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 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 $70,000 spent for approved agricultural best management programs. The amount of the tax credit may not exceed $17,500.

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. 

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

Using the credit

To claim the credit, 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 Equipment Credit

You may qualify to claim this credit if:

You’re a farmer who invests in certain equipment designed to reduce soil compaction and disturbance.  

What is it?

An income tax credit equal to 25% of what you spent on qualifying equipment.  You can claim a credit of up to $4,000 on your return, not to exceed 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
  • corporation income tax

What kind of equipment qualifies?

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

Using this credit

To claim the credit, complete the appropriate credit schedule below and attach to your return.  Also, attach a statement showing the purchase date, description of the equipment purchased, and how you computed the credit.

For more information, see Va.Code § 58.1 - 334.

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 § 4.1-207.

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.

Fertilizer and Pesticide Application 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; and
  • You purchase equipment designed to more precisely apply fertilizers and pesticides. The equipment must meet standards set by the Virginia Soil and Water Conservation Board; and
  • You have a nutrient 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 cost of the equipment, or $3,750, whichever is less. You can’t claim a credit 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
  • corporation income tax

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 Va. Code § 58.1-436

Food Crop Donation Tax Credit

You may qualify for this credit if:

You’re a farmer who donates crops you grow to a nonprofit food bank in Virginia.

What is it?

An income tax credit equal to 30% of the fair market value of the crops donated. The total amount of credit for all crop donations you make during the year can’t be greater than $5,000.  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

Are there any restrictions on how the donated crops are used?

  • The food bank must use the donated crops in a way that provides food for the needy; and
  • The donated crops 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 crops, they can only sell them to the needy, other nonprofit food banks, or other organizations that will use the crops to provide food to the needy.

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

Is there a cap?

Yes.  We can’t issue more than $250,000 in food crop 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.

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.