Agricultural Best Management Practices Credit (Refundable)

This credit is available to individuals and corporations that are engaged in agricultural production for market and have a soil conservation plan in place to provide significant improvement to water quality in Virginia's streams, rivers, and bays. To be eligible for the credit, your plan must be certified in advance by your local soil and water conservation district.

Tax credit amount

The credit is 25% of the first $70,000 you spend for approved agricultural best management programs. The maximum credit is $17,500 or the total amount of the tax imposed, whichever is less. 

Effective July 1, 2018, this credit is fully refundable for both individuals and corporations. Previously, it was only refundable for individuals.

Corporations who were approved for this credit prior to taxable year 2018, and who have carry-forward amounts from 2013-2017, should claim their carry-forward amounts as a refundable credit in taxable year 2018.

Individual filers complete Schedule CR, Section 3, Part 3, and corporate filers complete Form 500CR, Section 1, Part 13 to claim this credit. Attach the certificate from the local soil and water conservation district from the locality in which the credit is claimed.

Taxpayers claiming this credit cannot claim another credit for costs related to the same eligible practices. 

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 5 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.

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.

Claiming the credit

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.

Send applications 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 5 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. 

Credits shall be allowed under this section only if:

  1. The use of the donated food crops by the donee nonprofit food bank is related to providing food to the needy,
  2. 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
  3. 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. 

Claiming the credit

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.

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.