Communities of Opportunity Tax Credit
For tax years beginning on or after Jan. 1, 2010, a tax credit may be claimed by landlords with qualified housing units located in census tracts with poverty rates of less than 10% in the Richmond Metropolitan Statistical Area who participate in the Housing Choice Voucher program.
The amount of tax credit for an eligible property will be based on 10% of annual fair market rent for that specific unit and prorated when units are qualified for less than the full tax year. Prorations will be based on full calendar months. A landlord may receive tax credits on one or more units within the same tax year. Credits taken for any one tax year cannot exceed the tax liability for that year. Credits not taken for the year for which they are allocated may be carried forward, but cannot be carried forward for more than 5 years.
To be eligible for the credit, participating landlords must apply to the Department of Housing and Community Development. The maximum amount of credit that may be issued in a fiscal year is $250,000. Should eligible applications received by the March 1 deadline exceed the annual appropriation, tax credits will be prorated based on the total amount of qualified requests received and the total amount of credits available. If the annual appropriation for tax credits is not fully allocated based on qualified applications received by the March 1 deadline, the remaining balance will be allocated on a first-come, first-served basis. Unused balances will not be allocated more than 3 years after the tax year in which they were first made available.
Credits granted to a partnership, limited liability company, or electing small business corporation (S corporation) shall be allocated to the individual partners, members, or shareholders in proportion to their ownership or interest in such business entity. The landlord must assume responsibility for distributing credits in this manner. No person shall be allowed both a Communities of Opportunity Tax Credit and a Rent Reductions Tax Credit under Va. Code § 58.1-339.9 for the rental of the same dwelling unit in a taxable year.
For additional information, please contact: Virginia Department of Housing and Community Development, Main Street Centre, 600 East Main Street, Suite 300, Richmond, VA 23219, or call 804.371.7000.
Reference: Virginia Code 58.1-439.12:04
Conservation Tillage Equipment Credit
Individuals and corporations that invest in conservation tillage equipment for the purpose of farming may claim this credit. The term "conservation tillage equipment" means a "no-till" planter or drill designed to minimize soil disturbance. This includes planters and drills that may be attached to existing equipment.
The tax credit is 25% of conservation tillage equipment expenditures, up to a maximum credit of $4000. The allowable credit is the lesser of the total credit or your tax liability. Any unused credit may be carried forward for five years.
Individual filers complete Schedule CR, Section 1, Part 5 and corporate filers complete Form 500CR, Section 1, Part 4 to claim this credit. Attach a statement showing the purchase date, description of equipment, and the credit computation.
Reference: Virginia Code 58.1 - 334.
Education Improvement Scholarships Tax Credit
Effective for taxable years beginning on and after Jan. 1, 2013, but before Jan. 1, 2028. Allows taxpayers to claim a credit against individual income tax, corporate income tax, bank franchise tax, insurance premiums license tax, or tax on public service corporations for contributions to approved scholarship foundations. Capped at $25 million per fiscal year. Unused tax credits would be carried over for 5 years.
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.
This program provides state tax credits for persons or businesses making monetary or marketable securities donations to approved scholarship foundations that provide scholarships to eligible students for qualified educational expenses incurred in attending eligible nonpublic schools.
The tax credit is equal to 65% of the monetary or marketable securities donation, and may be claimed against the individual income tax, corporate income tax, bank franchise tax, insurance premiums license tax, or tax on public service corporations. For individuals, a monetary or marketable securities donation must be at least $500 in order to qualify for the tax credit program. An individual may not be issued less than $325 or more than $81,250 in tax credits for a taxable year. However, the $325 and $81,250 tax credit limitations do not apply to credits issued to any business entity, including a sole proprietorship. Any unused tax credits may be carried over for the next 5 succeeding taxable years or until the total amount of credit has been taken, whichever is sooner.
For additional information, visit the Virginia Department of Education's program page.
- Reference: Virginia Code 58.1-439.25
- Reference: Virginia Code 58.1-439.26
- Reference: Virginia Code 58.1-439.27
- Reference: Virginia Code 58.1-439.28
Farm Wineries and Vineyards Tax Credit
An individual and corporate income tax credit is available for Virginia farm wineries and vineyards in an amount equal to 25% of the cost of all qualified capital expenditures made in connection with the establishment of new Virginia farm wineries and vineyards and capital improvements made to existing Virginia farm wineries and vineyards.
"Qualified capital expenditures" includes all expenditures made by the taxpayer for the purchase and installation of barrels, bins, bottling equipment, capsuling equipment, corkers, chemicals, crushers and destemmers, dirt, fermenters, or other recognized fermentation devices, fertilizer and soil amendments, filters, grape harvesters, grape plants, hoses, irrigation equipment, labeling equipment, poles, posts, presses, pumps, refractometers, refrigeration equipment, seeders, tanks, tractors, vats, weeding and spraying equipment, and wire.
"Virginia vineyard" means agricultural lands located in the Commonwealth consisting of at least one contiguous acre dedicated to the growing of grapes that are used or are intended to be used in the production of wine by a Virginia farm winery as well as any plants or other improvements thereon.
"Virginia farm winery" means an establishment located in the Commonwealth that is licensed as a Virginia farm winery pursuant to §4.1-207.
The total amount of tax credits available for a calendar year cannot exceed $250,000. If applications for this credit exceed $250,000, Virginia Tax will allocate the credits on a pro rata basis. Any credit amounts that exceed a taxpayer's liability can be carried forward 10 years. Taxpayers cannot claim both this credit and a federal deduction for the same expenses under IRC §179.
This credit requires approval to be claimed on your tax return. Businesses must apply by April 1 using Form FWV. Submitting a late application will disqualify you for the credit. All applications must be sent to:
Virginia Department of Taxation
Tax Credit Unit
PO Box 715
Richmond, VA 23218-0715
We will send you a letter certifying the credit.
The amount of the credit attributable to a partnership, electing small business corporation (S corporation), or limited liability company (LLC) 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.
Reference: Virginia Code 58.1-339.12
Fertilizer and Pesticide Application Equipment Credit
Individuals and corporations may claim this credit for equipment purchased to provide more precise pesticide application. You must be engaged in agricultural production for market and have a nutrient management plan approved by your local Soil and Water Conservation District in place.
The credit is 25% of the cost of the certified equipment, or $3,750, whichever is less. The allowable credit may not exceed your tax liability. Unused credits may be carried forward for five years.
Individual filers complete Schedule CR, Section 1, Part 6, and corporate filers complete Form 500CR, Section 1, Part 6 to claim this credit.
Food Crop Donation Tax Credit
For taxable years beginning on or after Jan. 1, 2016, but before Jan. 1, 2022, any person engaged in the business of farming as defined under 26 C.F.R. § 1.175-3 that donates food crops grown by the person in the Commonwealth to a nonprofit food bank shall be allowed a credit against the tax levied pursuant to § 58.1-320 or 58.1-400 for the taxable year of the donation. The person shall be allowed a credit in an amount equal to 30% of the fair market value of such food crops donated by the person to a nonprofit food bank during the taxable year but not to exceed an aggregate credit of $5,000 for all such donations made by the person during such year. Any unused credit amount can be carried forward for 5 years.
Credit shall be allowed under this section only if:
- The use of the donated food crops by the donee nonprofit food bank is related to providing food to the needy,
- The donated food crops are not transferred for use outside the Commonwealth or used by the donee nonprofit food bank as consideration for services performed or personal property purchased, and
- The donated food crops, if sold by the donee nonprofit food bank, are sold to the needy, other nonprofit food banks, or organizations that intend to use the food crops to provide food to the needy.
No more than $250,000 in tax credits can be issued in any fiscal year.
This credit requires certification to be claimed on your tax return. Businesses must apply for the credit by Feb. 1 using Form FCD-1. Submitting a late application will disqualify you from the credit. All applications must be sent to:
Virginia Department of Taxation
Tax Credit Unit
PO Box 715
Richmond, VA 23218-0715
We will send a letter to certify the credit.
Pass-through entities must file Form PTE at least 60 days before filing their income tax return. You must attach a copy of the certification letter to Form PTE.
Virginia Food Crop Donation Certification must be completed by the nonprofit food bank which received the donation. The nonprofit food bank must prepare and provide Form FCD-2 to the donor within 30 days of the date of the donation.
Foreign Source Retirement Income Credit
Virginia residents may claim a credit for income taxes paid to a foreign country on pension or retirement income derived from employment in a foreign country. The retirement income must be included in Virginia taxable income on the return to which this credit is applied. The credit is nonrefundable and excess credits cannot be carried forward.
To compute the credit, the foreign currency must be converted into U.S. dollars using the prevailing exchange rate that most nearly reflects the value of the currency at the time the taxes were actually paid to the foreign country.
For purposes of this credit, a foreign country shall include all possessions of the United States. Any foreign country that does not qualify for the federal foreign tax credit (IRC 901[j]) does not qualify for this Virginia credit.
Complete Schedule CR, Section 1, Part 8 to claim this credit. Attach a copy of the return filed in the foreign country or other proof of tax payment to the foreign country and a schedule showing computation of foreign currency converted to U.S. dollars.
Reference: Virginia Code 58.1 - 332.1.
Historic Rehabilitation Credit
An individual, estate, trust, or corporation incurring eligible expenses in the rehabilitation of a certified historic structure is entitled to claim a credit against their respective taxes.
The credit is equal to 25% of rehabilitation expenses for projects completed in 2000 and thereafter.
To qualify, the cost of the rehabilitation must equal at least 50% (25% if the building is owner occupied) of the assessed value of the building for local real estate tax purposes prior to the rehabilitation. The rehabilitation work must be certified by the Virginia Department of Historic Resources and be consistent with The Secretary of the Interior's Standards for Rehabilitation. The allowable credit may not exceed your tax liability. Unused credits may be carried forward for 10 years.
Applications for certification of buildings and rehabilitation projects may be obtained from the Virginia Department of Historic Resources, 2801 Kensington Avenue, Richmond, VA 23221. You must receive certification of the credit before claiming it on your tax return.
This credit may be allocated among owners in proportion to each owner's percentage of ownership or interest in the pass-through entity, or as the owners mutually agree, or as provided in the partnership agreement or other entity document using Form PTE within 30 days after the credit is granted but at least 90 days before filing an income tax return.
Individual and fiduciary filers complete Schedule CR, Section 1, Part 11, and corporate filers complete Form 500CR, Section 1, Part 11 to claim this credit. Attach Schedule CR and your certification to your return.
Reference: Virginia Code 58.1 -339.2.
Livable Home Tax Credit
Effective for Jan. 1, 2008 this credit is now being administered by the Department of Housing and Community Development (DHCD). Effective for tax year 2011, individuals and licensed contractors who are corporations may be eligible for an income tax credit of $5000 for the purchase of a new accessible residence and 50% of the cost of retrofitting activities, not to exceed $5000.
Any tax credit that exceeds the eligible individual's tax liability may be carried forward for 7 years. If the total amount of tax credits issued under this program exceeds $1 million in a fiscal year, DHCD will pro rate the amount of credits among the eligible applicants. Applications are to be filed with the Virginia Department of Housing and Community Development (DHCD) by Feb. 28 of the year following the year in which the purchase or retro-fitting was completed. For additional information please contact Kathy Robertson at 804.225.3129.
Reference: Virginia Code 58.1-339.7
Neighborhood Assistance Act Credit
The purpose of the Neighborhood Assistance Program (NAP) is to encourage individuals, trusts and businesses to make donations to approved 501(c) (3) (4) non-profit organizations for the benefit of low-income persons or an eligible student with a disability. To be considered for the NAP program, a 501(c)(3) (4) non-profit organization would submit an application to the Department of Social Services (DSS) or Department of Education (DOE) by the first business day of May each year. Applicants submitting all required information and meeting the eligibility criteria will be determined approved organizations.
- Individuals making a donation of cash or marketable securities directly to an approved NAP nonprofit organization may be eligible for the credit. The NAP state tax credit for an individual may be offered up to 65% of the donation's value. To qualify, individuals must donate at least $500. An individual may be eligible to receive a NAP tax credit for a donation value up to $125,000 per taxable year.
- Trusts making a donation of cash, stock, merchandise, real estate, and rent/lease of non-profit's facility directly to an approved NAP nonprofit organization may be eligible for the credit. The NAP state tax credit for a trust may be offered up to 65% of the donation's value. To qualify, a trust must donate at least $616 per taxable year.
- Businesses making a donation of cash, stock, merchandise, real estate, rent/lease of non-profit's facility, professional services, or contracting services directly to an approved NAP nonprofit organization may be eligible for the credit. The NAP state tax credit for a business may be offered up to 65% of the donation's value. To qualify, a business must donate at least $616 per taxable year.
- Limited health care, pharmaceutical, mediation, or physician specialists providing services directly to an approved NAP non-profit organization may be eligible for the credit. The NAP state tax credit may be offered up to 65% of the donation's value. The minimum donation value must be at least $616 per taxable year.
A NAP tax credit is non-refundable and non-transferable. Excess donor credit, if applicable, may be carried forward for the next 5 taxable years.
To claim the NAP state tax credit on an income tax return:
- An individual filer must complete Schedule CR, Section 1, Part 3
- A business filer must complete Form 500CR, Section 1, Part 2
- A trust must claim the credit on Form 770, line 5(e)
Information about the application process or making a donation to a NAP approved organization can be found at the Department of Social Services Neighborhood Assistance Program or by calling 804.726.7920 or 804.726.7924.
Reference: Virginia Code 58.1-439.18:24
Riparian Waterway Buffer Credit
You may qualify to claim this credit if you own land abutting a waterway on which timber is harvested, and forbear harvesting timber on certain portions of the land near the waterway. The distance from the waterway to the most distant end of the riparian buffer must be at least 35 feet and no more than 300 feet. The buffer must remain in place for at least 15 years. The land that is the subject of the credit cannot be the subject of this credit again for 15 years after it was first taken.
To qualify for this credit, the property owner must comply with an individualized Forest Stewardship Plan to be certified by the State Forester. The credit amount is subject to recapture if the Stewardship Plan is violated.
The credit is 25% of the value of timber on the area designated as a forested buffer for a waterway, not to exceed $17,500 or the total amount of tax liability, whichever is less. Unused credits may be carried forward 5 years.
For more information contact the Virginia Department of Forestry, Fontaine Research Park, 900 Natural Resources Dr. Suite 800, Charlottesville, VA 22903-0758, or call 434.977.6555.
To claim this credit:
- Individual filers complete Schedule CR, Section 1, Part 21
- Corporate filers complete Form 500 CR, Section 1, Part 16
Reference: Virginia Code 58.1 - 339.10.
Trust Beneficiary Accumulation Distribution Credit
You may qualify to claim this credit if you were the beneficiary of a trust whose Virginia taxable income includes all of part of an accumulation distribution by the trust.
For the years in which income was accumulated, the distributing trust would have reported the income on its own fiduciary return and paid taxes accordingly. To prevent double taxation of the distribution to the beneficiary, Virginia law allows the beneficiary to claim a credit for the income taxes paid by the trust.
Computation of credit: (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
A schedule showing the credit computation must be attached to your return.
Reference: Virginia Code 58.1-370.