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  • Please Note:  It is essential that you use the most current version of your credit form, available in the forms section of this website, when you file your return. All Virginia credit forms are now available in fillable PDF format.

Tax Credits

Except where noted, use Schedule CR to claim any of these credits and attach it, with required documentation, to your return.

Agricultural Best Management Practices Credit

This credit is available to individuals and corporations that are engaged in agricultural production for market and have a soil conservation plan in place to provide significant improvement to water quality in Virginia's streams, rivers, and bays. To be eligible for the credit, your plan must be certified in advance by your local Soil and Water Conservation District.

The credit is 25% of the first $70,000 you spend for approved agricultural best management programs. The maximum credit is $17,500 or the taxpayers' tax liability, whichever is less. Unused credits may be carried forward for five years.

For Individual taxpayers, effective January 2011 the credit is refundable. Individuals who were approved for this credit prior to taxable year 2011, and who have carry-forward amounts from 2006-2010, should claim their carry forward as a refundable credit on the Schedule CR in taxable year 2011. A line has been added to the Schedule CR for taxable year 2011 only for this purpose. Further, legislation permits pass through entities (PTEs) to designate a Tax Matters Representative with the Department of Taxation to handle any allocation issues related to Credit.

Individual filers complete Schedule CR, Section 3, Part 3, line 3B and corporate filers complete Form 500CR, Part XVI to claim this credit. Attach the certificate from the local Soil and Water Conservation District from the locality in which the credit is claimed.

Reference: Virginia Code 58.1-339.3

Reference: Virginia Code 58.1-439.5

Barge and Rail Usage Tax Credit

The amount of the credit should be is $25 per 20-foot equivalent unit (TEU) or 16 tons of noncontainerized cargo or one unit of roll-on/roll-off cargo moved by barge or rail rather than trucks or other motor vehicles on the Commonwealth’s highways. To receive this credit, an international trade facility is required to apply to The Department of Taxation (TAX ).  No more than $500,000 in tax credits can be issued in any fiscal year. TAX will determine the allowable credit amount for the taxable year and provide a written certification of the credit amount to each taxpayer. Taxpayers can claim this credit against the individual income tax, the corporate income tax, the tax on trusts, the bank franchise tax, the insurance premiums tax, and the tax on public service corporations. Any unused tax credits may be carried over for 5 taxable years.

The business must apply by April 1st using Form BRU. Submitting a late application will disqualify you for the credit. All applications must be sent to the Virginia Department of Taxation, Tax Credit Unit, P.O. Box 715, Richmond, VA 23218-0715. This credit requires certification from the Tax Credit Unit to be claimed on your tax return. TAX will issue the credit by June 30.  A letter will be sent to certify the credit.

The amount of the credit attributable to a partnership, electing small business corporation (S corporation), or limited liability company (LLC) must be allocated to the individual partners, shareholders, or members in proportion to their ownership or interest within the business entity using Form PTE within 30 days after the credit is granted.

Guidelines

Reference: Virginia Code 58.1-439.12:09

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Biodiesel Fuels Credit

Beginning on January 1, 2008 a credit is available for Virginia biodiesel and green diesel fuel producers who produce up to two million gallons of fuel per year. This credit is only available during the first three years of production. Corporate and individual taxpayers may claim a nonrefundable credit against their tax liability for the production of these fuels.

Form BFC is used to apply to the Virginia Department of Taxation (TAX) for a Biodiesel Fuels Credit after the Department of Mines, Minerals, and Energy (DMME) has certified that you have satisfied all the requirements of § 58.1-439.12:02.

The amount of the credit is $0.01 per gallon, not to exceed $5,000 annually.  The amount of the credit allowed cannot exceed the tax liability for the tax year the credit is being claimed.  Unused credits may be carried forward for 3 years.

The amount of the credit attributable to a partnership, electing small business corporation (S corporation), or limited liability company (LLC) must be allocated to the individual partners, shareholders, or members in proportion to their ownership or interest within the business entity using Form PTE.

The credit may be transferred to another taxpayer. The transfer of the credit must be completed before the end of a tax year in order to use the credit for that tax year.
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To claim this credit, complete Part XIX of Schedule CR and attach a copy of the certificate from Virginia Department of Taxation to your income tax return.

Reference: Virginia Code 58.1-439.12:02
 

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Credit for Tax Paid to Another State

General provisions -- Section 332 of the Code of Virginia makes out-of-state tax credit provisions for income that is taxed by more than one state. The credit is restricted to certain types of income. The intent of the law is to address double taxation when income is generated in more than one state; however, the credit does not eliminate double taxation in all cases. For example, taxes paid to another state on non-qualifying income would not be subject to the credit provisions. 

Qualifying taxable income -- Generally, Virginia will allow taxpayers filing resident individual income tax returns to claim credit for income tax paid to another state on qualifying income derived from sources outside of Virginia, provided the income is taxed by Virginia as well as the other state. If the income is from one or more of the following states, you should claim the credit on the nonresident income tax return of the other state instead of the Virginia return: Arizona; California; District of Columbia; Oregon.

Dual residency -- When an individual is an actual resident of one state, but is a domiciliary resident of another state, both states will usually require a return. In that case, the domiciliary state will generally allow a credit for taxes paid to the state of actual residence. For example, if a domiciliary resident of Virginia actually lives and works in Oregon for the taxable year, Virginia will allow a credit for taxes paid to Oregon on qualifying income (see PD 97-223).

To claim the credit -- Complete Schedule OSC and attach a copy to your Virginia return, along with a copy of the other state's income tax return. To claim credit for taxes paid to more than one state, you must complete a separate Schedule OSC for each state.

Qualifying income -- The first step in computing the credit is to determine the qualifying taxable income on which the other state's tax is based. To be included in the computation, the income must:

Be earned or business income derived from sources outside Virginia, which is subject to tax by Virginia as well as another state; or
Be a gain from the sale of a principal residence outside Virginia which was included in federal adjusted gross income; or
Be a gain from the sale of any capital asset not used in a trade or business; or
Be corporation income tax paid to another state (one that does not recognize the federal S corporation election), by an individual shareholder of an S corporation. Attach a statement from the S corporation.
In most cases, the net taxable income reported on the other state's return is the amount on which the Virginia credit will be based. In some states, however, the tax is computed on the total taxable income from all sources, then reduced by an allocation percentage. In a case like this, you must multiply the total taxable income shown on the other state's return by the allocation percentage in order to determine the amount of income to use when computing the credit.

Example

A Virginia resident taxpayer files as a nonresident with another state. The other state's tax was computed as follows:

Taxable income from all sources 100,000
Tax liability 4,000
Taxable income from other state's sources 50,000
Allocation percentage (50,000/100,000) 50%
Net tax due (4,000 x 50%) 2,000
Because the taxpayer only paid 50% of the total tax liability to the other state, the Virginia credit cannot be based on 100% of the other state's taxable income. To compute the qualifying income, the taxable income must be multiplied by the allocation percentage. In this case, the qualifying income for Virginia purposes is $50,000 (100,000 x 50%).

In addition to the circumstances described above, S Corporation shareholders may also need to provide a separate computation of qualifying income. The amount of income used for the credit should be the shareholder's share of the income subject to tax by another state.

Form 760PY filers may include only the portion of income taxed by another state that was received while they lived in Virginia.

Virginia taxable income -- Enter the amount of taxable income from your Virginia return. If you filed separately in the other state, but are filing jointly in Virginia, use only the Virginia taxable income attributable to the filer whose income was taxed by the other state.

Qualifying tax paid to the other state -- Enter the actual income tax paid to the other state. Do not use the state income tax withheld, or include any city, local, or other taxes. For states that apply an allocation percentage to the tax, use the net tax amount after allocation.

Virginia income tax -- Enter the amount of income tax from your return, minus any spouse tax adjustment or credit for low-income individuals claimed. If you filed separately in another state, but are filing jointly in Virginia, enter the amount of Virginia income tax due on the taxable income reported on Schedule OSC. Use the tax tables or the tax rate schedule to determine the amount of tax.

Income percentage -- The next step is to determine what percentage of income in Virginia is also taxable in the other state. To do this, divide the qualifying taxable income from the other state by the Virginia taxable income. The result should not exceed 100%. Special computation for border states: You may qualify for a special computation of the credit if you are required to file a return with Virginia and only one of the following states: Kentucky; Maryland; North Carolina; or West Virginia, The income from the border state must consist solely of wages and salaries or business income from federal Schedule C, and your Virginia taxable income must be at least equal to the taxable income shown on the other state's return. If you meet all of the qualifications, enter 100%.

Allowable credit -- To determine how much of the tax paid to another state is allowable for computing the credit, multiply the Virginia income tax by the income percentage. The credit is the lesser of this computation or the qualifying tax paid to the other state.

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Coalfield Employment Enhancement Credit

This credit benefits individuals, estates, trusts and corporations who have an economic ownership interest in coal mined in Virginia. The credit may be earned for taxable years beginning on or after January 1, 1996, but before January 1, 2008. This credit may be claimed on your return in taxable years beginning on or after January 1, 1999 through January 1, 2017.

Compute your allowable credit on Form 306.

All filers must complete Form 306 B. Individual and fiduciary filers complete Schedule CR, Part XXV, and corporate filers complete Form 500CR, Part XXV to claim this credit. Attach Form 306 for both the Earned Year (a copy of the original) and the Claimed Year (current year) with the completed schedules where appropriate. Follow instructions on Form 306 for "What to Attach."

Reference: Virginia Code 58.1 - 439.2.

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Conservation Tillage Equipment Credit

Individuals and corporations that invest in conservation tillage equipment for the purpose of farming may claim this credit. The term "conservation tillage equipment" means a "no-till" planter or drill designed to minimize soil disturbance. This includes planters and drills that may be attached to existing equipment.

The tax credit is 25% of conservation tillage equipment expenditures, up to a maximum credit of $4000. The allowable credit is the lesser of the total credit or your tax liability. Any unused credit may be carried forward for five years.

Individual filers complete Schedule CR, Part V and corporate filers complete Form 500CR, Part IV to claim this credit. Attach a statement showing the purchase date, description of equipment, and the credit computation.

Reference: Virginia Code 58.1 - 334.

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Communities of Opportunity Tax Credit

For tax years beginning on or after January 1, 2010, a tax credit may be claimed by landlords with qualified housing units located in census tracts with poverty rates of less than 10% in the Richmond Metropolitan Statistical Area who participate in the Housing Choice Voucher program.

The amount of tax credit for an eligible property will be based on 10% of annual Fair Market Rent for that specific unit and prorated when units are qualified for less than the full tax year.  Prorations will be based on full calendar months. A landlord may receive tax credits on one or more units within the same tax year. Credits taken for any one tax year cannot exceed the tax liability for that year. Credits not taken for the year for which they are allocated may be carried forward, but cannot be carried forward for more than five years.

To be eligible for the credit, participating landlords must apply to the Department of Housing and Community Development. The maximum amount of credit that may be issued in a fiscal year is $250,000. Should eligible applications received by the March 1 deadline exceed the annual appropriation, tax credits will be prorated based on the total amount of qualified requests received and the total amount of credits available. If the annual appropriation for tax credits is not fully allocated based on qualified applications received by the March 1 deadline, the remaining balance will be allocated on a first-come, first-served basis. Unused balances will not be allocated more than three years after the tax year in which they were first made available.

Credits granted to a partnership, limited liability company, or electing small business corporation (S corporation) shall be allocated to the individual partners, members, or shareholders in proportion to their ownership or interest in such business entity. The landlord must assume responsibility for distributing credits in this manner. No person shall be allowed both a Communities of Opportunity Tax Credit and a Rent Reductions Tax Credit under Va. Code § 58.1-339.9 for the rental of the same dwelling unit in a taxable year.

For additional information, please contact: Virginia Department of Housing and Community Development, Main Street Centre, 600 East Main Street, Suite 300, Richmond, VA 23219, or call 804-371-7000.

Reference: Virginia Code 58.1-439.12:04

Day Care Facility Investment Credit

This credit expired on December 31, 2013.

For taxable years beginning on and after January 1, 1997, an employer may be eligible for a credit for expenditures incurred to establish a day-care facility for the children of employees. The maximum credit is $25,000. The Department of Taxation may not approve more than $100,000 in total credits in any fiscal year.

To be eligible for the credit, the employer's day care facility must meet the following criteria: (1) the facility shall be operated under a license issued by the Virginia Department of Social Services; (2) the building permit application for the facility must be submitted after July 1, 1996; (3) the facility must be used primarily by the children of the taxpayer's employees and; (4) the Tax Commissioner must approve the credit application before a credit may be claimed. Any unused credit may be carried forward for three taxable years.

To apply for this credit, submit a letter of application that specifies the employer's name and location of the facility. You must also provide certification of items (1) and (2) above. Send your application to: Virginia Department of Taxation, Tax Credit Unit, P.O. Box 715, Richmond, VA 23218-0715.

Individual filers complete Schedule CR, Part XII, and corporate filers complete Form 500CR, Part XIV to claim this credit.

Reference: Virginia Code 58.1-439.4.

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Education Improvement Scholarships Tax Credit

Effective for taxable years beginning on and after January 1, 2013, but before January 1, 2028.  Allows taxpayers to claim a credit  against the  individual income tax, corporate income tax, bank franchise tax,  insurance premiums license tax, or tax on public service corporations for contributions to  approved scholarship foundations.  Capped at $25 million per fiscal year.  Unused tax credits would be carried over for five years. 

Approved scholarship foundations must disburse 90% of the value of donations (in the form of scholarships) it receives between July 1 and June 30, by the following June 30.

This program provides state tax credits for persons or businesses making monetary or marketable securities donations to approved scholarship foundations that provide scholarships to eligible students for qualified educational expenses incurred in attending eligible nonpublic schools.

The tax credit is equal to 65 percent of the monetary or marketable securities donation, and may be claimed against the individual income tax, corporate income tax, bank franchise tax, insurance premiums license tax, or tax on public service corporations. A monetary or marketable securities donation must be at least $500 in order to qualify for the tax credit program.  An individual may not be issued less than $325 or more than $81,250 in tax credits for a taxable year.  However, the $81,250 tax credit limitation does not apply to credits issued to any business entity, including a sole proprietorship.  Any unused tax credits may be carried over for the next five succeeding taxable years or until the total amount of credit has been taken, whichever is sooner.

The credit will be allowed to be claimed for the taxable year following the year of the monetary or marketable securities donation.  For those taxpayers making estimated tax payments, the credit would be prorated equally against estimated tax payments made in the third and fourth quarters of the taxable year in which the credit may be claimed, and the final tax payment.  When claiming the tax credit for the appropriate taxable year, an individual or business must submit with the applicable tax return verification from each scholarship foundation to which monetary or marketable securities donations have been made and the tax credit certification document issued by VDOE.

Reference: Virginia Code 58.1-439.25

Reference: Virginia Code 58.1-439.26

Reference: Virginia Code 58.1-439.27

Reference: Virginia Code 58.1-439.28

 

Enterprise Zone Act Credit

Businesses qualified prior to July 1, 1995 may be able to claim a general tax credit against the tax due on taxable income within the zone. The credit is a percentage of the tax due on taxable income from within the zone. In addition, a credit for a percentage of unemployment tax due on zone employees may be claimed.

Businesses qualified between July 1, 1995 and June 30, 2005 may take a credit against the tax due on the zone's taxable income and may be eligible for the real property improvement tax credit or the investment tax credit.

Effective July 1, 2005, the Enterprise Zone Act credit has been replaced with a grant program administered by the Department of Housing and Community Development (DHCD). Certain businesses that signed agreements with DHCD prior to the expiration of the Enterprise Zone Act credit provisions may continue to claim the business tax credit and the real property improvement credit.

For forms to qualify and additional information on this credit, visit the Virginia Department of Housing and Community Development website at http://www.dhcd.virginia.gov/.

All filers must complete Form 301 and attach the certificate of qualification from the Virginia Department of Housing and Community Development to claim this credit. If applicable, attach the Certificate of Unemployment Tax Credit from the Virginia Employment Commission. Individuals must also complete Schedule CR, Part II, to claim nonrefundable credits, and Part XXVI to claim the Real Property Improvement Credit, which is refundable. Corporate filers must complete Form 500CR, Part III, to claim nonrefundable credits, and Part XXVI to claim the Real Property Improvement Credit.

Complete Form 301 and Schedule 500CR, Part III, to claim this credit. Attach the certificate of qualification from the Virginia Department of Housing and Community Development and a completed Form 301. If applicable, attach the Certificate of Unemployment Tax Credit from the Virginia Employment Commission.

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Farm Wineries and Vineyards Tax Credit


An individual and corporate income tax credit is available for Virginia farm wineries and vineyards in an amount equal to 25 percent of the cost of all qualified capital expenditures made in connection with the establishment of new Virginia farm wineries and vineyards and capital improvements made to existing Virginia farm wineries and vineyards.

“Qualified capital expenditures” includes all expenditures made by the taxpayer for the purchase and installation of barrels, bins, bottling equipment, capsuling equipment, corkers, chemicals, crushers and destemmers, dirt, fermenters, or other recognized fermentation devices, fertilizer and soil amendments, filters, grape harvesters, grape plants, hoses, irrigation equipment, labeling equipment, poles, posts, presses, pumps, refractometers, refrigeration equipment, seeders, tanks, tractors, vats, weeding and spraying equipment, and wire.

“Virginia vineyard” means agricultural lands located in the Commonwealth consisting of at least one contiguous acre dedicated to the growing of grapes that are used or are intended to be used in the production of wine by a Virginia farm winery as well as any plants or other improvements thereon.

“Virginia farm winery” means an establishment located in the Commonwealth that is licensed as a Virginia farm winery pursuant to §4.1-207.

The total amount of tax credits available for a calendar year cannot exceed $250,000. If applications for this credit exceed $250,000, the Department of Taxation will allocate the credits on a pro rata basis. Any credit amounts that exceed a taxpayer’s liability can be carried forward for ten years. Taxpayers cannot claim both this credit and a federal deduction for the same expenses under IRC §179.

The business must apply by April 1st using Form FWV. Submitting a late application will disqualify you for the credit. All applications must be sent to the Virginia Department of Taxation, Tax Credit Unit, and P.O. Box 715, Richmond, VA 23218-0715. This credit requires certification from the Tax Credit Unit to be claimed on your tax return. A letter will be sent to certify the credit.

The amount of the credit attributable to a partnership, electing small business corporation (S corporation), or limited liability company (LLC) must be allocated to the individual partners, shareholders, or members in proportion to their ownership or interest within the business entity using Form PTE within 30 days after the credit is granted.

Reference: Virginia Code 58.1-339.12

Fertilizer and Pesticide Application Equipment Credit

Individuals and corporations may claim this credit for equipment purchased to provide more precise pesticide application. You must be engaged in agricultural production for market and have a nutrient management plan approved by your local Soil and Water Conservation District in place.

The credit is 25% of the cost of the certified equipment, or $3,750, whichever is less. The allowable credit may not exceed your tax liability. Unused credits may be carried forward for five years.

Individual filers complete Schedule CR, Part VI, and corporate filers complete Form 500CR, Part VI to claim this credit.

Reference: Virginia Code 58.1-337.

Reference: Virginia Code 58.1-436.

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Foreign Source Retirement Income Credit

Effective for taxable years beginning on or after January 1, 1998, Virginia residents may claim a credit for income taxes paid to a foreign country on pension or retirement income derived from employment in a foreign country. The retirement income must be included in Virginia taxable income on the return to which this credit is applied. The credit is nonrefundable and excess credits cannot be carried forward.

To compute the credit, the foreign currency must be converted into U.S. dollars using the prevailing exchange rate that most nearly reflects the value of the currency at the time the taxes were actually paid to the foreign country.

For purposes of this credit, a foreign country shall include all possessions of the United States. Any foreign country that does not qualify for the federal foreign tax credit (IRC 901[j]) does not qualify for this Virginia credit.

Complete Schedule CR, Part X, to claim this credit. Attach a copy of the return filed in the foreign country or other proof of tax payment to the foreign country and a schedule showing computation of foreign currency converted to U.S. dollars.

Reference: Virginia Code 58.1 - 332.1.

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Green Jobs Tax Credit

Allows a $500 income tax credit for the creation of a “green” job paying an annual salary of $50,000 for taxable years beginning on and after January 1, 2010 but before January 1, 2015. Each taxpayer is allowed a credit for up to 350 new green jobs.

In order to qualify for the tax credit, the taxpayer must have created the green job and filled it during the taxable year in which the credit is claimed. You cannot apply if you have applied for a Major Business Facility Job Tax Credit for the same jobs.  The credit is allowed for the taxable year in which the job has been filled for at least one year and for each of the four succeeding taxable years provided the job is continuously filled during the respective taxable year.

The Form GJC and any supporting documentation must be completed and sent to the Virginia Department of Taxation, Tax Credit Unit, P.O. Box 715, Richmond, VA 23218-0715 at least 90 days prior to the due date of your return. You must apply each year you are eligible to earn credit for each job that is continuously filled (not to exceed 5 years). Any unused tax credits may be carried over for 5 taxable years.

The amount of the credit attributable to a partnership, electing small business corporation (S corporation), or limited liability company (LLC) must be allocated to the individual partners, shareholders, or members in proportion to their ownership or interest within the business entity using Form PTE within 30 days after the credit is granted.

 

Reference:  Virginia Code 58.1-439.12:05

 

Historic Rehabilitation Credit


An individual, estate, trust, or corporation incurring eligible expenses in the rehabilitation of a certified historic structure is entitled to claim a credit against their respective taxes.

The credit is equal to 25% of rehabilitation expenses for projects completed in 2000 and thereafter.

To qualify, the cost of the rehabilitation must equal to at least 50% (25% if the building is owner occupied) of the assessed value of the building for local real estate tax purposes prior to the rehabilitation. The rehabilitation work must be certified by the Virginia Department of Historic Resources and be consistent with The Secretary of the Interior's Standards for Rehabilitation. The allowable credit may not exceed your tax liability. Unused credits may be carried forward for 10 years.

Applications for certification of buildings and rehabilitation projects may be obtained from the Virginia Department of Historic Resources, 2801 Kensington Avenue, Richmond, VA 23221. You must receive certification of the credit before claiming it on your tax return.

This credit may be allocated among owners in proportion to each owner’s percentage of ownership or interest in the pass-through entity, or as the owners mutually agree, or as provided in the partnership agreement or other entity document using Form PTE within 30 days after the credit is granted but at least 90 days before filing an income tax return.

Individual and fiduciary filers complete Schedule CR, Part XI, and corporate filers complete Form 500CR, Part XIII, to claim this credit. Attach Schedule CR and your certification to your return.

Reference: Virginia Code 58.1 -339.2.

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International Trade Facility Tax Credit
 

An income tax credit is allowed for either capital investment in an international trade facility or increasing jobs related to an international trade facility. To qualify, an ITF must show at least a 10% increase in shipments through VPA ports in Virginia. The amount of the credit would be equal to $3,000 per new qualified full-time employee that results from increased qualified trade activities by the taxpayer or two percent of the amount of capital investment made by the taxpayer to facilitate the increased eligible trade activities. Any company that creates jobs or makes capital investments in a “tobacco-dependent locality” would be permitted to claim a port tax credit equal to $6,000 per job created or four percent of qualified capital investment expenses, to the extent that money is available in the Tobacco-Dependent Localities Fund. If the amount of credits allowable for companies in tobacco-dependent localities exceeds the amount deposited in the Fund, the credits would be allocated to taxpayers on a pro rata basis by the Department of Taxation. Taxpayers can elect to claim either credit, but cannot claim both credits in the same taxable year.

A qualified company that claims employees for the Major Business Facility Job Tax Credit or the International Trade Facility Tax Credit cannot receive a Port of Virginia Economic and Infrastructure Development Zone Grant (POV Zone Grant) for those previously claimed jobs.

No more than $1.25 million in tax credits can be issued in any fiscal year. If the amount of tax credits requested exceeds $1.25 million, the credits would be allocated proportionately among all qualified taxpayers. The Virginia Department of Taxation (TAX) will determine the credit amount for the taxable year and provide a written certification to each taxpayer. The amount of the credit will be limited to fifty percent of the taxpayer’s tax liability for the taxable year. Any unused credit amount can be carried forward for ten years.

The business must apply by April 1st using Form ITF. Submitting a late application will disqualify you for the credit. All applications must be sent to the Virginia Department of Taxation, Tax Credit Unit, and P.O. Box 715, Richmond, VA 23218-0715. This credit requires certification from the Tax Credit Unit to be claimed on your tax return. A letter will be sent to certify the credit.

The amount of the credit attributable to a partnership, electing small business corporation (S corporation), or limited liability company (LLC) must be allocated to the individual partners, shareholders, or members in proportion to their ownership or interest within the business entity using Form PTE within 30 days after the credit is granted.

Guidelines

Reference: Virginia Code 58.1-439.12:06
 

Land Preservation Tax Credit

For information about LPC, please visit our Land Preservation Tax Credit page.

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Livable Home Tax Credit


Effective for January 1, 2008 this credit is now being administered by the Department of Housing and Community Development (DHCD). Effective for tax year 2011, individuals and licensed contractors who are corporations may be eligible for an income tax credit of $5000 for the purchase of a new accessible residence and 50 percent of the cost of retro-fitting activities, not to exceed $5000.
 

Any tax credit that exceeds the eligible individual’s tax liability may be carried forward for seven years. If the total amount of tax credits issued under this program exceeds $1million in a fiscal year, DHCD will pro rate the amount of credits among the eligible applicants. Applications are to be filed with the Virginia Department of Housing and Community Development (DHCD) by February 28 of the year following the year in which the purchase or retro-fitting was completed. For additional information please contact Kathy Robertson at 804-225-3129.
 

Form and Guidelines for 2011

Reference:  Virginia Code 58.1-339.7

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Long-Term Care Insurance Credit
Credit for Purchase of Long-Term Care Insurance

This credit expired on December 31, 2013.

Individuals may claim a credit equal to 15% of the amount paid by the individual during the taxable year in long-term care insurance premiums for long-term care insurance coverage for himself, but the total credits for any policy may not exceed 15% of the amount of premiums paid for the first 12 months of coverage. Any unused credit may be carried forward for the next five taxable years. In order to determine the amount that may be used as a basis for this credit, the individual must subtract any amount actually included as a deduction on Schedule A of the individual’s federal income tax return. In addition, the individual may not claim this credit to the extent the premiums have been used to claim the Virginia deduction for long-term health care premiums. It may be possible, however, for an individual to claim this credit and the Virginia deduction in the same year.

Example

This credit is based on the amount paid during the taxable year, even if the months covered by the policy extend into the following taxable year. For example, if an individual purchased a policy on July 1 and paid for 12 months, he would base his credit on the entire payment, even though only six months of the coverage period would fall in the taxable year in which he claimed the credit. If however, the individual made payments on a monthly basis, he would claim a credit in the current taxable year for 6 months of premiums and a credit in the second year for the next six months of premiums in order to reach the allowed total of 12 months. In that case, the individual could also claim a deduction in the second year for the 6 months of premiums that were not used as a basis for the credit.

Reference:  Virginia Code 58.1-339.11 (Repealed)

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Low Income Housing Credit (Expired June 30, 2010)

If you are a Virginia taxpayer and you claimed a low-income housing tax credit on your federal income tax return for housing units placed in service in Virginia on or after January 1, 1998, you may qualify to claim the state low-income housing tax credit.

The Virginia credit is a percentage of the federal credit. If in subsequent years you are subject to the federal recapture provisions for this credit, you will also be subject to a recapture amount on your Virginia return.

You must receive certification from the Virginia Department of Housing and Community Development before claiming this credit on your tax return. The allowable credit may not exceed your tax liability. For additional information contact the Dept of Housing and Community Development at 804/371-7117.

Individual filers complete Schedule CR, Part XIII, and business filers complete 500CR Part XV to claim the credit.

Reference: Virginia Code 58.1 - 435 and 36-55.63.

Reference: Virginia Code 58.1- 336 (Repealed).

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Low Income Individuals Credit


You may qualify to claim the Credit for Low Income Individuals (CLI) if your total family Virginia adjusted gross income is below federal poverty guidelines. Family Virginia adjusted gross income includes the total Virginia adjusted gross income for you, your spouse and your dependents, even if they do not file their own Virginia returns. If you and your spouse file separate returns, the family income includes income from your return, your spouse's return and any income for any dependents claimed on either return. Only one spouse may claim the CLI. For more information on computing Virginia adjusted gross income, refer to Form 760.

The maximum credit you may claim is $300 for each personal and dependent exemption claimed on your Virginia return. Unlike the Federal Earned Income Credit, this credit is not refundable. The amount of CLI claimed may not exceed your tax liability. Excess credit amounts may not be carried forward to future years.

You may not claim this credit if you, your spouse or any dependent listed on your return claimed one or more of the following exemptions, deductions or subtractions:

subtraction for wages or salaries received by members of the Virginia National Guard
subtraction for up to $15,000 of military basic pay for military service personnel on extended active duty
subtraction for up to $15,000 of salary for a federal or state employee whose annual salary is $15,000 or less
additional personal exemption for blind or aged taxpayers (NOTE: If you qualify for both the CLI and an additional exemption for blindness, it may be to your advantage to claim the CLI, rather than the additional exemption).
age deduction
In addition, you cannot claim this credit if you were claimed as a dependent on another taxpayer's return.

Claiming the credit is a two-step process. First, you must determine if you qualify for the credit. If so, then you must compute your allowable credit. Use the following table to see if you qualify for the CLI:

If the number of eligible exemptions is: Your family Virginia adjusted income must be less than
1 $11,490
2 $15,510
3 $19,530
4 $23,550
5 $27,570
6 $31,590
7 $35,610
8 $39,630

For each additional exemption over 8, add $4,020 to the guidelines. Eligible exemptions include personal exemptions only - you may not claim the CLI if you also claim additional exemptions for blindness or age.

If you qualify for the credit, multiply the total number of personal exemptions claimed on your return by $300. The credit cannot be more than your total tax as shown on line 17 of your income tax return, Form 760. Use Schedule ADJ to report the credit.

Reference: Virginia Code 58.1 - 339.8.

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Major Business Facility Job Credit

Companies engaged in any business in the Commonwealth, except for retail trade business, may claim a Virginia Jobs Tax Credit if the taxpayer creates new full time jobs in excess of the threshold amounts established for one of the two credit tiers. The thresholds for the two credit tiers are as follows:
 

Tier 1: The qualifying threshold amount for Tier 1 is 100 new jobs for the establishment or expansion of a major business facility in Virginia. Please note that for taxpayers whose expansion year begins on or after January 1, 2010 the threshold has been reduced to 50 new jobs.
 

Tier 2: The qualifying threshold amount for Tier 2 is 50 new jobs for the establishment or expansion of a major business facility in a locality identified by the Virginia Economic Development Partnership as an economically distressed area or has been designated as an Enterprise Zone. Please note that for taxpayers whose expansion year begins on or after January 1, 2010 the threshold has been reduced to 25 new jobs.

Taxpayers can qualify for and claim a credit for only one tier per facility. Credits are subject to recapture if employment decreases during the five years following the credit year.
 

The credit year is defined as the first taxable year following the taxable year in which the major business facility was established or expanded. The credit is earned in one-third increments over three taxable years beginning with the credit year. Please note, for tax years 2009 thru 2014, the credit can be earned in 1/2 increments over a two year period. The allowable credit may not exceed your tax liability. Unused credits may be carried forward for ten years. Credits will be recaptured proportionately if employment decreases during the five years following the initial credit year. Compute on Form 304.

The credit allows a qualifying business to receive both an Enterprize Zone grant and a Major Business Facility tax credit.  The grant and tax credit cannot be earned/claimed for the same job.

The taxpayer cannot claim the Major Business Facility Job Tax Credit and the Coalfield Employment Enhancement Tax Credit, the Clean Fuel Vehicle and Advanced Cellulosic Biofuels Job Credit or the Green Job Creation Tax Credit.

Individual filers complete Schedule CR, Part IX, and corporate filers complete Form 500CR, Part X, to claim this credit.

Please Note this Change in Procedures:

All Major Business applications (Form 304) must be submitted to the Department of Taxation, Tax Credit Unit, PO Box 715, Richmond, VA 23218-0715 90 days prior to filing your return. Form 304 is no longer part of your income tax return. This credit requires certification from the Tax Credit Unit to be claimed on your tax return. A letter will be sent to certify the credit.

Reference: Virginia Code 58.1 - 439.

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Motion Picture Production Tax Credit

Allows a refundable income tax credit to any motion picture film production company with qualifying expenses of at least $250,000 for taxable years beginning on or after January 1, 2011. The CAP is $6.5 million per biennium per fiscal year, beginning in fiscal year 2015. Qualifying companies must submit an initial application 30 days prior to the start of production to the Virginia Film Office (VFO) and must have a memorandum of understanding. Additionally the production company must submit documentation to the VFO after completion of the production in order for the VFO to issue certification of the credit. This credit is administered by the Virginia Film Office. For additional information please contact Becky Beckstoffer at 800-854-6233.
 

Sunset date:  January 1, 2019

Final Guidelines

Public Document 10-281 provides complete guidelines and rules for claiming the credit.

Reference: Virginia Code 58.1-439.12:03
 

Neighborhood Assistance Act Credit

The purpose of the Neighborhood Assistance Program (NAP) is to encourage individuals, trusts and businesses to make donations to approved 501(c) (3) (4) non-profit organizations for the benefit of low-income persons or an eligible student with a disability. To be considered for the NAP program, a 501(c)(3) (4) non-profit organization would submit an application to the Department of Social Services (DSS) or Department of Education (DOE) by the first business day of May each year.  Those applicants submitting all required information and meeting the eligibility criteria will be determined an approved organization.

Neighborhood Assistance Program (NAP) state tax credits may be available to an individual making a donation of cash or marketable securities directly to an approved NAP non-profit organization.  The NAP state tax credit for an individual is equal to 65 percent of the donation’s value.  To qualify, individuals must donate at least $500. An individual may be eligible to receive a NAP tax credit for a donation value up to $125,000 per taxable year.

Neighborhood Assistance Program (NAP) state tax credits may be available to a trust making a donation of cash, stock, merchandise, real estate and rent/lease of non-profit's facility directly to an approved NAP non-profit organization.  The NAP state tax credit for a trust is equal to 65 percent of the donation’s value.  To qualify, a trust must donate at least $616.

Neighborhood Assistance Program (NAP) state tax credits may be available to a business making a donation of cash, stock, merchandise, real estate, rent/lease of non-profit's facility, and limited health care, pharmaceutical, mediation, professional, and contracting services directly to an approved NAP non-profit organization.  The NAP state tax credit for a business is equal to 65 percent of the donation’s value.  To qualify, a business must donate at least $616.

A NAP Tax credit is non-refundable and non-transferrable. Excess donor credit, if applicable, may be carried forward for the next five taxable years.

 To claim the NAP state tax credit on an income tax return:

  • An individual filer must complete Schedule CR, Part III.
  • A business filer must complete Form 500CR, Part II.
  • A trust must claim the credit on Form 770, line 5(e). 

Information about the application process or making a donation to a NAP approved organization can be found at http://www.dss.virginia.gov/community/nap.cgi or by calling (804) 726-7920 or (804) 726-7924.

Reference: Virginia Code 58.1-439.18:24
 

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Political Contribution Credit


You may qualify to claim this credit if you made contributions to political candidates in a primary, special, or general election for local or state office. The election must be held in the year in which the contribution is made.

The Virginia credit is equal to 50% of the political contributions made to candidates for state and local offices, not to exceed $25 for an individual taxpayer or $50 for taxpayers filing a joint return. The credit is non-refundable and unused credits cannot be carried forward to subsequent years.

Complete Schedule CR, Part XXIII, to claim this credit. If this is the only credit you are claiming, you may omit Schedule CR, and fill in the Political Contributions Credit oval on your income tax return.

Reference: Virginia Code 58.1 - 339.6.

Port Volume Increase Tax Credit

Allows an income tax credit to a qualifying taxpayer that is an agricultural entity, manufacturing-related entity (manufacturer or distributor of manufactured goods), or mineral and gas entity that uses port facilities in the Commonwealth and increases its port cargo volume by a minimum of 5% at these facilities for taxable year beginning January 1, 2011 but before January 1, 2017.  Base year cargo volume must be at least 75 net tons of non-containerized cargo or ten 20-ft equivalent units (TEUs).

The CAP is $3.2 million. The taxpayer must apply to the Virginia Port Authority by March 1st of the calendar year after the calendar year in which the increase in port cargo volume occurs. Submitting a late application will disqualify you for the credit. If, on March 15 of each year, the cumulative amount of tax credits requested by qualifying taxpayers for the prior year exceeds $3.2 million, the credits will be prorated among the qualifying taxpayers who requested the credit. A qualifying taxpayer is generally not permitted to receive more than $250,000 each calendar year. However, if, on March 15 of each year, the $3.2 million credit amount is not fully allocated among qualifying taxpayers, those taxpayers who have already been allocated a credit for the prior year are allowed a pro rata share of the remaining credit amount. The Virginia Port Authority will issue the credit by May 30.

The amount of the credit attributable to a partnership, electing small business corporation (S corporation), or limited liability company (LLC) must be allocated to the individual partners, shareholders, or members in proportion to their ownership or interest within the business entity using Form PTE within 30 days after the credit is granted.

Reference: Virginia Code 58.1-439.12:10
 

Qualified Equity And Subordinated Debt Investments Credit


To Qualify

This credit is available to individual and fiduciary taxpayers making a qualified investment in the form of "equity" or "subordinated debt" in a pre-qualified small business venture. Businesses must file Form QBA by December 31 of the year that they request qualification. The business must reapply each year to maintain qualification. Investors must file Form EDC by April 1 of the year following the investment to apply for their credit. Submitting a late application will disqualify you for the credit. All applications must be sent to the Virginia Department of Taxation, Tax Credit Unit, P. O. Box 715, Richmond, VA 23218 - 0715. The Department of Taxation will notify investors of the amount of their authorized credit by June 30th.

Qualified Investment

Qualified investment means a cash investment in a qualified business in the form of equity or subordinated debt; however, an investment shall not be qualified if the taxpayer who holds such investment, or any of such taxpayer's family members, or any entity affiliated with such taxpayer, receives or has received compensation from the qualified business in exchange for services provided to such business as an employee, officer, director, manager, independent contractor or otherwise in connection with or within one year before or after the date of such investment. For the purposes hereof, reimbursement of reasonable expenses incurred shall not be deemed to be compensation.

Commercialization Investment

Commercialization investment means a qualified investment in a qualified business that was created to commercialize research developed at or in partnership with an institution of higher education.

Equity

Equity means common stock or preferred stock, regardless of class or series, of a corporation; a partnership interest in a limited partnership; or a membership interest in a limited liability company, which is not required or subject to an option on the part of the taxpayer to be redeemed by the issuer within 3 years from the date of issuance. No equity investment will qualify for this credit if it is required to be redeemed or subject to an option to be redeemed by the issuer within 5 years of the date of issuance.

Subordinated Debt

Subordinated debt means indebtedness of a corporation, general or limited partnership, or limited liability company that (i) by its terms required no repayment of principal for the first 3 years after issuance; (ii) is not guaranteed by any other person or secured by any assets of the issuer or any other person; and (iii) is subordinated to all indebtedness and obligations of the issuer to national or state-chartered banking or savings and loan institutions.


Qualified Business

Effective January 1, 2009 a qualified business means a business which (i) has annual gross revenues of no more than $3 million in its most recent fiscal year, (ii) has its principal office or facility in the Commonwealth, (iii) is engaged in business primarily in or does substantially all of its production in the Commonwealth, (iv) has not obtained during its existence more than $3 million in aggregate gross cash proceeds from the issuance of its equity or debt investments (not including commercial loans from chartered banking or savings and loan institutions), and (v) is primarily engaged, or is primarily organized to engage, in the fields of advanced computing, advanced materials, advanced manufacturing, agricultural technologies, biotechnology, electronic device technology, energy, environmental technology, information technology, medical device technology, nanotechnology, or any similar technology-related field determined by regulation by the Department of Taxation to fall under the purview of this section.
 

How Much is the Credit?

The credit is equal to 50% of the qualified business investments made during the taxable year. If total annual requests for the credit exceed $4.5 million for tax year 2013, the Department of Taxation will prorate the credit for each taxpayer.

The credit a taxpayer may claim per taxable year may not exceed the credit authorized by the Department of Taxation, $50,000, or the income tax liability on that year's return, whichever is less. The credit is nonrefundable. Unused credits may be carried forward up to 15 years.

This credit may be allocated among owners in proportion to each owner’s percentage of ownership or interest in the pass-through entity, or as the owners mutually agree, or as provided in the partnership agreement or other entity document using Form PTE within 30 days after the credit is granted but at least 90 days before filing an income tax return.

To Claim the Credit

Complete Schedule CR, Part XV, to claim this credit. Please note: Since the Department of Taxation does not complete authorization of these credits until June 30 each year, it will be necessary for the taxpayers with a May 1 due date to either file for an extension, or file an amended return in order to claim this credit.

Reference: Virginia Code 58.1 - 339.4.

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Recyclable Materials Processing Equipment And Alternative Recycling Credit
This credit has been extended until January 1, 2015.

A Virginia resident or manufacturing business entity may claim an income tax credit for purchases of equipment that can produce tangible personal property items from recyclable materials. The manufacturing facility must be located within Virginia, and must be engaged in the manufacture, production, processing or compounding of tangible personal property for sale. The recycling machinery or equipment must be used exclusively in or on the manufacturing premises.

The credit is 10% of the purchase price paid during the taxable year for the recycling equipment. The total allowable credit may not exceed 40% of the tax liability, computed prior to applying the credit. Unused credits may be carried forward for 10 years.

Effective January 1, 2008 the amount of the credit attributable to a partnership, electing small business corporation (S corporation), or limited liability company (LLC) must be allocated to the individual partners, shareholders, or members in proportion to their ownership or interest within the business entity using Form PTE.

For additional information on how to qualify for certification, contact the Department of Environmental Quality P.O. Box 10009, Richmond, VA 23240-0009 or call 804-698-4145.

Individual filers complete Schedule CR, Part IV, and corporate filers complete Form 500CR, Part VII, to claim the credit. Attach your approved Form 50-11S, as well as purchase receipts and invoices.

Reference: Virginia Code 58.1-439.7

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Rent Reduction Program Credit

This credit expired on December 31, 2010.

Owners of rental property who provide a rent reduction to low income tenants who: 1) are over age 62; 2) have a mental disability, or; 3) have been homeless (those in domestic violence and homeless shelters) at any time within the previous 12 months preceding the lease term are eligible to apply for a state income tax credit.

The reduced rent must be at least 15% below the market rate. After January 1, 2000, no credit may be claimed unless credit was validly claimed on the unit for all or part of the month of December 1999. The credit is equal to 50% of the total rent reductions given to eligible tenants during the taxable year. The total amount of credit a taxpayer may claim per taxable year may not exceed their tax liability. Unused credits may be carried forward for five years. Total credits approved in a fiscal year cannot exceed $50,000.

For more information and to apply for the credit, contact the Virginia Housing Development Authority.

Individual filers complete Schedule CR, Part VII, and corporate filers complete Form 500CR Part VIII to claim this credit.

Reference: Virginia Code 58.1 -339.9.

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Research and Development Tax Credit

Allows an income tax credit for individuals and businesses for qualified research and development expenses for taxable years beginning on or after January 1, 2011, but before January 1, 2019. Effective for taxable years beginning on or after January 1, 2014, the tax credit amounts are (i) 15 percent of the first $234,000 in Virginia qualified research and development expenses, or (ii) 20 percent of the first $234,000 of Virginia qualified research and development expenses if the research was conducted in conjunction with a Virginia public or private college or university, to the extent the expenses exceed a base amount. There is a $6 million cap on the total amount of credits allowed in any fiscal year.

The Department shall require taxpayers applying for the credit to provide information including (i) the number of full-time employees employed by the taxpayer in the Commonwealth during the taxable year for which the credit is sought; (ii) the taxpayer’s sector or sectors according to the 2012 edition of the North American Industry Classification System (NAICS) as published by the United States Census Beureau; (iii) a brief description of the area, discipline, or field of Virginia qualified research performed by the taxpayer; (iv) the total gross receipts or anticipated total gross receipts of the taxpayer for the taxable year for which the credit is sought; (v) whether the Virginia qualified research was conducted in conjunction with a Virginia public or private college or university.

The business must apply by April 1st using Form RDC. Submitting a late application will disqualify you for the credit. All applications must be sent to the Virginia Department of Taxation, Tax Credit Unit, P.O. Box 715, Richmond, VA 23218-0715. This credit requires certification from the Tax Credit Unit to be claimed on your tax return. A letter will be sent to certify the credit.  Use this spreadsheet to compute the Virginia base amount for calendar and fiscal year filers.

This credit may be allocated among owners in proportion to each owner’s percentage of ownership or interest in the pass-through entity, or as the owners mutually agree, or as provided in the partnership agreement or other entity document using Form PTE within 30 days after the credit is granted but at least 90 days before filing an income tax return.  Effective for tax year 2014, pass-through entities may elect to claim the entire granted amount at the entity level.

Any taxpayer who claims the tax credit for Virginia qualified research and development expenses pursuant to this section shall not use such expenses as the basis for claiming any other credit provided under the Code of Virginia. Additionally, the taxpayer will not be eligible if research is conducted in the Commonwealth on human cells or tissue derived from induced abortions or from stem cells obtained from human embryos. The foregoing provision shall not apply to research conducted using stem cells other than embryonic stem cells.

Reference: Virginia Code 58.1-439.12:08
 

Riparian Waterway Buffer Credit

You may qualify to claim this credit if you own land abutting a waterway on which timber is harvested, and forbear harvesting timber on certain portions of the land near the waterway. The distance from the waterway to the most distant end of the riparian buffer must be at least 35 feet and no more than 300 feet. The buffer must remain in place for at least 15 years. The land that is the subject of the credit cannot be the subject of this credit again for 15 years after it was first taken

To qualify for this credit, the property owner must comply with an individualized Forest Stewardship Plan to be certified by the State Forester. The credit amount is subject to recapture if the Stewardship Plan is violated

The credit is 25% of the value of timber on the area designated as a forested buffer for a waterway, not to exceed $17,500 or the total amount of tax liability, whichever is less. Unused credits may be carried forward for five years.

For more information contact the Virginia Department of Forestry, Fontaine Research Park, 900 Natural Resources Dr. Suite 800, Charlottesville, VA 22903-0758, or call (434) 977-6555.

Individual filers complete Schedule CR, Part XXI, and corporate filers complete Form 500 CR, Part XXI, to claim this credit.

Reference: Virginia Code 58.1 - 339.10.

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Telework Expenses Tax Credit

Allows a tax credit to employers for eligible expenses incurred for allowing employees to telework pursuant to a signed telework agreement for taxable years beginning on or after January 1, 2012, but before January 1, 2017. An employer may be eligible for a credit of up to $1,200 per teleworking employee and/or a maximum of $20,000 for conducting a telework assessment. The amount of credit shall not exceed $50,000 per employer for each calendar year. The telework assessment can only be allowed once.  The aggregate amount of tax credits that will be issued is capped at $1 million annually. An employer shall be ineligible for a tax credit pursuant to this section if such employer claims a credit based on the jobs, wages, or other expenses for the same employee under any other provision of this chapter.  Additionally employers are not allowed to deduct expenses that are deducted for federal purposes.

The business must apply for a reservation of tax credits between September 1 and October 31 of the year preceding the taxable year for which the tax credit is to be earned using Form TEL-1. All applications must be sent to the Virginia Department of Taxation, Tax Credit Unit, P.O. Box 715, Richmond, VA 23218-0715. A letter will be sent certifying “tentative approval” of the credit by December 31. Additionally, the business must file Form TEL-2 by April 1 of the year following the calendar year that the eligible expenses were incurred. No application received after the filing deadline will be eligible for the credit. TAX will issue the credit by June 30 providing the amount of the credit that can be claimed on the Virginia return. No unused tax credit shall be carried forward or carried back against the employer’s tax liability.

The amount of the credit attributable to a partnership, electing small business corporation (S corporation), or limited liability company (LLC) must be allocated to the individual partners, shareholders, or members in proportion to their ownership or interest within the business entity using Form PTE within 30 days after the credit is granted.

The Department of Rail and Public Transportation (DRPT) is available to help guide businesses through the development of a telework program. This includes providing assistance on policy and agreement development, training for teleworkers and managers, and program assessment. For questions about developing a telework program or the policies for telework agreements, visit the Telework! VA website at www.teleworkva.org or contact DRPT by phone at 804-786-4440 or by email at drptpr@drpt.virginia.gov.

Reference: Virginia Code 58.1-439.12:07
 

Trust Beneficiary Accumulation Distribution Credit

You may qualify to claim this credit if you were the beneficiary of a trust whose Virginia taxable income includes all of part of an accumulation distribution by the trust.

For the years in which income was accumulated, the distributing trust would have reported the income on its own fiduciary return and paid taxes accordingly. To prevent double taxation of the distribution to the beneficiary, Virginia law allows the beneficiary to claim a credit for the income taxes paid by the trust. The credit is computed as follows:

D = Virginia addition for accumulation distribution
T = Total Virginia taxable income reported by the trust on Form 770 for the years in which the income was accumulated
P = Virginia income tax paid by the trust for the years in which the income was accumulated
C = Allowable Virginia tax credit to be claimed by the beneficiary
Computation of credit: (D ÷ T) x P = C
A schedule showing the credit computation must be attached to your return.

Reference: Virginia Code 58.1-370.

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Vehicle Emissions Testing Equipment, Clean Fuel Vehicle and Certain Refueling Property Credit
This credit may be claimed for purchases of vehicle emissions testing equipment, clean fuel vehicles and certain refueling equipment.

Vehicle Emissions Testing Equipment

The credit is equal to 20% of the purchase or lease price for equipment certified by the Department of Environmental Quality for vehicle emissions testing. The equipment must be located within, or adjacent to, any locality that requires an enhanced vehicle emissions inspection program.

Individual filers complete Schedule CR, Part VIII, and corporate filers complete Form 500CR, Part IX, to claim this credit. Attach a copy of the Department of Environmental Quality's letter to the equipment vendor certifying that the equipment configuration meets the regulations for use in the enhanced vehicle emissions inspection program. To obtain a copy of the letter, contact your equipment vendor or the DEQ Northern Virginia Regional Office in Woodbridge.

Clean Fuel Vehicle and Certain Refueling Property

General instructions -- For taxable years beginning before January 1, 2006, a credit may be claimed for: 10% of the deduction allowed under IRC Section 179A for the purchase of clean fuel vehicles, including hybrid vehicles, principally garaged in Virginia, or for the purchase of refueling property placed in service in Virginia; or, for taxable years beginning before January 1, 2007, 10% of the total costs used to compute the credit for electric vehicles under IRC Section 30. Individual filers complete Schedule CR, Part VIII, and corporate filers complete Form 500CR, Part IX, to claim this credit. For clean fuel vehicles, provide a property description. For qualified electric vehicles for which a federal credit was claimed, federal Form 8834 must also be attached. For refueling property, attach a copy of federal Form 4562 or other form showing computation of the Federal Section 179A deduction. Unused credits may be carried forward for five years.

For taxable years beginning before January 1, 2006 only: If you claimed a clean fuel vehicle deduction on your federal return, you may claim a credit on your Virginia return equal to 10% of the amount deducted on your federal return, not to exceed your Virginia tax liability. As explained in the general instructions, you must provide a description of the property for which the credit is being claimed. In lieu of a separate statement, you may write directly on the individual Schedule CR or the corporate Form 500CR. For example, if you claimed a clean fuel vehicle deduction on your federal individual income tax return for the purchase and use of a Honda Insight (hybrid vehicle), you should complete Schedule CR, Part VIII, Lines 30 through 34, and write next to line 30, "Clean Fuel Vehicle - Honda Insight".
For taxable years beginning before January 1, 2006 only: If you claimed a credit for qualified electric vehicles on your federal return, you may claim a credit on your Virginia return equal to 10% of the cost used to compute the federal credit.
For taxable years beginning before January 1, 2007 only: If you claimed a deduction for clean fuel vehicle refueling property on your federal return, you may claim a credit on your Virginia return equal to 10% of the amount deducted on your federal return, not to exceed your Virginia tax liability.

Reference: Virginia Code 58.1 - 438.1.

Clean Fuel Vehicle and Advanced Cellulosic Biofuels Job Creation Tax Credit

The expiration date for the Clean Fuel Vehicle and Advanced Cellulosic Biofuels Job Creation Tax Credit has been extended from December 31, 2011, to December 31, 2014.

The Clean Fuel Vehicle and Advanced Cellulosic Biofuels Job Creation Tax Credit allows a corporation to claim an income tax credit equal to $700 for each job it creates that is related to the manufacture and production of clean fuel and advanced cellulosic biofuel vehicles. The credit is allowed in the taxable year in which the job is created and in each of the two succeeding years.

The credit can be claimed in Part XI of the corporate Schedule 500CR. This credit is not available to individuals.

Reference: Virginia Code 58.1-439.1
 

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Waste Motor Oil Burning Equipment Credit

For tax years beginning on or after January 1, 1999, a business that operates a facility in Virginia that accepts waste motor oil from the public is allowed a tax credit equal to 50% of the purchase price paid for equipment used to exclusively burn waste motor oil.

The total amount of credit a taxpayer may claim per taxable year may not exceed $5,000. The taxpayer can only use the credit in the year the qualified equipment is purchased. Any unused portion of the credit may not be carried forward.

The Department of Environmental Quality must certify the equipment prior to claiming this credit. Apply for certification by filing Form DEQ 50-12 with the Department of Environmental Quality at 629 E. Main Street, 5th floor, Richmond, VA 23219. For additional information contact the Department of Environmental Quality at 804-698-4145.

Individual filers complete Schedule CR, Part XVII, and corporate filers complete Form 500CR, Part XVIII, to claim this credit. Attach the certificate from the Department of Environmental Quality, receipts, invoices or other documentation to confirm purchase price paid.

Reference: Virginia Code 58.1-439.10

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Worker Retraining Credit

To Qualify

This credit allows an employer to claim a tax credit for the training costs of providing eligible worker retraining to qualified employees for taxable years beginning on or after January 1, 1999.

The credit may be applied against individual income tax, estate and trust tax, corporate income tax, bank franchise tax, and taxes imposed on insurance companies and utility companies.

Eligible Worker Retraining

Eligible worker retraining includes approved non-credit courses provided by any of the Commonwealth's community colleges or a private school. It also includes credit or non-credit retraining courses undertaken through an apprenticeship agreement approved by the Virginia Apprenticeship Council.

How Much is the Credit?

Generally, the credit is 30% of all classroom training costs but is limited to up to $200 annual credit per student if the course work is incurred at a private school or $300 per qualified employee with retraining in a STEM or STEAM discipline. The Department of Taxation is authorized to issue up to $2,500,000 of retraining credits annually. If total requested credits exceed this amount, the Department of Taxation will prorate the authorized credits.

Credits taken may not exceed your tax liability in any one taxable year. Unused credits may be carried forward for three years.

Employer Certification

Employers must apply for certification of the amount of allowable credit using Form WRC. All WRC applications requiring course approval must be sent to:

Virginia Jobs Investment Program
Virginia Economic Development Partnership
901 E. Byrd Street
Richmond, VA 23219
Phone:  804-545-5706

by April 1 following the year that the expenditures were paid or incurred. Applications requesting apprenticeship retraining credit must be sent to:

Virginia Department of Taxation
Tax Credit Unit
P.O. Box 715
Richmond, VA 23218-0715

by the same April 1 deadline.

The Department of Taxation will issue the credit to all eligible WRC applicants by June 30.

Other Information

For information on pre-approved apprenticeship programs, contact your Virginia Department of Labor and Industry apprenticeship representative. For information on non-credit course approval, contact the Virginia Economic Development Partnership at 804-545-5706.

The amount of the credit attributable to a partnership, electing small business corporation (S corporation), or limited liability company (LLC) must be allocated to the individual partners, shareholders, or members in proportion to their ownership or interest within the business entity using Form PTE within 30 days after the credit is granted.

To Claim the Credit

Individual filers complete Schedule CR, Part XVI, and corporate filers complete Form 500CR, Part XVII, to claim this credit.

Reference: Virginia Code 58.1 - 439.6.

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Last Updated 12/19/2014 13:16

 

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