Major Business Facility Job Tax Credit: Businesses that expand in or relocate to Virginia may qualify for an income tax credit equal to $1,000 for each new full-time job created over a threshold number of 50 jobs. A company that is located in an enterprise zone or another economically distressed area is subject to a lower threshold of 25 new jobs. The credit is taken in equal installments over 2 years. Credits are non-refundable and non-transferable; however unused credits may be carried forward for up to 10 years.
Refundable Research and Development Expenses Tax Credit: This program provides an as-of-right corporate income tax credit equal to 15% of the first $300,000 in Virginia qualified R&D expenditures incurred during a taxable year. If the qualified R&D was conducted in partnership with a Virginia college or university, the tax credit is increased to 20% of the first $300,000 in expenditures. Effective for taxable years on or after January 1, 2016, a taxpayer may elect to calculate the credit for this program as 10% of the difference of the taxable year’s qualified research and development expenses and 50% of the average of the previous three years of expenses. If no research and development expenses were incurred in any one of the previous three years, the credit is equal to 5% of the qualified expenses during the relevant taxable year. Regardless of calculation method, the credit shall not exceed $45,000 for any year. The only exception is if the research is conducted in conjunction with a Virginia college or university. In this case the credit may not exceed $60,000. If the amount of credit that a business is entitled to claim exceeds its Virginia tax liability, the excess amount may be refunded to the company.
Major Research and Development Expenses Tax Credit: For taxable years beginning on or after January 1, 2016, but before January 1, 2022, a taxpayer with Virginia R&D expenses in excess of $5 million for the taxable year will be allowed a credit against the Virginia corporate income tax for qualified R&D expenses incurred in Virginia. Businesses may claim a tax credit equal to 10% of the difference of the taxable year’s qualified R&D expenses and 50% of the average of the previous three years of expenses. If no R&D expenses were incurred in any one of the previous three years, the credit is equal to 5% of the qualified expenses during the relevant taxable year. The amount of the credit cannot exceed 75% of the taxpayer’s tax burden for any taxable year. Any credit not usable may be carried forward for up to 10 years.
Port Volume Increase Tax Credit: Virginia’s Port Volume Increase Tax Credit benefits manufacturing, distribution, agriculture, and mineral and gas companies that utilize Virginia’s port facilities. A company that increases its usage by 5% in a single calendar year over its base year of port cargo volume can claim a credit against its corporate income tax of up to $250,000. Any unused credits may be carried forward for up to 5 years.
International Trade Facility Tax Credit: Is an income tax credit which is allowed for either capital investment in an international trade facility (ITF) or for increasing jobs related to an international trade facility. To qualify, an ITF must show at least a 5% increase in shipments through Virginia Port Authority (VPA) ports in Virginia. The amount of the credit is equal to $3,500 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. Taxpayers can elect to claim either credit, but cannot claim both credits in the same taxable year.
Barge and Rail Usage Tax Credit: The tax credit is available for international trade facilities that transport containers by barge or rail, rather than by trucks or other motor vehicles on Virginia’s highways. The amount of the credit is $25 per 20-foot equivalent unit (TEU), or 16 tons of non-containerized cargo, or one unit of roll-on/roll-off cargo moved by barge or rail.
Green Job Creation Tax Credit: Offers annual individual or corporate income tax credit for each new green job meeting minimum hour requirements in taxable years beginning before January 1, 2021. The amount of the annual credit for each new green job will be $500 for each job with an annual salary of $50,000 or more.
Recyclable Materials Processing 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 beginning before January 1, 2020. The credit is equal to 20% of the purchase price paid during the taxable year for the machinery or equipment.
Enterprise Zone Job Creation Grant: Qualified businesses that locate or expand in one of 46 Enterprise Zones may receive a cash grant if certain wage levels are met. An annual grant of up to $800 per job may be provided for up to 5 years.
Enterprise Zone Real Property Investment Grant: Businesses that make a qualified investment in an enterprise zone facility are eligible for a cash grant based on the excess above the minimum required investment threshold (the threshold is $100,000 for rehabilitation or expansion projects and $500,000 for new construction projects).
Tobacco Region Opportunity Fund: Assists with the location of companies in Virginia’s tobacco producing regions. This program provides discretionary cash grants to local governments to assist with the recruitment of economic development projects. To qualify, a project must have a minimum private capital investment of $1 million and result in the creation of at least 10 jobs within a 3-year period.
Technology Zones: Virginia cities, counties, and towns have the ability to establish, by ordinance, one or more technology zones to attract growth in targeted industries. Qualified businesses locating or expanding operations in a zone may receive local permit and user fee waivers, local tax incentives, special zoning treatment, or exemption from ordinances.
Foreign Trade Zones (FTZ): FTZs allow businesses to defer paying U.S. Customs duties on imported goods held within the zones until the goods enter the United States for domestic consumption. No duties are paid if goods are re-exported. Companies also receive the benefit of not having to pay duties on broken or scrapped product. Businesses are allowed to store goods within FTZs for an unlimited period of time. They are also allowed to manufacture products within FTZs and pay duties at the duty rate of either the foreign parts used or on the finished product, whichever is most advantageous to the company. Virginia offers six Foreign Trade Zones designated by the U.S. Department of Commerce. Each of Virginia’s six FTZs are Alternative Site Framework (ASF) designated, which allows greater flexibility when adding new zone operations as well as expedited FTZ Board applications. Any property within the ASF-designated area of a particular FTZ can obtain status as a usage-driven FTZ site. All zones provide space for storage, distribution, and light assembly operations.
Commonwealth’s Opportunity Fund (COF): The Governor has the discretionary authority to provide incentives under this “deal closing fund” program in competitive situations where Virginia is competing against other states for business attraction and expansion projects. To qualify, a company must satisfy minimum job creation, salary, and capital investment requirements which vary by county. Discretionary grants are awarded to local governments who disburse funds for the benefit of a company that is expanding in or relocating to that community.
Virginia Investment Partnership Grant (VIP): This discretionary performance-based incentive is designed to encourage continued capital investment by manufacturers that have business operations in Virginia for at least 3 years. To qualify, a company must invest at least $25 million and maintain existing employment levels. The grant is disbursed in 5 equal installments over 5 years; installments begin two or three years after investment and job creation are achieved, depending on locality.
Major Eligible Employer Grant (MEE): Businesses that make a minimum capital investment of $100 million and create at least 1,000 new jobs (or 400 jobs if the average pay is at least twice the area’s prevailing average wage) may receive a discretionary grant. The grant is disbursed in 5 to 7 equal annual installments; installments begin three years after investment and job creation are achieved, depending on locality.
Virginia Economic Development Incentive Grant (VEDIG): This discretionary grant is available to businesses that meet one of the following criteria:
Agriculture and Forestry Industries Development Fund (AFID): AFID is a discretionary incentive designed to grow Virginia’s agriculture and forestry industries. AFID grants are made to localities at the discretion of the Governor with the expectation that the grant will be critical to the success of a project that will result in the creation of new jobs and investment from companies that add value to Virginia-grown agriculture and forestry products.
Port of Virginia Economic and Infrastructure Development Grant (POV Grant): The Port of Virginia Economic and Infrastructure Development Grant (POV Grant) is designed to incentivize companies to locate new maritime-related employment centers or expand existing centers to encourage growth of The Port of Virginia. POV Grants are administered by the Virginia Port Authority. The maximum amount of a grant allowable per qualified company is $500,000.
Rail Industrial Access Program: This program provides funds to construct railroad tracks to new or substantially expanded industrial and commercial projects having a positive impact upon economic development in Virginia. Financial assistance to any one county, city, or town is limited to $450,000 in any one fiscal year, and the locality may utilize the entire allocation for one project. The state will provide a maximum of $300,000 in unmatched funds. Up to $150,000 in additional funds are available if matched by the community on a dollar-for-dollar basis.
Economic Development Access Program: The Virginia Department of Transportation (VDOT) administers this program that assists localities in providing adequate road access to new and expanding basic employers. The maximum award for an economic development access road is $500,000. However, the state will fund an additional $150,000 if the amount is matched on a dollar-for-dollar basis from sources other than VDOT. The amount of the award is limited by the eligible capital investment of the company and the estimated cost of the access road.
Virginia Jobs Investment Program - Virginia New Jobs Program: Businesses that make a minimum capital investment of $1 million and create 25 or more full-time jobs within 12 months that pay at least 1.35 times the federal minimum wage may receive a cash grant to cover a portion of training costs.
Virginia Jobs Investment Program - Workforce Retraining Program: Available to companies retraining at least 10 full-time employees and making a new capital investment of $500,000 (businesses with more than 250 employees company-wide) or 5 full-time employees and making a new capital investment of $50,000 (businesses with less than 250 employees company-wide).
Worker Retraining Tax Credit: Eligible businesses may receive an income tax credit equal to 30% of expenditures associated with worker retraining. If courses are given at a private institution, the credit is equal to the cost per qualified employee, up to $200 annually, or $300 annually if the retraining is in a STEM OR STEAM field.
Sales & Use Tax Exemptions: All machinery, replacement parts, and materials used directly in the manufacturing process are exempt from sales tax. Other items exempt from sales tax include purchases used directly and exclusively in research and development; semiconductor clean rooms and related equipment; and computer equipment associated with data centers.
Last updated: June 2018