Research and Development Expenses Tax Credit Guidelines

During the 2011 Session, the Virginia General Assembly enacted House Bill 1447 (2011 Acts of Assembly, Chapter 742), and Senate Bill 1326 (2011 Acts of Assembly, Chapter 745), which established the Research and Development Expenses Tax Credit. This is an individual and corporate income tax credit for certain taxpayers that incur Virginia qualified research and development expenses.

During the 2014 Session, the Virginia General Assembly enacted House Bill 1220 (2014 Acts of Assembly, Chapter 227), and Senate Bill 623 (2014 Acts of Assembly, Chapter 306), which increased the overall credit cap, increased the per taxpayer credit cap, and allow pass-through entities to elect to claim the credit at the entity level. These bills also require taxpayers to provide certain information to the Department of Taxation (“the Department”) when applying for the credit and require the Department to disclose certain information to the General Assembly regarding the credit on request.

On January 6, 2015, the Department published guidelines regarding the Research and Development Expenses Tax Credit. These Guidelines are effective for Taxable Years 2011 through 2015.

During the 2016 Session, the Virginia General Assembly enacted House Bill 884 (2016 Acts of Assembly, Chapter 661), and Senate Bill 58 (2016 Acts of Assembly, Chapter 300), which amended the Research and Development Expenses Tax Credit. Such changes increase the annual credit cap, increase the annual amount of credits each taxpayer may claim, allow a taxpayer to elect to compute the credit using a simplified method in lieu of the default method, and extend the sunset date for the credit.  

Accordingly, on April 19, 2017, the Department published updated Research and Development Expenses Tax Credit Guidelines to reflect changes set forth during the 2016 Session. These Guidelines are effective for Taxable Year 2016 and after.

Legislative Documents

House Bill 884 (2016)

• HB 884 Text as passed the House and Senate 
• HB 884 PDF of text as passed the House and Senate (PDF) 
• HB 884 Fiscal Impact Statement

Senate Bill 58 (2016)

• SB 58 Text as passed
• SB 58 PDF of text as passed (PDF)
• SB 58 Fiscal Impact Statement

House Bill 1220 (2014)

• HB 1220 Text as passed 
• HB 1220 PDF of text as passed (PDF)
• HB 1220 Fiscal Impact Statement

Senate Bill 623 (2014)

• SB 623 Text as passed 
• SB 623 PDF of text as passed (PDF) 
• SB 623 Fiscal Impact Statement

House Bill 1447 (2011)

• HB 1447 Text as passed 
• HB1447 PDF of text as passed 
• HB 1447 Fiscal Impact Statement 

Senate Bill 1326 (2011)

• SB 1326 Text as passed 
• SB 1326 PDF of text as passed (PDF)
• SB 1326 Fiscal Impact Statement 

Guideline Development Documents

• Final Updated Research and Development Tax Credit Guidelines - Effective for Taxable Years beginning January 1, 2020 and after (PDF) (Link opens on the Virginia Regulatory Town Hall website)
• Research and Development Expenses Tax Credit Guidelines 2016-2019 - Effective for Taxable Years 2016 through 2019 (PDF)
• Research and Development Expenses Tax Credit Workplan (Updated Guidelines) (PDF)
• Research and Development Expenses Tax Credit Guidelines 2011-2015 - Effective for Taxable Years 2011 through 2015 (PDF)