    year) or the end of each tax year in which the clinical rotations are served.
    INCOME TAX CREDIT AMOUNT AND CALCULATION
14. Q. What is the credit amount for each qualifying clinical rotation?
    A. The amount of credit for each qualifying clinical rotation served depends on the
    calendar year the rotations are served, the professional designation of the preceptor
    (e.g., physician, physician assistant), and the percentage of Medicaid insured, Medicare
    insured, and self-pay patients in the preceptor’s practice.
    The credit is phased-in over five years in equal and cumulative installments beginning
    in tax year 2020. The phased-in credit amounts for each year are provided below and
    reflect completion of four rotations* during the year, i.e., the maximum number of
    clinical rotations for which a taxpayer may earn the credit during the year.

5

Table 1A - Physician Preceptor whose practice is 30% to 49% of Medicaid insured,
Medicare insured, and Self-Pay Patients
Tax Year

2020
2021
2022
2023
2024
2025
2026

Rotations
Performed*
(Maximum #)
4
4
4
4
4
4
Credit Repealed

Phased-In Credit
Allowed per
Rotation
$150
$300
$450
$600
$750
$750

Maximum Phased-In Credit Earned
(# Rotations Performed x Phased-In
Credit Amount Allowed per Rotation)
$ 600
$1,200
$1,800
$2,400
$3,000
$3,000

Table 1B - Physician Preceptor whose practice is 50% or more of Medicaid insured,
Medicare insured, and Self-Pay Patients
Tax Year

2020
2021
2022
2023
2024
2025
2026

Rotations
Performed*
(Maximum #)
4
4
4
4
4
4
Credit Repealed

Phased-In Credit
Allowed per
Rotation
$ 200
$ 400
$ 600
$ 800
$1,000
$1,000

Maximum Phased-In Credit Earned
(# Rotations Performed x Phased-In
Credit Amount Allowed per Rotation)
$ 800
$1,600
$2,400
$3,200
$4,000
$4,000

Table 1C - Physician Assistant Preceptor or Nurse Practitioner Preceptor whose practice is
30% to 49% of Medicaid insured, Medicare insured, and Self-Pay Patients
Tax Year

2020
2021
2022
2023
2024
2025
2026

Rotations
Performed*
(Maximum #)
4
4
4
4
4
4
Credit Repealed

Phased-In Credit
Allowed per
Rotation
$100
$200
$300
$400
$500
$500

6

Maximum Phased-In Credit Earned
(# Rotations Performed x Phased-In
Credit Amount Allowed per Rotation)
$ 400
$ 800
$1,200
$1,600
$2,000
$2,000

Table 1D - Physician Assistant Preceptor or Nurse Practitioner Preceptor whose practice is
50% or more of Medicaid insured, Medicare insured, and Self-Pay Patients
Tax Year

2020
2021
2022
2023
2024
2025
2026

Rotations
Performed*
(Maximum #)
4
4
4
4
4
4
Credit Repealed

Phased-In Credit
Allowed per
Rotation
$150
$300
$450
$600
$750
$750

Maximum Phased-In Credit Earned
(# Rotations Performed x Phased-In
Credit Amount Allowed per Rotation)
$ 600
$1,200
$1,800
$2,400
$3,000
$3,000

15. Q. What is the credit amount for a preceptor serving less than four clinical rotations in a
    calendar year?
    A. A preceptor can earn a credit for two, three, or four qualifying clinical rotations per
    calendar year. The tables above reflect the maximum phased-in credit amount a
    preceptor can earn per calendar year for service as a preceptor in four clinical rotations.
    A preceptor serving two (or three) clinical rotations during the calendar year would
    multiply the phased-in credit allowed per rotation in the above tables by two rotations
    performed (or three rotations performed) to compute the applicable phased-in credit
    earned for each calendar year.
    Note: A preceptor serving only one clinical rotation in a calendar year is not allowed a
    preceptor credit for that year.
16. Q. When does the preceptor earn the credit?
    A. The preceptor earns the credit in the calendar year the qualifying clinical rotation is
    served. Code Section 12-6-3800(D).
17. Q. When does the preceptor claim the credit?
    A. The entire credit is not claimed in the tax year the credit is earned. Instead, the credit is
    claimed over two tax years - 50% of the credit is claimed in the tax year the credit is
    earned (Year 1) and 50% of the credit is claimed in the following tax year (Year 2).
    Code Section 12-6-3800(D).
    The phased-in credit amounts allowed in Year 1 and Year 2 for each year are provided
    below and reflect completion of four rotations* during the tax year, i.e., the maximum
    number of clinical rotations for which a taxpayer may earn the credit during the year.

7

Table 2A - Physician Preceptor whose practice is 30% to 49% of Medicaid insured,
Medicare insured, and Self-Pay Patients
Tax Year

2020
2021
2022
2023
2024
2025
2026

Phased-In Credit Earned
(4 Rotations Performed x
Phased-In Credit Amount)
(See Questions 14 and 15)
$ 600
$1,200
$1,800
$2,400
$3,000
$3,000
Credit Repealed

50% of Credit
Allowed in Year
Earned (Year 1)

50% of Credit Allowed in
Year After Preceptor
Service (Year 2)

$ 300
$ 600
$ 900
$1,200
$1,500
$1,500

$ 300
$ 600
$ 900
$1,200
$1,500
$1,500

Table 2B - Physician Preceptor whose practice is 50% or more of Medicaid insured,
Medicare insured, and Self-Pay Patients
Tax Year

2020
2021
2022
2023
2024
2025
2026

Phased-In Credit Earned
(4 Rotations Performed x
Phased-In Credit Amount)
(See Questions 14 and 15)
$ 800
$1,600
$2,400
$3,200
$4,000
$4,000
Credit Repealed

50% of Credit
Allowed in Year
Earned (Year 1)

50% of Credit Allowed in
Year After Preceptor
Service (Year 2)

$ 400
$ 800
$1,200
$1,600
$2,000
$2,000

$ 400
$ 800
$1,200
$1,600
$2,000
$2,000

Table 2C- Physician Assistant Preceptor or Nurse Practitioner Preceptor whose Practice is
30% to 49% of Medicaid insured, Medicare insured, and Self-Pay Patients
Tax Year

2020
2021
2022
2023
2024
2025
2026

Phased-In Credit Earned
(4 Rotations Performed x
Phased-In Credit Amount)
(See Questions 14 and 15)
$ 400
$ 800
$1,200
$1,600
$2,000
$2,000
Credit Repealed

50% of Credit
Allowed in Year
Earned (Year 1)

50% of Credit Allowed in
Year After Preceptor
Service (Year 2)

$ 200
$ 400
$ 600
$ 800
$1,000
$1,000

$ 200
$ 400
$ 600
$ 800
$1,000
$1,000

8

Table 2D - Physician Assistant Preceptor or Nurse Practitioner Preceptor whose Practice is
50% or More of Medicaid insured, Medicare insured, and Self-Pay Patients
Tax Year

2020
2021
2022
2023
2024
2025
2026

Phased-In Credit Earned
(4 Rotations Performed x
Phased-In Credit Amount)
(See Questions 14 and 15)
$ 600
$1,200
$1,800
$2,400
$3,000
$3,000
Credit Repealed

50% of Credit
Allowed in Year
Earned (Year 1)

50% of Credit Allowed in
Year After Preceptor
Service (Year 2)

$ 300
$ 600
$ 900
$1,200
$1,500
$1,500

$ 300
$ 600
$ 900
$1,200
$1,500
$1,500

18. Q. What income of the preceptor does the credit offset?
    A. The credit claimed each year may not exceed 50% of the taxpayer's remaining tax
    liability after all other credits have been applied. If the preceptor files a joint return, the
    credit may be used to offset 50% of the married couple’s income tax liability after all
    other credits have been applied.
19. Q. Is the preceptor credit refundable?
    A. No. The preceptor credit is a nonrefundable credit.
20. Q. What is the credit carryforward period?
    A. Any unused credit may be carried forward to the following year. The carryforward,
    however, may not be used for a tax year that begins more than ten years from the year
    that the credit was earned.
    The chart below illustrates the nine or ten year period that each credit installment may
    be carried forward based upon a credit being earned in tax year 2020.
    Credit Installment
    Credit Amount in Year
    Carryforward of
    installment

Year 2020 (credit earned)
50%
10 year carryforward Years 2020 – 2030

21. Q. Is the credit transferrable?
    A. No. The preceptor credit is not transferrable.

9

Year 2021- Year 2
50%
9 year carryforward Years 2021 – 2030

22. Q. What is the practical effect of the repeal date of the preceptor credit?
A. The credit is repealed on January 1, 2026. Accordingly, a credit may not be earned
after December 31, 2025. The repeal does not affect remaining credit installments for a
credit earned before January 1, 2026. Further, it does not affect the carryforward period
of any credit earned but unused.

23. Q. What form is used to compute and claim the credit?
    A. South Carolina Form TC-62, “Preceptor Credit,” is used to compute and claim the
    credit. This form must be included with the preceptor’s individual income tax return.
    Documentation supporting the credit should not be included with the tax return when
    filed, but should be available in the event requested by the Department.
    PRECEPTOR DEDUCTION
24. Q. When is an income tax deduction allowed for service as a preceptor?
    A. An income tax deduction is allowed only after a preceptor serves four qualifying
    clinical rotations. Once a preceptor earns the maximum annual credit allowed for
    service in four qualifying rotations, he is then allowed a deduction for service in up to
    six more qualifying rotations.
    The first four rotations are each eligible for a credit; the next six rotations are each
    eligible for a deduction. Preceptor services in any additional rotations over ten in a
    calendar year are not eligible for a credit or a deduction. Code Section 12-6-3800(E).
25. Q. What is the deduction amount for each additional qualifying clinical rotation?
    A. The deduction for each additional qualifying clinical rotation served over four (i.e.,
    clinical rotations five through ten) is equal to the amount the credit would have equaled
    for the rotation. The amount depends on the calendar year the rotation is served, the
    professional designation of the preceptor (e.g., physician, physician assistant), and the
    preceptor’s percentage of Medicaid insured, Medicare insured, and self-pay patients.
    The deduction is phased-in over five years in equal and cumulative installments
    beginning in tax year 2020. The phased-in deduction amounts are provided below and
    reflect completion of six additional rotations* during the year, i.e., the maximum
    number of additional clinical rotations for which a taxpayer is allowed a deduction
    during the year.

10

Table 3A - Physician Preceptor whose practice is 30% to 49% of Medicaid insured,
Medicare insured, and Self-Pay Patients
Tax
Year

Additional
Rotations
Performed*
(Maximum #)

Phased-In
Deduction
Allowed
per
Rotation

2020
2021
2022
2023
2024
2025
2026

6
$150
6
$300
6
$450
6
$600
6
$750
6
$750
Credit Repealed

Maximum
Phased-In Deduction
Amount
(# Additional
Rotations x PhasedIn Amount Allowed
per Rotation)
$ 900
$1,800
$2,700
$3,600
$4,500
$4,500

50% of
Deduction
Allowed in
Year of
Preceptor
Service
(Year 1)
$ 450
$ 900
$1,350
$1,800
$2,250
$2,250

50% of
Deduction
Allowed in
Year After
Preceptor
Service
(Year 2)
$ 450
$ 900
$1,350
$1,800
$2,250
$2,250

Table 3B - Physician Preceptor whose practice is 50% or more of Medicaid insured,
Medicare insured, and Self-Pay Patients
Tax
Year

Additional
Rotations
Performed*
(Maximum #)

Phased-In
Deduction
Allowed
per
Rotation

2020
2021
2022
2023
2024
2025
2026

6
$200
6
$400
6
$600
6
$800
6
$1,000
6
$1,000
Credit Repealed

Maximum
Phased-In Deduction
Amount
(# Additional
Rotations x PhasedIn Amount Allowed
per Rotation)
$1,200
$2,400
$3,600
$4,800
$6,000
$6,000

11

50% of
Deduction
Allowed in
Year of
Preceptor
Service
(Year 1)
$ 600
$1,200
$1,800
$2,400
$3,000
$3,000

50% of
Deduction
Allowed in
Year After
Preceptor
Service
(Year 2)
$ 600
$1,200
$1,800
$2,400
$3,000
$3,000

Table 3C - Physician Assistant Preceptor or Nurse Practitioner Preceptor whose Practice is
30% to 49% of Medicaid insured, Medicare insured, and Self-Pay Patients
Tax
Year

Additional
Rotations
Performed*
(Maximum #)

Phased-In
Deduction
Allowed
per
Rotation

2020
2021
2022
2023
2024
2025
2026

6
$100
6
$200
6
$300
6
$400
6
$500
6
$500
Credit Repealed

Maximum
Phased-In Deduction
Amount
(# Additional
Rotations x PhasedIn Amount Allowed
per Rotation)
$ 600
$1,200
$1,800
$2,400
$3,000
$3,000

50% of
Deduction
Allowed in
Year of
Preceptor
Service
(Year 1)
$ 300
$ 600
$ 900
$1,200
$1,500
$1,500

50% of
Deduction
Allowed in
Year After
Preceptor
Service
(Year 2)
$ 300
$ 600
$ 900
$1,200
$1,500
$1,500

Table 3D - Physician Assistant Preceptor or Nurse Practitioner Preceptor whose Practice is
50% or More of Medicaid insured, Medicare insured, and Self-Pay Patients
Tax
Year

Additional
Rotations
Performed*
(Maximum #)

Phased-In
Deduction
Allowed
per
Rotation

2020
2021
2022
2023
2024
2025
2026

6
$150
6
$300
6
$450
6
$600
6
$750
6
$750
Credit Repealed

Maximum
Phased-In Deduction
Amount
(# Additional
Rotations x PhasedIn Amount Allowed
per Rotation)
$ 900
$1,800
$2,700
$3,600
$4,500
$4,500

50% of
Deduction
Allowed in
Year of
Preceptor
Service
(Year 1)
$ 450
$ 900
$1,350
$1,800
$2,250
$2,250

50% of
Deduction
Allowed in
Year After
Preceptor
Service
(Year 2)
$ 450
$ 900
$1,350
$1,800
$2,250
$2,250

26. Q. When does the preceptor take the income tax deduction?
    A. The entire income tax deduction is not taken in the tax year the qualifying clinical
    rotation is served. Instead, the deduction is taken over two years - 50% of the deduction
    is taken in the tax year the rotation is served, and 50% the following tax year.

12

EXAMPLE
Facts. In 2020 and each year thereafter, a physician serves as a preceptor for the maximum of ten
qualifying clinical rotations. Over 50% of the physician’s practice consists of Medicaid insured,
Medicare insured, and self-pay patients. The taxpayer qualifies for the maximum credit and
deduction amounts. Since the preceptor credit each year does not exceed 50% of the taxpayer’s
remaining tax liability after all other credits have been applied, there are no credit carry
forwards.
Preceptor Credit Claimed Each Year. The credit amounts that the physician may claim each year
for tax years 2020 – 2026 are listed below (See Tables 1B and 2B). The credit earned each year
for qualifying rotations is claimed in equal amounts over two tax years (i.e., 50% of the credit is
claimed in the tax year the credit is earned and the remaining 50% is claimed in the following tax
year).

Year Credit Earned
2020 (Take 50% in 2020
and 50% in 2021)
2021
2022
2023
2024
2025
Jan. 2026 – Credit Repealed
Maximum Credit Claimed
Each Year (4 rotations)

2020

2021

$400

$400

2022

$800

$400

$ 800
$1,200

$1,200

$2,000

2023

$1,200
$1,600

$2,800

2024

$1,600
$2,000

$3,600

2025

2026

$2,000
$2,000

$2,000

$4,000

$2,000

Note: The preceptor credit reduces the total amount of income tax owed. It provides a dollar for
dollar tax benefit. For example, if the preceptor’s 2025 South Carolina tax liability is $10,000
before this credit, then the $4,000 preceptor income tax credit claimed in 2025 reduces his
income tax owed to $6,000. The value of this tax credit to the preceptor in 2025 is $4,000 – the
face value of the credit.
Preceptor Deduction Taken Each Year. The deduction amounts that the physician may claim
each year for tax years 2020 – 2026 are listed below (See Table 3B). The deduction is taken each
year for qualifying rotations in equal amounts over two tax years (i.e., 50% of the deduction is
taken in the tax year the rotation is served and the remaining 50% is taken in the following tax
year).

13

Year Deduction Earned
2020 (Take 50% in 2020
and 50% in 2021)
2021
2022
2023
2024
2025
Jan. 2026 – Deduction
Repealed
Maximum Deduction
Taken Each Year
(6 rotations)

2020

2021

2022

$600

$ 600
$1,200 $1,200
$1,800

$600

$1,800 $3,000

2023

$1,800
$2,400

$4,200

2024

$2,400
$3,000

$5,400

2025

2026

$3,000
$3,000

$3,000

$6,000

$3,000

The preceptor deduction reduces the amount of income on which the individual is taxed. For
example, if the preceptor’s 2025 South Carolina taxable income before deductions is $106,000, a
$6,000 tax deduction taken in 2025 would reduce his South Carolina taxable income to
$100,000. This would lower the preceptor’s South Carolina income tax liability from $7,420
($106,000 x 7% tax rate) to $7,000 ($100,000 x 7%). The value of this tax deduction in 2025 to
the preceptor is $420.
SOUTH CAROLINA DEPARTMENT OF REVENUE

s/W. Hartley Powell
W. Hartley Powell, Director
June 11,
, 2020
Columbia, South Carolina

14

EXHIBIT A - QUALIFYING INSTITUTIONS

Medical school-required clinical rotations, physician assistant program-required clinical
rotations, or advanced practice nursing program-required clinical rotations for a public teaching
institution or independent institution of higher learning that is established for a student who is
enrolled in a South Carolina public teaching institution or an independent institution of higher
learning, including: (a) medical school; (b) a physician assistant program; and (c) an advanced
practice nursing program qualify for the credit.
An independent institution of higher learning, as defined in Code Section 59-113-50, is
an independent eleemosynary junior or senior college in South Carolina whose major
campus and headquarters are located within South Carolina and which is accredited by
the Southern Association of Colleges and Secondary Schools; or (2) independent
bachelor’s level institution chartered before 1962 whose major campus and headquarters
are located within South Carolina.
The following list is derived from the above statutory criteria for a South Carolina public
teaching institution or independent institution of higher learning. Since academic
curriculum may change each year, any subsequent changes to this list will be published in
an Information Letter, form instruction, or on the Department’s website.
Medical Schools
Medical University of South
Carolina College of Medicine
University of South Carolina
School of Medicine (Columbia)
University of South Carolina
School of Medicine
(Greenville)

Physician Assistant
Programs
Charleston Southern
University
Francis Marion University
Medical University of South
Carolina – College of Health
Professions
North Greenville University
Presbyterian College

University of South Carolina
School of Medicine
(Columbia)

15

Nurse Practitioner
Programs
Anderson University
Charleston Southern
University
Clemson University

Francis Marion University
Medical University of
South Carolina – College
of Nursing
University of South
Carolina – College of
Nursing (Columbia)