State Incentives

Corporate Income Tax Credits

Virginia allows the following credits against the corporate income tax:

Major Business Facility Job Tax Credit

Credits for new job creation are available statewide for qualifying companies. Companies reaching certain employment thresholds will receive a $1,000 credit for each qualifying job in excess of the threshold. The credit amount is taken in equal installments over two years (i.e., $500 per year) and may be used to eliminate the entire state corporate income tax liability.  Unused credits may be carried forward for up to ten years.  The employment threshold for companies locating in enterprise zones or economically distressed areas is 50 net, new, full-time jobs. For all other areas of the state, the threshold is 100 jobs. Credits are available for taxable years before January 1, 2020.

Worker Retraining Tax Credit

Virginia employers will be eligible to receive an income tax credit equal to 30 percent of all expenditures made by the employer for eligible worker retraining. The credit has a statewide spending cap of $2.5 million in any taxable year. Eligible worker retraining consists of courses at Virginia community colleges and private schools certified by the Department of Business Assistance,
or retraining programs through apprenticeship agreements approved by the Virginia Apprenticeship Council.

Day Care Investment Tax Credit

Businesses may claim a tax credit equal to 25 percent of all expenditures incurred by a business for planning, site preparation, construction, renovation, acquisition of facilities or permanent equipment installed for the purpose of providing day care to be used primarily by the children of the business’ employees. The maximum credit allowed to any one taxpayer is $25,000. Any
credit not usable for the taxable year may be carried over to the extent usable for the next three years. The Virginia Tax Commissioner at the Department of Taxation approves applications
for this program.

Recycling Equipment Tax Credit

An income tax credit is available to manufacturers for the purchase of certified machinery and equipment used for processing recyclable materials in taxable years before January 1, 2015. The credit is equal to 10 percent of the original total capitalized cost of the equipment. In any taxable year, the amount of credit allowed cannot exceed 40 percent of the company’s Virginia income tax liability before the credit. The unused amount of the credit may be carried over for ten years. Eligible equipment is certified by the Virginia Department of Environmental Quality as integral to the recycling process.

For more information about the corporate income tax credits mention above, contact the Virginia Department of Taxation at (804) 367-8037.