Agricultural Best Management Practices Credit (Refundable)

You may qualify to claim this credit if:

  • You’re a farmer, grower, rancher, or someone else engaged in agricultural production for market; and
  • You have a soil conservation plan or resource management plan in place that your local soil and water conservation district has approved.

What is it?

An income tax credit equal to:

  • 25% of the first $100,000 spent for approved agricultural best management practices when you have an approved soil conservation plan in place
  • 50% of the first $100,000 spent for approved agricultural best management practices on acreage covered by an approved resource management plan

The aggregate amount of the tax credit may not exceed $75,000. 

The maximum annual amount of tax credits that may be issued for each fiscal year is $2 million. Credits are issued on a first come, first served basis.

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. If you’re claiming this credit, you can’t claim another credit for costs related to the same eligible practices. 

You can’t use the same expenses to claim both the 25% and 50% credit.

What are eligible agricultural best management practices?

For the purpose of this credit, ones that will provide significant improvement to water quality in Virginia’s streams, rivers and bays. For more details, please visit the Department of Conservation and Recreation’s (DCR) website. 

To apply for this credit:

Complete Form ABM and send it to us by December 31 of the year after you spent the money on the approved practices (example: you have until December 31, 2024 to apply for a credit for expenses made in 2023). Late applications are not eligible for the credit. Please allow at least 90 days before you file your income tax return. We will send you a notice of the amount of credit that you're allowed. 

Using the credit

To claim the credit, you must first receive a notification of the amount of credit you’re allowed. Once you have this, complete the following and attach it to your return, along with your certificate from your local soil and water conservation district:

For more information, see Va. Code § 58.1-339.3 and Va. Code § 58.1-439.5

Conservation Tillage and Precision Agriculture Equipment Credit

You may qualify to claim this credit if:

  • You’re a farmer, grower, rancher or someone else engaged in agricultural production for market
  • You have a soil conservation plan in place that was approved by your local soil and water conservation district
  • You have a nutrient management plan developed by a certified nutrient management planner
  • You purchase certain equipment designed to reduce soil compaction and disturbance, or to more precisely apply fertilizers and pesticides.

What is it?

An income tax credit equal to 25% of the cost of the equipment. The maximum credit is $17,500.  

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

  • Individual income tax
  • Corporation income tax

This credit is refundable to individuals and corporations. 

What kind of equipment qualifies?

Equipment to reduce soil compaction

  • “No till” planters and drills, including those attached to equipment you already own; 
  • Guidance systems to control traffic patterns designed to reduce soil disturbance

Fertilizer and pesticide application equipment

  • Sprayers for pesticides and liquid fertilizers
  • Pneumatic fertilizer applicators
  • Monitors, computer regulators, and height-adjustable booms for sprayers and liquid fertilizer applicators
  • Manure applicators
  • Tramline adapters
  • Starter fertilizer banding attachments for planters

To qualify, the equipment must meet standards set by the Virginia Soil and Water Conservation Board.

To apply for this credit:

Complete Form AEC and send it to us at least 90 days before you file your return. We will send you a letter certifying your credit.(Form AEC will be available later this year.)

Using this credit

To claim the credit, complete the appropriate credit schedule below and attach to your return.

For additional information, please see Va. Code §§ 58.1-337 and 58.1-436

Farm Wineries and Vineyards Tax Credit

You may qualify to claim this credit if:

You’re starting a new farm winery or vineyard, or improving an existing one.

A Virginia vineyard is agricultural land with at least 1 acre dedicated to growing grapes that a Virginia farm winery will use to make wine. A Virginia farm winery is one licensed according to Va. Code § 4.1-206.1.

What is it?

An income tax credit equal to 25% of what you spent on qualified capital expenditures related to starting or improving the farm winery or vineyard.

The credit cannot be greater than your tax liability. Carry forward any excess credit for 10 years. You can’t claim a credit for any expenses you deducted as a Section 179 expense on your federal income tax return.

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

  • individual income tax
  • corporation income tax

What are “qualified capital expenditures?”

What you spent to purchase and install:

  • 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
  • wire

Is there a cap?

Yes.  We can’t issue more than $250,000 in Farm Wineries and Vineyards tax credits per year. If applications for this credit exceed $250,000, we’ll prorate the credit amounts among eligible taxpayers. 

To apply for this credit:

Complete Form FWV, and send it to us by April 1.  Late applications will be disqualified.  

We will send you a letter certifying the credit by June 30.

Using the credit

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

For more information, see Va. Code § 58.1-339.12.

Food Donation Tax Credit

You may qualify for this credit if:

You’re a farmer who donates one or more of the following to a nonprofit food bank in Virginia:

  • crops you grow
  • wholesome food you produce

What is it?

An income tax credit equal to 50% of the fair market value of the crops or food donated. The total amount of credit for all food donations you make during the year can’t be greater than $10,000.  Carry forward any unused credits for 5 years.

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

  • individual income tax
  • corporation income tax

What is wholesome food?

Food you produce that: 

  • meets all federal, state and local quality standards 
  • includes food that may not be readily marketable due to 
    • appearance 
    • age 
    • freshness 
    • grade 
    • surplus 
    • other condition  

Are there any restrictions on how the donated food is used?

  • The food bank must use the donated food in a way that provides food for the needy; and
  • The donated food can’t be used outside of Virginia, and can’t be used to pay for goods or services; and
  • If the food bank decides to sell the donated food, they can only sell it to the needy, other nonprofit food banks, or other organizations that will use the food to provide food to the needy.

The food bank that receives your donation will complete Form FCD-2, Virginia Food Donation Certification, and give the certification to you within 30 days of when you donated the food.

Is there a cap?

Yes.  We can’t issue more than $250,000 in food donation tax credits per fiscal year. 

To apply for this credit:

Complete Form FCD-1, and send it to us by February 1.  Late applications will not be eligible.  

We will send you a letter certifying the credit by April 1.

Using the credit:

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

For more information, see Va. Code § 58.1-439.12:12.

Hardwood Initiative Tax Credit

You may qualify for this credit if: 

  • You implement beneficial hardwood best practices in your forest. 

What is it? 

An income tax credit equal to up to $1,000 of the amount you spent implementing beneficial hardwood best practices. If you participate in a cost-share or initiative program, you can claim the credit for the liability that remains after applying that cost share.  

The credit can’t be greater than your tax liability. Carry forward any unused credits for 5 years. Claim the credit against the following taxes administered by Virginia Tax: 

  • Individual income tax   

Is there a cap? 

Yes. The Virginia Department of Forestry (DOF) can issue no more than $1 million in credits per year.  

Using the credit 

Complete Schedule CR and attach it to your return.  

Riparian Waterway Buffer Credit

You may qualify to claim this credit if:

You own land along a Virginia river, stream or the Chesapeake Bay that you harvest timber from, and leave the trees near the waterway standing (a “riparian buffer.”) A Stewardship Management Plan, certified by the State Forester, must cover your land.

The Virginia Department of Forestry (VDOF) administers this credit. You’ll find more information about this credit on their website.

What is it?

An income tax credit equal to 25% of the value of the timber in the buffer, if the timber were harvested. The maximum amount of the credit is $17,500, or your total tax liability, whichever is less. Carry forward any unused credits for 5 years.

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

  • individual income tax
  • corporation income tax

What is a Stewardship Management Plan?

It’s a collection of information about your land and your stewardship plans for it. See the VDOF website for more information, including how to get one for your land.

If you break the terms of your stewardship plan, you’ll have to pay back any credit that you’ve received.

Are there any specific requirements for the buffer?

The buffer must be at least 35 feet wide, but no more than 300 feet wide. At least 50% of the crown needs to remain after harvesting. The buffer needs to remain in place for at least 15 years. Once you’ve claimed the credit, you won’t be able to claim it again for this piece of land for another 15 years.

For more information about qualifying for the credit, please visit the VDOF website.

To apply for this credit:

VDOF administers this credit. Please visit their website, and follow their application procedure.

Using the credit

To claim the credit, complete the following and attach it to your return, with the certification from VDOF:

For more information, see Va. Code § 58.1 - 339.10.