Virginia State Tax Credits

More ways to save your hard-earned money from the tax man!

Virginia has some great State Tax Credits for you....

Thank you so much for checking our resource out here for your state and congratulations for taking a proactive step to paying less in taxes. For your state, we have identified the tax credits that are currently being offered to help you pay less in state taxes.

We hope this resource is helpful to you, and if there is something you feel we have missed, please let us know!

It would be completely arrogant of us to think that we know all things and if we missed something we want to know so we can vet that and help you and our other friends in the entrepreneurial community pay less in taxes! And if you found this helpful, you should check out our DIY resources inside of our Tax Savings Communities (found at www.MakeTaxesFair.com/Our-Communities).

We're also ready to help you if you want to skip the line of the DIY process and get help directly from us. To learn more about how we help our clients check out www.MakeTaxesFair.com/Get-My-Roadmap

 
Virginia

Virginia Education Improvement Scholarships Tax Credit (EISTC) Program

Overview:
The EISTC program offers a 65% Virginia state tax credit to individuals and businesses who donate to approved scholarship foundations supporting K–12 students from low-income families.

Who It’s For:
Virginia individual taxpayers, corporations, banks, insurance companies, and public service corporations seeking to support private school scholarships while offsetting state tax liabilities.

Four Key Highlights:

  1. 65% Tax Credit with Carryforward:
    Receive 65% of your donation back as a tax credit, claimable against multiple Virginia taxes. Unused credits carry forward for up to 5 years.

  2. Donation Thresholds:

    • Individuals: Minimum $500/year; up to $125,000 eligible for credit.

    • Businesses: No minimum or maximum—high-value donation potential.

  3. Preauthorization Required:
    Donations must be preauthorized by VDOE before being made. Contributions outside the approved amount or window (180 days) are ineligible.

  4. Quick Turnaround & First-Come, First-Served:
    The statewide cap is $25 million/year, and tax credits are allocated in order of preauthorization. Early action is crucial for high-credit donors.

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Virginia Major Business Facility Job Tax Credit

Overview:
This tax credit rewards businesses that establish or expand facilities in Virginia and create significant new full-time jobs, offering $1,000 per qualifying job beyond minimum thresholds.

Who It’s For:
For-profit businesses establishing or expanding operations in Virginia (excluding retail) that plan to create 26–51+ full-time jobs, depending on location.

Four Key Highlights:

  1. Earn $1,000 Per Qualifying Job:
    Businesses creating 51+ new jobs statewide or 26+ in Enterprise Zones earn $1,000 per job above the threshold—claimed over two years.

  2. Multi-Tax Credit Flexibility:
    The credit can be used to offset individual, corporate, fiduciary, bank franchise, insurance premium, and utility tax liabilities.

  3. 6-Year Compliance Commitment:
    You must maintain employment levels for six years. If jobs are lost within five years, the credit may be reduced or recaptured.

  4. Can Be Combined Strategically:
    May be combined with Enterprise Zone Grants, but jobs can’t be double-counted for both incentives.

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Virginia Worker Training Tax Credit

Overview:
This credit supports Virginia employers investing in workforce development through approved training programs or manufacturing-related education for students in grades 6–12.

Who It’s For:
Virginia employers providing eligible job training or instruction, including manufacturers training middle or high school students.

Four Key Highlights:

  1. Earn Up to $1,000 Per Employee:
    Claim 35% of classroom training costs—up to $500 per employee, or $1,000 if the employee earns less than Virginia’s median income.

  2. Support for Youth Manufacturing Education:
    Manufacturers offering certified programs to grades 6–12 students can claim 35% of training costs, up to $2,000 annually.

  3. Statewide Cap of $1 Million:
    Credits are non-refundable and may be prorated if total claims exceed the $1M annual limit—carry forward allowed for up to 3 years.

  4. Wide Training Provider Eligibility:
    Courses from WIOA-listed providers, Virginia public colleges, and approved apprenticeships qualify.

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Virginia Communities of Opportunity Tax Credit

Overview:
This tax credit incentivizes landlords to provide affordable housing in low-poverty areas of Virginia through participation in the Housing Choice Voucher (HCV) program.

Who It’s For:
Landlords with rental units under HAP contracts in areas with poverty rates under 10% who participate in the Housing Choice Voucher (HCV) program.

Four Key Highlights:

  1. Earn 10% of Annual Market Rent as a Credit:
    Landlords can claim 10% of the market rent for each eligible unit per year—prorated if the unit qualifies for less than 12 months.

  2. Supports Low-Poverty Neighborhood Participation:
    Units must be located in areas with less than 10% poverty to qualify. This supports equitable housing access and tenant mobility.

  3. $500,000 Annual Cap – Act Early:
    Statewide credit cap is $500,000 annually, with new rules reserving $400,000 for low-poverty areas and $100,000 for other underserved regions outside of major metro areas.

  4. 5-Year Carryforward Available:
    Credits are non-refundable, but any unused portion may be carried forward for up to five years.

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Virginia Livable Home Tax Credit (LHTC)

Overview:
The LHTC provides a state income tax credit for individuals and businesses that build, purchase, or retrofit residences with accessibility features that meet specific visitability or universal design standards.

Who It’s For:
Homeowners or businesses in Virginia who construct, purchase, or retrofit homes to improve accessibility for residents with disabilities or mobility challenges.

Four Key Highlights:

  1. Up to $6,500 Tax Credit Per Project:
    Earn a $6,500 credit for building or purchasing a new accessible home, or 50% of retrofitting costs (max $6,500) for existing residences.

  2. Must Meet Specific Accessibility Standards:
    Projects must comply with Universal Visitability or accessibility standards outlined in Virginia’s LHTC guidelines. Rental properties do not qualify.

  3. Annual Cap – First-Come, First-Served:
    The statewide credit cap is $2 million annually (increased from $1 million as of July 1, 2023). If applications exceed the cap, credits are prorated.

  4. 7-Year Carryforward Available:
    Non-refundable credits can be carried forward for up to seven years if they exceed your current tax liability.

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Virginia Housing Opportunity Tax Credit

Overview:
The Virginia Housing Opportunity Tax Credit supports the development of affordable housing by offering tax credits to property owners and investors of low-income residential buildings placed in service on or after January 1, 2021. It complements the federal Low-Income Housing Tax Credit (LIHTC) program.

Who It’s For:
Developers, property owners, and investors in qualified low-income housing projects located in Virginia.

Four Key Highlights:

  1. Matches Federal LIHTC Allocation:
    Credit amount equals the federal LIHTC allocated by Virginia Housing—no reduction, and the full credit may be claimed in the first year (except for 2022–2025 allocations).

  2. Structured Credit for 2022–2025:
    For credits issued between 2022–2025, recipients must claim 10% annually for 10 years, mirroring the federal LIHTC’s annual distribution.

  3. Carryforward Up to 5 Years:
    The non-refundable credit can offset multiple types of Virginia tax (income, franchise, insurance premium, and certain utility taxes). Unused credits can be carried forward for five years.

  4. Robust Program Cap:
    Annually, up to $60 million in tax credits are available, with a $225 million total program cap—making this one of Virginia’s most impactful tools for affordable housing expansion.

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Virginia Qualified Equity and Subordinated Debt Investments Tax Credit

Overview:
This Virginia tax credit rewards individuals who invest in early-stage tech-focused Virginia businesses. It provides up to 50% of the investment as a credit against individual or fiduciary income tax, encouraging innovation and entrepreneurial growth within the state.

Who It’s For:
Virginia-based individual or fiduciary taxpayers who invest in certified, early-stage technology companies through equity or subordinated debt.

Four Key Highlights:

  1. Generous 50% Credit on Qualified Investments:
    Investors can claim 50% of their investment, up to $50,000 per year, for investing in certified small tech businesses in Virginia.

  2. Supports Technology Startups:
    Only companies in advanced or emerging industries—like biotech, nanotech, energy, or IT—with under $3M in revenue and capital raised are eligible. Must be certified annually via Form QBA.

  3. Subordinated Debt Option & 3-Year Hold:
    Qualifying investments include not only equity but unsecured, long-term subordinated loans. Equity investments must be held for at least 3 years to retain the credit.

  4. 15-Year Carryforward & Commercialization Priority:
    Unused credits carry forward up to 15 years. Half of the $5M annual credit cap is reserved for investments that commercialize Virginia college/university research.

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Virginia Neighborhood Assistance Act (NAP) Tax Credit

Overview:
The NAP tax credit provides a 65% state tax credit to individuals and businesses that donate to approved Virginia nonprofits serving low-income individuals or students with disabilities. It encourages charitable giving by significantly reducing state income tax liability.

Who It’s For:
Virginia individuals, trusts, and businesses who want to support eligible nonprofit organizations and reduce their state tax burden.

Four Key Highlights:

  1. Generous 65% Tax Credit:
    Donors receive 65% of the donation amount as a credit, applied to personal or corporate income tax, bank franchise tax, insurance premiums license tax, or certain utility taxes.

  2. Wide Range of Donation Types:
    Donations can be cash, stocks, real estate, rent/lease value, professional or contracting services, or even medical services for qualifying nonprofits.

  3. Carry Forward Unused Credits:
    If the credit exceeds your tax liability, it can be carried forward for up to 5 years, providing flexibility in tax planning.

  4. Donation Minimums & Annual Limits:

    • Individuals: $500 minimum, up to $125,000 in eligible donations per year.

    • Businesses & Trusts: $616 minimum donation.

    • Nonprofits must be pre-approved NAP organizations and file paperwork to issue credit certificates.

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Virginia Research and Development Tax Credit (Refundable)

Overview:
This refundable tax credit supports small businesses investing in R&D within Virginia. Companies with $5 million or less in qualified research expenses can receive up to 20% of eligible expenditures back—even as a cash refund if it exceeds their tax liability.

Who It’s For:
Virginia-based businesses with $5 million or less in qualified R&D expenses seeking refundable tax credits for research activities conducted in the state.

Four Key Highlights:

  1. Up to 20% Refundable Tax Credit:
    Businesses receive 15% of the first $300,000 in qualified expenses over their Virginia base amount—or 20% if partnering with a Virginia college or university.

  2. Focused on In-State Innovation:
    Only research conducted in Virginia qualifies, aligning the program with local economic development goals.

  3. Refundable + No Carryforward Needed:
    Unlike many credits, this one is refundable, meaning you can receive a cash benefit even if your tax liability is zero—helpful for startups and early-stage companies.

  4. Annual Cap and Prorating:
    Statewide limit of $15.77 million; if requests exceed this, credits are prorated. Application is due by September 1, and credits are certified by November 30.

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