See below for an overview of updates to tax credits as of July 1, 2018. For an overview of all 2018 state and local tax legislation, see the 2018 Legislative Summary (.pdf).
Agricultural Best Management Practices Tax Credit
Effective July 1, 2018 the Agricultural Best Management Practices Tax Credit is refundable for both individuals and corporations. Previously, it was only refundable for individuals.
Coalfield Employment Enhancement Tax Credit
This credit was reinstated for taxable years beginning on or after Jan. 1, 2018, but before Jan. 1, 2023. Taxpayers with an economic interest in coal mined in Virginia, can claim the credit for metallurgical coal mined by underground methods and surface methods.
A version of this credit expired on Dec. 31, 2016. The previous version of the credit was not restricted to metallurgical coal.
Green Job Creation Tax Credit
The sunset date was extended for another 3 years, from Jan. 1, 2018 to Jan. 1, 2021.
Historic Rehabilitation Credit
For taxable years beginning on and after Jan. 1, 2018, the amount of the Historic Rehabilitation Tax Credit that may be claimed by each taxpayer, including carryover amounts, may not exceed $5 million for any taxable year. Taxpayers with credit amounts in excess of $5 million may carry forward the excess and claim the credit in future taxable years within the credit's current 10-year carryover period, or until the full credit is used, whichever occurs first.
Land Preservation Tax Credit
Transfer to a designated beneficiary
Effective July 1, 2018, individual taxpayers who originally earned the Land Preservation Tax Credit can transfer any unused credits through a will, bequest, or other instrument of transfer to a designated beneficiary upon his or her death. If such taxpayer dies without a will, any unused credits will be transferred to the next person who is eligible to receive according to Virginia's laws of intestate succession.
This change applies to transfers of unused credits upon the death of a taxpayer occurring on or after July 1, 2018, regardless of when the unused credits were earned. The 2% transfer fee does not apply to transfers to a beneficiary.
There is an annual limitation on the amount that each taxpayer can claim per taxable year. For taxable years 2018 and 2019, the annual limitation will remain $20,000.
Worker Retraining Tax Credit
For taxable years beginning on or after Jan. 1, 2018, but before Jan. 1, 2022, the credit now allows taxpayers primarily engaged in manufacturing to claim an individual or corporate income tax credit equal to 35% of its direct costs incurred during the taxable year in conducting orientation, instruction, and training in Virginia relating to the manufacturing activities undertaken by such taxpayer. The credit is permitted only for programs that are provided to students in grades 6 through 12, coordinated with the local school division, and conducted either at a plant or facility owned, leased, rented, or otherwise used by the manufacturer or at a public middle or high school in Virginia. No taxpayer is permitted to claim credits in excess of $2,000 per taxable year.
The annual credit cap was reduced from $2.5 million to $1 million.