The following credits have expired or been repealed; however, taxpayers with carryover amounts may continue to claim the credits until their eligible amounts are exhausted or as otherwise provided by law. See the individual credit instructions for more information.

Barge and Rail Usage Tax Credit
This credit expired on January 1, 2025
You may qualify for this credit if:

You’re an international trade facility (ITF) operating in Virginia that moves cargo by barge or train, instead of by truck or other motor vehicles. 

What is it?

A tax credit based on the how much more cargo you shipped by barge or rail this year than you did last year. The amount you shipped in the year prior to the one you’re applying for the credit for is your “base amount.” Your credit is based on the volume increase over your base amount.   

The credit equals $25 per:

  • 20-foot equivalent unit (TEU); or
  • 16 tons of noncontainerized cargo; or
  • 1 unit of roll-on/roll-off cargo. 

Claim the credit against the following taxes:

  • individual income tax
  • corporation income tax
  • fiduciary income tax
  • bank franchise tax
  • insurance premiums license tax
  • tax on public service corporations
Is there a cap?

Yes. We can issue no more than $500,000 in barge and rail usage tax credits per year.

 

 

 

Who can apply for this credit?

An international trade facility, or ITF, is eligible for the credit. For the purposes of this credit, and ITF is defined as a company that:

  • is doing business in Virginia;
  • is engaged in port-related activities;
  • has the sole discretion and authority to choose the method used to move cargo originating or terminating in Virginia;
  • uses maritime port facilities located in Virginia; and
  • uses barges and rail systems to move cargo through port facilities in Virginia rather than trucks or other motor vehicles on Virginia’s highways.

The ITF is the company itself, not the place the activities are taking place. To qualify for the credit, the ITF must have an ownership interest in the cargo. 

To apply for this credit:

Complete Form BRU and send it to us by April 1. We’ll send you a letter certifying your credit by June 30.

Using the credit:

To claim the credit, complete the following and attach it to your return:

For bank franchise tax, attach a copy of your certification letter to your return. 

The credit claimed can’t be greater than your tax liability. Carry forward any unused credits for 5 years.

For more information, see:

Clean-Fuel Vehicle and Advanced Cellulosic Biofuels Job Creation Tax Credit

This credit expired on 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

Coalfield Employment Enhancement Credit

This credit expired December 31, 2021.

You may qualify to claim this credit if:
  • you have an economic ownership interest in metallurgical coal mined in Virginia, or
  • you have an economic ownership interest in coalbed methane produced in Virginia.

Claim this credit against the following taxes administered by Virginia Tax:

  • individual income tax;
  • fiduciary income tax;
  • corporation income tax

A similar credit covering tax years 1996 - 2016 expired on Dec. 31, 2016. Before it expired, the credit was available for all coal mined by such methods and was not restricted to metallurgical coal.

What’s “metallurgical coal”?

Bituminous coal used in the manufacture of iron and steel. The coal should have a calorific value of 14,000 BTUS or greater on a moisture and ash free basis.

Using the credit

Claim the credit in the 3rd year after you earn it, (e.g. if you earned the credit in 2018, you can claim it on your 2021 return).

Complete Form 306 and attach it, along with the following, to your return:

For additional information, see Va.Code § 58.1-39.2.

Coal Employment and Production Incentive Tax Credit

This credit expires December 31, 2021.

You may qualify to claim this credit if:
  • you’re an electricity generator who purchases Virginia-mined coal to produce power, or
  • you have an economic interest in Virginia-mined coal sold to an electricity generator.
What is it?

An income tax credit equal to $3 per ton of coal purchased and used by the electricity generator, so long as that coal is mined in Virginia. The credit can’t be greater than your tax liability. Carry forward any unused credits for up to 10 years. 

Electricity generators may claim the credit against the following taxes administered by Virginia Tax:

  • corporation income tax
How do you allocate the credit?

Electricity generators may give, or “allocate”, their credits back to the mine where they purchased the coal. Parties should allocate the credit in the contract to purchase the coal.

Persons who receive this allocation should treat the credit in the same manner as the Coalfield Employment Enhancement Credit. Allocated credits are refundable to the person with an economic interest in the coal, and may be claimed against:

  • individual income tax
  • fiduciary income tax
  • corporation income tax
Using the credit

Complete Forms 306 and 306T and attach them, along with the following, to your return:

For additional information, see Va. Code § 58.1-433.1.

Conservation Tillage Equipment Credit

The Conservation Tillage and Precision Agriculture Equipment Credit replaced this credit December 31, 2020.

You may qualify to claim this credit if:

You’re a farmer who invests in certain equipment designed to reduce soil compaction and disturbance.  

What is it?

An income tax credit equal to 25% of what you spent on qualifying equipment.  You can claim a credit of up to $4,000 on your return, not to exceed your tax liability. Carry forward any unused credits for 5 years. 

Claim the credit against the following taxes administered by Virginia Tax:

  • individual income tax
  • corporation income tax

What kind of equipment qualifies?

  • “no till” planters and drills, including those attached to equipment you already own; 
  • guidance systems to control traffic patterns designed to reduce soil disturbance

Using this credit

To claim the credit, complete the appropriate credit schedule below and attach to your return.  Also, attach a statement showing the purchase date, description of the equipment purchased, and how you computed the credit.

For more information, see Va.Code § 58.1 - 334.

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. Virginia Tax 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 3 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.

Fertilizer and Pesticide Application Equipment Credit

The Conservation Tillage and Precision Agriculture Equipment Credit replaced this credit December 31, 2020.

You may qualify to claim this credit if:

  • You’re a farmer, grower, rancher, or someone else engaged in agricultural production for market; and
  • You purchase equipment designed to more precisely apply fertilizers and pesticides. The equipment must meet standards set by the Virginia Soil and Water Conservation Board; and
  • You have a nutrient management plan in place that your local soil and water conservation district has approved

What is it?

An income tax credit equal to 25% of the cost of the equipment, or $3,750, whichever is less. You can’t claim a credit greater than your tax liability. Carry forward any unused credits for 5 years.

Claim the credit against the following taxes administered by Virginia Tax:

  • individual income tax
  • corporation income tax

Using this credit

To claim the credit, complete the appropriate credit schedule below and attach to your return.  

For additional information, please see Va. Code § 58.1-337 and Va. Code § 58.1-436

Food Crop Donation Tax Credit

The Food Donation Tax Credit replaced this one January 1, 2023

You may qualify for this credit if:

You’re a farmer who donates crops you grow to a nonprofit food bank in Virginia.

What is it?

An income tax credit equal to 30% of the fair market value of the crops donated. The total amount of credit for all crop donations you make during the year can’t be greater than $5,000.  Carry forward any unused credits for 5 years.

Claim the credit against the following taxes administered by Virginia Tax:

  • individual income tax
  • corporation income tax

Are there any restrictions on how the donated crops are used?

  • The food bank must use the donated crops in a way that provides food for the needy; and
  • The donated crops can’t be used outside of Virginia, and can’t be used to pay for goods or services; and
  • If the food bank decides to sell the donated crops, they can only sell them to the needy, other nonprofit food banks, or other organizations that will use the crops to provide food to the needy.

The food bank that receives your donation will complete Form FCD-2, Virginia Food Crop Donation Certification, and give the certification to you within 30 days of when you donated the crops.

Is there a cap?

Yes.  We can’t issue more than $250,000 in food crop donation tax credits per fiscal year. 

To apply for this credit:

Complete Form FCD-1, and send it to us by February 1.  Late applications will not be eligible.  

We will send you a letter certifying the credit by April 1.

Using the credit:

To claim the credit, complete the following and attach it to your return:

For more information, see Va. Code § 58.1-439.12:12.

Green and Alternative Energy Job Creation Tax Credit

This credit expired on January 1, 2025

You may qualify to claim this credit if:

You create a “green” job that pays an annual salary of at least $50,000. 

What is it?

A $500 income tax credit for each new green job created. You can claim a credit for up to 350 new jobs. You claim the credit the same year that you create the job, then each of the next 4 years so long as the job remains continuously filled.

The credit claimed can’t exceed your tax liability. Carry forward any unused credits for 5 years. Claim the credit against the following taxes administered by Virginia Tax:

  • individual income tax
  • corporation income tax

What is a “green” job?

For the purpose of this credit, it’s a job in an industry related to alternative and renewable energy. You’ll find a detailed definition of green jobs on the Secretary of Commerce and Trade’s website.

How to apply

Complete Form GJC and send it to us at least 90 days before your income tax return is due. You’ll need to reapply every year that you have jobs eligible for the credit. However, you can’t apply for this credit and the Major Business Facility Job Tax Credit or a related federal credit for the same jobs. Please see the Form GJC instructions for more details.

Using the credit

To claim the credit, complete the following and attach it to your return:

For more information, see Va. Code § 58.1-439.12:05

Hardwood Initiative Tax Credit

This credit expired on January 1, 2025

You may qualify for this credit if: 

  • You implement beneficial hardwood best practices in your forest. 

What is it? 

An income tax credit equal to up to $1,000 of the amount you spent implementing beneficial hardwood best practices. If you participate in a cost-share or initiative program, you can claim the credit for the liability that remains after applying that cost share.  

The credit can’t be greater than your tax liability. Carry forward any unused credits for 5 years. Claim the credit against the following taxes administered by Virginia Tax: 

  • Individual income tax   

Is there a cap? 

Yes. The Virginia Department of Forestry (DOF) can issue no more than $1 million in credits per year.  

Using the credit 

Complete Schedule CR and attach it to your return.  

International Trade Facility Tax Credit
This credit expired on January 1, 2025
You may qualify for this credit if:
  • you hire more people because you’ve increased your shipments through an international trade facility (ITF); or
  • you make a capital investment in an ITF.
What is it?

There are 2 types of credits available under this section. You can choose which of these you’d like to apply for, but can’t apply for both.

  • The Port Jobs Tax Credit is an income tax credit equal to $3,500 per new, permanent full-time job created by your increase in shipments through an ITF.
  • The Port Investment Tax Credit is an income tax credit equal to 2% of your capital investment in an ITF. 

To qualify for either, the company must have moved at least 5% more cargo through Virginia port facilities this year than it did last year. 

Claim the credit against the following taxes administered by Virginia Tax:

  • individual income tax
  • corporation income tax
Is there a cap?

Yes. We can’t issue more than $1,250,000 in international trade facility credits per year. 

What is an international trade facility (ITF)?

For the purposes of this credit, an ITF is a company that:

  • engages in port-related activities, including but not limited to:
    • warehousing, 
    • distribution, 
    • freight forwarding and handling,
    • and goods processing
  • and uses Virginia maritime port facilities.
What is a “new, permanent full-time job” for the port jobs credit?

For the purposes of this credit, a permanent full-time job is one that requires at least 35 hours per week for the entire year. 

The following types of positions don’t qualify for the credit:

  • seasonal and temporary jobs
  • jobs created by moving job responsibilities from somewhere else in Virginia, 
  • jobs not directly related to port activities.

You can’t use the same jobs to claim the international trade facility credit and the major business facility credit. 

What is a “capital investment” for the port investment credit?

For purposes of this credit, a capital investment includes:

  • exterior, structural, mechanical, or electrical improvements necessary to expand or rehabilitate a building for commercial or industrial use;
  • excavations, grading, paving, driveways, roads, sidewalks, landscaping, or other land improvements necessary to expand or rehabilitate a building for commercial or industrial use;
  • machinery, tools, and equipment directly related with the movement of cargo placed into service during the year. See the International Trade Facility guidelines for restrictions on machinery and tools. 

For the purposes of this credit, capital investment does not include:

  • the cost of acquiring any real property or building;
  • furnishings;
  • appraisal, architectural, engineering, or interior design fees;
  • loan fees, points, or capitalized interest;
  • legal, accounting, realtor, sales and marketing, or other professional fees;
  • closing costs, permit fees, user fees, zoning fees, impact fees, and inspection fees;
  • bids, insurance, signage, utilities, bonding, copying, rent loss, or temporary facilities costs incurred during construction;
  • utility hook-up or access fees;
  • outbuildings; and
  • any well or septic system.
To apply for this credit:

Complete Form ITF and send it to us by April 1. We will send you a letter certifying your credit by July 15. 

If you are applying for the International Trade Credit using Section 1 – “Port Job Tax Credit” you must file Form ITF for a total of 6 years: 

  • Year 1 to earn the credit;
  • Years 2 -6 to determine if your credit is subject to recapture.  

If your employment level at the facility declines during the “recapture” period (any of the 5 years after you first earned the credit), your credit amount will be adjusted and/or you’ll have to pay a portion of the credit back. The “recapture” amount is determined by the number of jobs lost.

Using the credit:

To claim the credit, complete the following and attach it to your return:

The credit can’t be greater than 50% of your tax liability. Carry forward any unused credits for 10 years. 

For further information, see:

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 5 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 healthcare 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 6 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 6 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 2nd 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)

Low Income Housing Credit

This credit expired on 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 Department 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).

Major Business Facility Job Credit
This credit expired on July 1, 2025
You may qualify for this credit if:
  • You’re a company operating in Virginia, and
  • You establish a new facility, or expand an existing facility, and
  • This expansion or creation of a new facility creates:
    • Tier 1 - at least 51 new jobs anywhere in Virginia.
    • Tier 2 - at least 26 new full-time jobs if located in designated Enterprise Zones, or areas the Virginia Economic Development Authority has identified as economically distressed.

Retail businesses are not eligible for this credit.

What is it?

A credit of $1,000 per new job created in excess of the qualifying threshold amount (minimum number of jobs created by the expansion or establishment, see above) The credit is earned over a 2 year period and the employment level must be maintained for a minimum of 6 years. You can claim the credit for only 1 tier per facility.

Claim the credit against the following taxes administered by Virginia Tax:

  • individual income tax
  • fiduciary income tax
  • corporation income tax
  • bank franchise tax
  • insurance premiums license tax

You can also claim the credit against certain utilities taxes administered by the State Corporation Commission. Please visit the SCC website for more information.

If you claim this credit, you can’t also claim the:

  • Coalfield Employment Enhancement Tax Credit,
  • Clean Fuel Vehicle and Advanced Cellulosic Biofuels Job Credit, or
  • Green Job Creation Tax Credit.

You can claim the Major Business Facility Job Credit and receive an Enterprise Zone grant for the same facility. However, you can’t use the same jobs to qualify for the grant and receive the credit.

To apply for this credit:

Complete Form 304 and send it to us at least 90 days before you file your return. We will send you a letter certifying your credit. Form 304 must be filed with us for a total of 6 years to earn and determine if your credit is subject to recapture. If your employment level at the facility declines during the “recapture” period (any of the 5 years after you first earned the credit), your credit amount will be adjusted and/or you’ll have to pay a portion of the credit back. The “recapture” amount is determined by the number of jobs lost.

Using the credit:

Your credit can’t exceed your tax liability. Carry forward any unused credits for 10 years.

Complete the following and attach it to your Virginia tax return:

For more information, see Va. Code § 58.1-439. 

Major Research and Development Tax Credit
This credit expired on January 1, 2025
You may qualify for this credit if:

You had more than $5 million in qualified research and development expenses during the year.

What is it?

For the first $1 million in qualifying expenses:

An income tax credit equal to 10% of the difference between this year’s qualifying expenses and 50% of the average amount of the qualifying expenses for the 3 previous years.

For qualifying expenses more than $1 million:

An income tax credit equal to 5% of the difference between this year’s qualifying expenses and 50% of the average amount of the qualifying expenses for the 3 previous years.

If you didn’t have any qualifying expenses in at least 1 of the previous 3 years, the amount of credit equals 5% of the expenses paid this year. 

You can’t use the same expenses to apply for any other Virginia tax credit.

Claim the credit against the following taxes administered by Virginia Tax:

  • individual income tax
  • corporation income tax
  • bank franchise tax

The total amount of credit claimed can’t be greater than 75% of your tax liability. Carry forward any unused credits for 10 years.

What are “qualified research and development expenses”?

These are defined in IRC § 41(b), as amended. Only expenses related to research conducted in Virginia are eligible for the credit.

No credit is allowed for expenses relating to research involving cells or tissues derived from induced abortions or embryonic stem cells. However, research involving other types of stem cells does qualify for the credit.

Is there a cap?

Yes. We can’t issue more than $16 million in major research and development credits per year. If the amount of eligible applications exceeds $16 million, we’ll prorate the credit among the eligible applicants.

A taxpayer is limited to a credit of no more than $300,000 per year, or 

$400,000 per year if the research was conducted in conjunction with a Virginia public or private college or university.

To apply for this credit

Complete Form MRD and send it to us. Use our spreadsheet (Excel) to calculate the Adjusted Research and Development Expenses. Applications are due September 1 of the year following the year you incurred the expenses. Late applications will not be eligible for the credit.. 

Our Tax Credit Unit must certify the credit before you can claim it on your tax return. We will send you a letter to certify the credit by November 30.

Using the credit

To claim the credit, complete the following and attach it to your return:

For more information, see Va. Code § 58.1-439.12:11. 

Port Volume Increase Tax Credit
This credit expired on January 1, 2025
You may qualify for this credit if:

You’re a business who increases your shipments or deliveries received through a Virginia port by 5% or more in the last calendar year. Your business must be in 1 of these industries:

  • agriculture
  • manufacturing or a distributor of manufactured goods
  • mineral or gas extraction

To qualify, your “base volume” (the amount of goods you shipped or received through a Virginia port) must be 75 net tons or 10 TEUs of cargo. (1 TEU = 16 short tons, or 1 piece of roll of/roll on cargo.) Your credit is based on the increase in volume over your base volume.

What is it?

An income tax credit equal to $50 per TEU that you increase your port volume by. The Virginia Port Authority administers the credit.

Claim the credit against the following taxes administered by Virginia Tax:

  • individual income tax
  • corporation income tax
Is there a cap?

Yes. The Virginia Port Authority can issue no more than $3.2 million in Port Volume Increase credits per year. 

To apply for this credit:

The Virginia Port Authority administers this credit. Contact the Virginia Port Authority for application and procedures. Applications are due by March 1 of the calendar year after the year you increase your port volume. Late applications are not eligible for the credit.

Using the credit:

To claim the credit, complete the following and attach it to your return:

The credit claimed can’t be greater than your tax liability. Carry forward any unused credits for 5 years.. 

Transferring the credit

The credit is transferrable. Credits issued for tax year 2018 and after can be transferred to another taxpayer, so long as the transfer takes place within 1 year of the credit being earned

  • File Form PVT within one year from the date that your credit was issued by the Virginia Port Authority.
  • Only transferees may claim the credit retroactively by amending a prior year return that is still within the statute of limitations (SOL).  SOL is defined as a return whose original due date was no more than three years ago.  For example:  If your 2016 return was due April 15, 2017, you have until April 15, 2020 to file an amended return.

For more information, see:

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 5 years. Total credits approved in a fiscal year cannot exceed $50,000.

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

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.

Research and Development Tax Credit (Refundable)
This credit expired January 1, 2025
You may qualify for this credit if:

You had $5 million or less in qualified research and development expenses during the year. If you had more than $5 million in qualified expenses, apply for the major research and development tax credit.

What is it?

A refundable tax credit equal to:

  • 15% of the first $300,000 in qualified expenses; or
  • 20% of the first $300,000 in qualified expenses if the research was conducted in conjunction with a Virginia public or private college or university. 

In either case, the credit is based upon the amount of qualified expenses that exceed the Virginia base amount. 

You can’t use the same expenses to apply for any other Virginia tax credit.

Claim the credit against the following taxes administered by Virginia Tax:

  • individual income tax
  • corporation income tax.
  • bank franchise tax

What are “qualified research and development expenses”?

These are defined in IRC § 41(b), as amended. Only expenses related to research conducted in Virginia are eligible for the credit.

No credit is allowed for expenses relating to research involving cells or tissues derived from induced abortions or embryonic stem cells. However, research involving other types of stem cells does qualify for the credit.

What is the “Virginia base amount”?

The base amount is the minimum amount of expenses you have to incur before you’re eligible to claim this credit. You calculate the credit on the first $300,000 of qualified expenses above the base amount. 

There are 2 options to calculate the credit - use the spreadsheets below to calculate the Virginia Base Amount for the credit: 

Is there a cap?

Yes. We can’t issue more than $15.77 million in research and development credits per year. 

To apply for this credit:

Complete Form RDC and send it to us. Applications are due September 1 of the year following the year you incurred the expenses. Late applications will not be eligible for the credit.

Our Tax Credit Unit must certify the credit before you can claim it on your tax return. We will send you a letter to certify the credit by November 30.

Using the credit

To claim the credit, complete the following and attach it to your return:

For more information, see Va. Code § 58.1-439.12:08

Telework Expenses Tax Credit

This credit expired December 31, 2018

This credit is available to employers for eligible expenses incurred for allowing employees to telework under a signed telework agreement for taxable years beginning on or after Jan. 1, 2012, but before Jan. 1, 2022. 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 will 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 will be ineligible for a tax credit as stated in this section if the employer claims a credit based on the jobs, wages, or other expenses for the same employee under any other provision of this chapter. Employers are not allowed to deduct expenses that are deducted for federal purposes.

The business must apply for reservation of tax credits between Sept. 1 and Oct. 31 of the year preceding the taxable year for which the tax credit is to be earned using Form TEL-1. Send your application to Virginia Tax, Tax Credit Unit, PO Box 715, Richmond, VA 23218-0715. We will send a letter certifying tentative approval of the credit by Dec. 31. The business must also file Form TEL-2 by April 1 of the year following the calendar year that the eligible expenses were incurred. Applications received after the filing deadline will not be eligible for the credit. We will issue the credit by June 30 providing the amount of the credit that can be claimed on the Virginia return is available. Unused tax credit can't 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 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 (Form TCA replaced Form PTE in 2023).

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 telework policies, visit the Telework! VA website. You can also get help by calling DRPT at 804.786.4440 or by email at drptpr@drpt.virginia.gov.

Reference: Va. Code § 58.1-439.12:07 

Worker Retraining Tax Credit

The Worker Training Tax Credit replaced this credit January 1, 2019

What is it?

A tax credit equal to:

  • 30% of the costs of providing eligible worker retraining to qualified workers. Claim this credit against your individual income tax, fiduciary income tax, corporation income tax, bank franchise tax, and taxes imposed on insurance companies and utilities, or
  • 35% of the direct costs of providing manufacturing training or instruction to middle and high school students. Claim this credit against your individual or corporation income tax beginning with taxable year 2018. 
What is eligible worker retraining?
What is manufacturing training or instruction for middle and high school students?

Programs offered by manufacturers that:

  • Provide orientation, instruction, or training in the type of manufacturing the business in engaged in,
  • Are for students in grades 6 through 12,
  • Are coordinated with the local school district, 
  • Are held at the business’s plant or facility, or a public middle or high school, and
  • Are certified by the VEDP.

These programs qualify for this credit beginning in taxable year 2018.

How much is the credit, and is there a cap?

Eligible worker retraining: 30% of all classroom training costs. The credit is limited to $200 per student per year if the training takes place in a private school, or $300 per qualified employees being retrained into a STEM or STEAM discipline.  

Manufacturing training for middle and high school students: 35% of direct costs associated with the training. No one manufacturer can claim more than $2,000 credit per year.

We are authorized to issue up to $2,500,000 of retraining credits annually (the cap will be $1 million beginning tax year 2018). If total requested credits exceed this amount, we will prorate the authorized credits.

Is this credit refundable?

No. Your credit cannot be greater than your tax liability. You may carry forward any unused credits for 3 years. 

Credit certification

Apply for certification by completing Form WRC and sending to the appropriate address for the type of program the credit is based on. 

Mail applications to VEDP if the credit is based on 

  • noncredit courses, or
  • manufacturing orientation, instruction and training, or
  • any combination of noncredit courses, manufacturing orientation, instruction and training, or apprenticeships

Mail applications to Virginia Tax’s Tax Credit Unit if the credit is based on apprenticeships alone.

How to claim the credit

Individual and fiduciary filers, complete Schedule CR.

Corporate filers, complete Schedule 500 CR.

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 VEDP.

The amount of the credit attributable to a partnership, electing small business corporation (S corporation), or limited liability company 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 (Form TCA replaced Form PTE in 2023).

For more information, please see our Worker Retraining Tax Credit Guidelines.