Coalfield Employment Enhancement Credit

This credit will expire 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 will expire 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.

Motion Picture Production Tax Credit (Refundable)

You may qualify to claim this credit if:

You’re a motion picture production company making a movie or other production, and spend at least $250,000 on production costs in Virginia. The Virginia Film Office (VFO) administers this credit. 

What is it?

An income tax credit equal to:

  • 15% of qualified expenses; or
  • 20% of qualified expenses if you film in an area the Virginia Economic Development Partnership has identified as economically distressed.

Companies may also be eligible for credits of:

  • 10% of the payroll of Virginia residents employed in the production, (20% if the production’s expenses are greater than $1 million); and
  • 10% of the payroll of Virginia residents employed as first-time actors or first-time members of a production crew. 

Please visit the VFO’s website for more details on qualifying for these credits. 

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

  • individual income tax
  • corporation income tax

The credit is refundable to both individuals and corporations. 

Is there a cap?

Yes. The VFO can issue no more than $6.5 million in motion picture production credits per fiscal year. 

To apply for the credit:

The VFO administers this credit. Visit their website and follow their application procedures. The VFO must receive your application at least 30 days before the start of principle photography. 

If your application is accepted, you'll enter into a Memorandum of Understanding with the VFO. 

Using the credit:

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

For more information, see Va Code § 58.1-439.12:03

Education Improvement Scholarships Tax Credit

You may qualify to claim this credit if:

You donated money or marketable securities (stocks, bonds, etc.) to an approved scholarship foundation. The Virginia Department of Education (VDOE) has to approve the donation before you give it to the foundation.

What is it?

A credit equal to 65% of the value of the donation. Claim the credit against:

  • Individual income tax
  • Corporation income tax
  • Bank franchise tax
  • Insurance premiums license tax
  • Tax on public service corporations

Individuals must donate at least $500 (cash or securities) to qualify for this credit. A $500 donation equals a $325 credit. An individual may be issued no less than $325, and no more than $81,250, in credits each year. These limits do not apply to businesses, including sole proprietorships.

Unused credits may be carried forward for up to 5 years.

Is there a cap?

Yes. VDOE can issue no more than $25 million in these credits annually. Credits are issued on a first come, first served basis.

What is an approved scholarship foundation?

Approved scholarship foundations must disburse at least 90% of the value of donations (in the form of scholarships) it receives between July 1 and June 30 by the following June 30. VDOE is responsible for approving scholarship foundations for this credit, and maintains a list of approved foundations on their website.

To claim the credit

First, visit VDOE’s program page, and follow their procedures for preauthorization. Receive certification from VDOE, then complete Schedule CR.

Foreign Source Retirement Income Credit

You may qualify to claim this credit if:

You worked overseas, and are now receiving a pension or retirement income from that work. 

What is it?

A credit for income tax paid to a foreign country on any pension or retirement income, so long as:

  • the income was included in your federal adjusted gross income; and
  • you’re receiving the retirement income because you were employed in the foreign country; and
  • the income is subject to Virginia income tax.

For the purposes of this credit, “foreign country” includes all U.S. possessions. Income from any country that doesn’t qualify for the federal foreign tax credit also doesn’t qualify for the Virginia credit. 

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

  • individual income tax
Using the credit:

To claim this credit, complete Schedule CR and attach it to your Virginia income tax return. You should also attach a copy of the return you filed with the foreign country. 

To calculate the credit, convert the foreign currency into U.S. dollars using the exchange rate that reflects their value when you paid the taxes to the foreign country. Attach a schedule showing the conversion to your Virginia income tax return. 

The credit can’t be greater than your Virginia tax liability You can’t carry forward any unused credits. 

For more information, see Va. Code § 58.1 - 332.1

Trust Beneficiary Accumulation Distribution Credit

You may qualify to claim this credit if:

You received an “accumulation distribution” from a trust, and this distribution is part of your Virginia taxable income for the year. We discuss a related accumulation distribution addition in the Other Additions section of our Virginia Additions to Income page

What is it?

A trust earns income throughout the year. If it distributes that income to its members, or “beneficiaries”, at the end of the year, the beneficiaries pay tax on that income. If, on the other hand, the trust holds onto that income, the trust pays the tax. 

When the trust eventually does distribute this income that they’ve already paid tax on, it’s called an “accumulation distribution.” Since the trust has already paid the tax on this income, the beneficiaries don’t have to. This credit keeps them from having to pay tax again on this same income.

Using the credit:

Calculate the allowable credit using the following formula:

(D ÷ T) x P = C

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

Once you have the credit amount, if this is the only credit you’re claiming on your income tax return, enter the amount on the Credits line (line 25 on the 2019 Virginia Form 760) and write “Trust Beneficiary Accumulation Distribution Credit” to the left of the box. If you’re claiming other credits, add this amount to the total amount of credits. 

Attach a schedule showing the Trust Beneficiary Accumulation Distribution Credit to your Virginia income tax return.

For more information, see Va. Code § 58.1-370.