Virginia Schedule CR Instructional Booklet

Schedule CR Instructional Booklet
2023 Virginia Schedule CR Instructions
Instructions for 2023 Virginia Schedule CR
Credit Computation Schedule for Individuals
For use with Forms 760, 760PY, 763, and 765
Tax Credit 	

Tax Credit 	

Page

Page

•	 Trust Beneficiary Accumulation Distribution. . . . . . . . . 2

•	 Farm Wineries and Vineyards . . . . . . . . . . . . . . . . . . . 7

•	 Enterprise Zone Act . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

•	 International Trade Facility. . . . . . . . . . . . . . . . . . . . . . 7

•	 Neighborhood Assistance Act. . . . . . . . . . . . . . . . . . . . 2

•	 Port Volume Increase . . . . . . . . . . . . . . . . . . . . . . . . . 7

•	 Recyclable Materials Processing Equipment . . . . . . . 2

•	 Barge and Rail Usage . . . . . . . . . . . . . . . . . . . . . . . . . 8

•	 Conservation Tillage Equipment. . . . . . . . . . . . . . . . . . 3

•	 Research and Development Expenses . . . . . . . . . . . . 8

•	 Precision Fertilizer and
Pesticide Application Equipment . . . . . . . . . . . . . . . . . 3

•	 Education Improvement Scholarships . . . . . . . . . . . . . 9

•	 Vehicle Emissions Testing Equipment . . . . . . . . . . . . . 3

•	 Food Donation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

•	 Major Research and Development Expenses . . . . . . . 9

•	 Major Business Facility Job . . . . . . . . . . . . . . . . . . . . . 3

•	 Worker Training . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

•	 Foreign Source Retirement Income. . . . . . . . . . . . . . . 3

•	 Virginia Housing Opportunity . . . . . . . . . . . . . . . . . . . 10

•	 Historic Rehabilitation. . . . . . . . . . . . . . . . . . . . . . . . . . 4

•	 Hardwood Initiative . . . . . . . . . . . . . . . . . . . . . . . . . . 11

•	 Qualified Equity and
Subordinated Debt Investments. . . . . . . . . . . . . . . . . . 4

•	 Firearm Safety Device . . . . . . . . . . . . . . . . . . . . . . . . 11
•	 Coalfield Employment Enhancement. . . . . . . . . . . . . 12

•	 Waste Motor Oil Burning Equipment . . . . . . . . . . . . . . 4

•	 Motion Picture Production . . . . . . . . . . . . . . . . . . . . . 12

•	 Biodiesel and Green Diesel Fuels . . . . . . . . . . . . . . . . 5

•	 Agricultural Best Management Practices. . . . . . . . . . 12

•	 Livable Home. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

•	 Conservation Tillage and
Precision Agriculture Equipment Tax Credit. . . . . . . . 12

•	 Riparian Waterway Buffer. . . . . . . . . . . . . . . . . . . . . . . 5
•	 Land Preservation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

•	 Pass-Through Entity
Elective Tax Payment Credit. . . . . . . . . . . . . . . . . . . . 13

•	 Community of Opportunity. . . . . . . . . . . . . . . . . . . . . . 6

•	 Retroactive Pass-Through Entity Elective Tax
Payment Credit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

•	 Green and Alternative Energy Job Creation. . . . . . . . . 6

For information or to obtain forms, visit www.tax.virginia.gov or call 804.367.8031.
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General Instructions
Each section of Schedule CR notes the carryover period,
if any, that applies to the credit. As a general rule, the
maximum nonrefundable credit available is the amount on
Schedule CR, Section 1, Part 1, Line 1A, reduced by the
other credits claimed, regardless of the order on Schedule
CR. There are 6 refundable credits aggregated on this
schedule: Coalfield Employment Enhancement Tax Credit
(computed on Form 306D), Motion Picture Production
Tax Credit, Agricultural Best Management Practices Tax
Credit, Research and Development Expenses Tax Credit,
Conservation Tillage and Precision Agriculture Equipment
Tax Credit, and Pass-Through Entity Elective Tax Payment
Credit. These refundable credits are reported in Section 3
of Schedule CR. The combined total of nonrefundable and
refundable credits is entered on Form 760, Line 25; Form
760PY, Line 25; or Form 763, Line 25.

•	 First claim any nonrefundable credits without
carryforward provisions;
•	 Next, claim any carryover credits from prior years (in
expiration order);
•	 Then, use any current year credits in the order of their
carryover provision;
•	 Finally, report any unused credits as carryovers for
succeeding taxable years to the extent allowed by law.
Partners of a partnership, shareholders of an S corporation,
and members of a limited liability company may claim the
amount of credit passed through to them by the partnership,
S corporation, or limited liability company. Generally,
distributions of a credit by a partnership, S corporation, or
limited liability company to its partners, shareholders, or
members are in proportion to their ownership or interest in
the partnership, S corporation, or limited liability company.
Any partnership, S corporation, or limited liability company
distributing a credit to its partners, shareholders, or members
must issue each owner a Schedule VK-1.

If the total of your nonrefundable credits exceeds the balance
of the maximum nonrefundable credit available, the following
rules will ensure that you receive the maximum benefit of
your credits:
2601451 Rev. 10/23

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Nonrefundable Credits

counselors, clinical social workers, clinical psychologists,
marriage and family therapists, physical therapists,
physician specialists, or mediators who donate their
services for an approved organization may be eligible for
credits. The amount of credit attributable to a partnership
or S corporation must be allocated to the partners and
shareholders in proportion to their ownership or interest in
the partnership or S corporation. Any unused tax credits
may be carried forward for the next 5 taxable years. For
a list of approved organizations or additional information,
contact the Virginia Department of Social Services,
Neighborhood Assistance Program, 801 E. Main Street,
Richmond, VA 23219-3301 or the Virginia Department
of Education, 23rd Floor, P.O. Box 2120, Richmond,
VA 23218-2120, Attn: Neighborhood Assistance Tax
Credit Program for Education or email tax.credits@doe.
virginia.gov.

Maximum Nonrefundable Credits
The total nonrefundable credits claimed on Schedule
CR may not exceed the amount of tax shown on your
return less the total amount reported for the spouse tax
adjustment, credit for tax paid to another state, and credit for
low-income individuals or the nonrefundable Virginia Earned
Income Credit.
Trust Beneficiary Accumulation Distribution Tax Credit
If only claiming the credit set forth under Va. Code § 58.1‑370
on Schedule CR, enter the amount of this credit on Form
760, Line 25; Form 760PY, Line 25; or Form 763, Line 25.
Write “Trust Beneficiary Accumulation Distribution Credit” to
the left of the entry box. If you are claiming other credits on
Schedule CR, add the amount of this credit to the total on
Schedule CR, Section 2, Line 1A. A schedule showing the
credit computation must be enclosed with your return.

Recyclable Materials Processing Equipment Tax Credit
For taxable years beginning on or after January 1, 1999,
and before January 1, 2025, an income tax credit may be
claimed for purchases made during the taxable year for:

Enterprise Zone Act Tax Credit
This credit expired June 30, 2019. Only Enterprise Zone Real
Property Investment Tax Credit carryover amounts from prior
years are allowed. Use the worksheet below to determine the
carryover amount that can be used on this year’s tax return.

A. 	 Credit carried over from
prior years:	

(i)	 machinery and equipment used predominantly in
or on the premises of manufacturing facilities or
plant units which manufacture, process, compound
or produce items of tangible personal property from
recyclable materials within the Commonwealth for
sale.

$_________________ .00

B. 	 Allowable credit: Enter
the amount from Line A
or the maximum credit
allowed:	$_________________ .00
C. 	 Amount to be carried
over to next year
(subtract Line B
from Line A)	

(ii)	 machinery and equipment used predominantly in or
on the premises of facilities that are predominantly
engaged in advanced recycling.
For purposes of determining “purchase price paid,” the
taxpayer may use the original total capitalized cost of such
machinery and equipment, less capitalized interest. The
credit is 20% of expenditures and cannot exceed 40%
of the taxpayer’s Virginia income tax liability for the year,
computed prior to computing the credit. Any amount unused
this year may be carried forward for the next 10 taxable
years.

$_________________ .00

Enter the allowable credit from Line B of the worksheet in
Section 1, Line 2A.
For additional information, contact: Virginia Department
of Housing and Community Development, Community
Revitalization Office, Main Street Centre, 600 East Main
Street, Suite 300, Richmond, VA 23219, call 804.371.7171,
or email [email protected].

“Advanced recycling” means the operation of a singlestream or multi-stream recycling plant that converts waste
materials into new materials for resale by processing
them and breaking them down into their raw constituents.
“Advanced recycling” includes the operation of a materials
recovery facility or materials reclamation facility that
receives, separates, and prepares recyclable materials for
sale to end-user manufacturers.

Neighborhood Assistance Act Tax Credit
The Virginia Neighborhood Assistance Act provides tax
credits to individuals and businesses that make qualified
donations directly to pre-approved Neighborhood
Assistance Program organizations whose primary function
is to provide educational or other qualified services for the
benefit of low-income families. Individuals may receive a
credit for a donation of money or marketable securities to
an eligible organization. Businesses may receive a credit
for a donation of money, marketable securities, property,
limited professional services or contracting services.
Licensed veterinarians, physicians, dentists, nurses,
nurse practitioners, physician assistants, chiropractors,
optometrists, dental hygienists, pharmacists, professional

The total amount of credit approved for any tax year
may not exceed $2 million. If the amount of tax credits
approved under this section by the Department of Taxation
for any taxable year exceeds $2 million, the Department
will apportion the credits by dividing $2 million by the
total amount of tax credits so approved, to determine the
percentage of otherwise allowed tax credits each taxpayer
will receive.

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The Virginia Department of Environmental Quality (DEQ)
administers the certification of all recycling machinery and
equipment. To allow adequate time for the recycling material

and equipment to be certified by DEQ, submit a completed
Form DEQ 50-11S to DEQ by March 1. Submit your credit
application, including the certification you receive from
DEQ, to the Department of Taxation by June 1, using Form
RMC. Submitting a late application will disqualify you from
the credit. All approved applicants filing a timely Form RMC
will be notified of the allowable credit by September 1. Since
the due date for individual income tax returns is May 1, most
claimants will need to file the tax return on extension or
amend the original return to claim the credit.

or a copy of the Northern Virginia Analyzer Equipment
Certification with the Schedule CR. For a copy of your service
agreement, contact Opus Inspection at 703.822.7587.
Only expenses listed in the agreement, or dynamometers
purchased or leased separately are eligible. You may obtain
a copy of the Analyzer Equipment Certification by contacting
Air Check Virginia at 703.583.3800.
You should retain documentation to support your claim for
the tax credit because an audit may be conducted to verify
any credit claimed under these provisions.

For additional information on how to qualify for certification,
contact the Department of Environmental Quality,
Equipment Certification Officer, P.O. Box 1105,
Richmond, VA 23218 or call 804.971.2132.

Major Business Facility Job Tax Credit
For taxable years beginning on and after January 1, 1995, but
before July 1, 2025, individuals, estates, trusts, corporations,
banks, insurance companies and telecommunications
companies may claim a Virginia tax credit if the taxpayer
creates at least 50 new full-time jobs in connection with
the establishment or expansion of a major business facility,
and the company is engaged in a qualifying industry
in Virginia. If a taxpayer is located in an enterprise zone
or in an economically distressed area (as defined by the
Virginia Economic Development Partnership), the threshold
is reduced from 50 to 25 new full-time jobs. Credits will be
recaptured proportionately if employment decreases during
the 5 years following the initial credit year.

All applications, Forms RMC, must be submitted to the
Virginia Department of Taxation, Credit Unit, P.O. Box
715, Richmond, VA 23218-0715. This credit requires
certification from the Tax Credit Unit to be claimed on your
tax return. For form assistance, contact the Tax Credit Unit
at the address above or call 804.786.2992.
Conservation Tillage Equipment Tax Credit
The Conservation Tillage Equipment Tax Credit expired
January 1, 2021. For taxable years beginning on and after
January 1, 2021, taxpayers will no longer be able to earn
the Conservation Tillage Equipment Tax Credit. Credits
earned in prior taxable years may be carried forward for
5 years. In addition, taxpayers formerly eligible for this
credit may be eligible for the new Conservation Tillage and
Precision Agriculture Equipment Tax Credit. Please see the
description found later in these instructions for information
on the new credit.

This nonrefundable credit is equal to $1,000 per qualifying
new job in excess of the 50/25 job threshold in enterprise
zones or economically distressed areas. This credit is
spread ratably over 2 years for taxpayers whose initial
credit year begins on or after January 1, 2009. The credit
only applies to facilities where an announcement to expand
or establish such a facility was made on or after January
1, 1994. The credit must be claimed ratably beginning with
the taxable year following the year in which the facility is
established or expanded, or the new qualifying jobs are
added. Unused credits may be carried forward for the next
10 taxable years. A qualified business firm receiving an
Enterprise Zone Job Creation Grant under Va. Code § 59.1547 shall not be eligible to receive a Major Business Facility
Job Tax Credit for any job used to qualify for the Enterprise
Zone Job Creation Grant.

Precision Fertilizer and
Pesticide Application Equipment Tax Credit
The Precision Fertilizer and Pesticide Application Tax Credit
expired January 1, 2021. For taxable years beginning on and
after January 1, 2021, taxpayers will no longer be able to earn
the Precision Fertilizer and Pesticide Application Tax Credit.
Credits earned in prior taxable years may be carried forward
for 5 years. In addition, taxpayers formerly eligible for this
credit may be eligible for the new Conservation Tillage and
Precision Agriculture Equipment Tax Credit. Please see the
description found later in these instructions for information
on the new credit.

To apply for this credit, complete Form 304. All applications
must be submitted to the Department of Taxation, Tax
Credit Unit, P.O. Box 715, Richmond, VA 23218-0715 90
days prior to the due date of your return. A letter will be sent
to certify the credit. To claim this credit, complete Section 1,
Part 8 of Schedule CR.

Vehicle Emissions Testing Equipment Tax Credit
The Vehicle Emissions Testing Equipment Tax Credit is 20%
of the purchase or lease price paid during the taxable year
for equipment certified by the Department of Environmental
Quality (DEQ) for vehicle emissions testing within a locality
that is required by law to implement an enhanced vehicle
emissions inspection program or within any locality adjacent
to those localities required to implement the program.

Foreign Source Retirement Income Tax Credit
A credit is available to Virginia residents who paid income
tax to a foreign country on pension or retirement income
derived from past employment in a foreign country, provided
that such income is included in Virginia taxable income for
the taxable year. For purposes of computing the credit, the
foreign currency must be converted to U.S. dollars using the
prevailing exchange rate that most nearly reflects the value
of the currency at the time the taxes were actually paid to the
foreign country. If you filed separately in the foreign country,

The Department of Taxation does not require you to submit
a specific tax form to claim the Vehicle Emissions Testing
Equipment Tax Credit. Instead, enclose a copy of your Air
Check Virginia Station Participation and Services Agreement
3

half of this amount must be allocated to commercialization
investments and the other half is available for all other
qualifying investments. If credit applications for either half
exceed the allowed amount, the credits for that half will be
prorated. However, if credit applications for either half are
less than the allowed amount, the balance will be available
for allocation to the other type of credit. The total amount of
credit that may be used per taxpayer per taxable year may
not exceed $50,000. This credit is nonrefundable; however,
any unused tax credits may be carried forward for the next 15
years. Equity and debt investments held in connection with
a qualified business investment must be held by the investor
for at least 3 full calendar years following the calendar year
for which the credit is allocated, except in certain instances.
If the holding period is not met, the unused credit amount
will be forfeited, and an assessment will be issued for the
amount used to which shall be added interest, computed at
the rate of 1% per month, compounded monthly from the
date the tax credits were claimed.

but are filing jointly in Virginia, enter only the Virginia taxable
income attributable to the filer whose income was taxed by
the foreign country. For the purposes of this credit, United
States territories are considered foreign countries. Any
foreign country that does not qualify for the federal tax credit
(under IRC § 901(j)) does not qualify for this Virginia credit.
To claim this credit, complete Schedule CR and enclose a
copy of the return filed in the foreign country or other proof
of tax payment to the foreign country.
Historic Rehabilitation Tax Credit
Individuals, estates, partnerships, trusts or corporations
incurring eligible expenses in the rehabilitation of a certified
historic structure are entitled to claim a credit against
individual income tax, fiduciary income tax, corporation
income tax, the bank franchise tax, and taxes imposed
against insurance companies and utility companies. The
credit is equal to 25% of eligible rehabilitation expenses.
To qualify for this credit, the cost of the rehabilitation
must equal at least 50% (25% if the building is an owneroccupied residence) of the assessed value of the building
for local real estate tax purposes in the year preceding
the start of the rehabilitation. For taxable years beginning
on and after January 1, 2017, 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. The rehabilitation work must be
certified by the Virginia Department of Historic Resources
as consistent with the Secretary of the Interior’s Standards
for Rehabilitation. The request for certification of the
completed project must be submitted within 1 year of the
completed work. Any unused credit may be carried forward
for 10 years. Applications for participation in the program
may be obtained by contacting the Virginia Department
of Historic Resources, 2801 Kensington Avenue,
Richmond, VA 23221, 804.482.6446, or visiting www.dhr.
virginia.gov/tax-credits/.

Taxpayers cannot receive a grant from the Small Business
Investment Grant Fund and claim the Qualified Equity and
Subordinated Debt Investments Tax Credit for the same
investment. Taxpayers cannot claim the credit if using the
subtraction for long-term capital gains, investments in a
Virginia venture capital account, or investments in a Virginia
real estate investment trust for the same investment.
This credit requires pre-approval by the Department of
Taxation. Investors must apply to the Department by April
1 of the year following the year the investment was made
using Form EDC. Taxpayers filing Form EDC after April
1 will be denied this credit. All approved investors filing a
timely Form EDC will be notified of the allowable credit by
June 30. Since the tax return of most individuals is due May
1, most investors will need to file a return on extension or
amend their original return to claim the credit.
Pass-Through Entities must file Form TCA with the
Department of Taxation at least 60 days before filing their
income tax return. A copy of the certification letter from the
Department is a required enclosure with Form TCA.

Qualified Equity and
Subordinated Debt Investments Tax Credit
Taxpayers making a “qualified investment” in the form
of equity or subordinated debt in a “qualified business”
may be eligible for this credit. Businesses may apply for
designation as a qualified business using Form QBA.
The qualification is valid only for the calendar year of the
application. Therefore, the business needs to reapply each
year for qualification. To qualify, the business must meet
the following criteria: (1) have annual gross revenues of
no more than $3 million in its most recent fiscal year, (2)
have its principal office or facility in the Commonwealth, (3)
be engaged in business primarily in or having substantially
all of its production in the Commonwealth and (4) have
not obtained during its existence more than $3 million in
aggregate gross cash proceeds from the issuance of its
equity or debt investments (not including commercial loans
from chartered banking or savings and loan institutions).

Visit the Department’s website at www.tax.virginia.gov
to obtain Form QBA, Form EDC and Form TCA. Information
on the application process is also available from the Virginia
Department of Taxation, Tax Credit Unit, P.O. Box 715,
Richmond, VA 23218-0715, or call 804.786.2992.
Waste Motor Oil Burning Equipment Tax Credit
A business that operates a business facility in Virginia
that accepts waste motor oil from the public is allowed a
tax credit equal to 50% of the purchase price paid for
equipment during the taxable year, provided that the
equipment is used exclusively for burning waste motor oil
at the business facility. The total credit allowed per taxpayer
per taxable year is limited to $5,000. Taxpayers successfully
applying for equipment certification with the Department
of Environmental Quality by filing Form DEQ 50-12 will
receive a statement from that agency certifying that the
equipment is used for burning waste motor oil. To claim the
tax credit, enclose a copy of DEQ Form 50-12 and receipts,

Taxpayers may claim a credit equal to 50% of the qualified
business investments made during the taxable year. The total
amount of credit approved may not exceed $5 million. One
4

invoices or other documentation to confirm the purchase
price paid. For additional information concerning equipment
qualifying for this credit or to apply for tax credit certification,
contact: Virginia Department of Environmental Quality,
Attention: Equipment Certification Officer, P.O. Box
1105, Richmond, VA 23218, or call 804.971.2132.

was completed. Documentation must be submitted with the
application. Enter any carryforward amount of the Livable
Home Tax Credit in Section 1, Part 16, Line B of Schedule
CR. For more information, contact: Virginia Department
of Housing and Community Development, Homeless
and Special Needs Housing, Main Street Centre, 600
East Main Street, Suite 300, Richmond, VA 23219, call
804.773.0405, or email [email protected].

Biodiesel and Green Diesel Fuels Tax Credit
Beginning on January 1, 2008, a credit is available for
Virginia biodiesel and green diesel fuel producers who
produce up to 2 million gallons of fuel per year. This credit is
only available during the first 3 years of production.

Riparian Waterway Buffer Tax Credit
Individuals and corporations may qualify for an income tax
credit of 25% of the value of the timber on land designated as
a riparian buffer for a waterway. The credit may not exceed
$17,500 or the total amount of tax, whichever is less. To
apply for this credit, file Department of Forestry (DOF) Form
18.8 with DOF or apply online at www.dof.virginia.gov.

Form BFC is used to apply to the Virginia Department of
Taxation for a Biodiesel and Green Diesel Fuels Tax Credit
after the Virginia Department of Energy has certified that
you have satisfied all the requirements of Va. Code § 58.1439.12:02.

A riparian buffer is a wooded area of land adjacent to a
waterway on which timber may be harvested. In order
to receive the credit, the owner of the land must refrain
from harvesting more than 50% of the timber from tracts
designated as riparian buffers. The buffer must be at least
35 feet wide and no more than 300 feet. There must also
be a Forest Stewardship Plan and annual certification of
compliance for each tract. The buffer must remain in place
for at least 15 years. The land that is the subject of this
credit cannot be the subject of this credit again for 15 years
after it was first taken. The credit may be carried over for
the succeeding 5 taxable years. For more information,
contact: Virginia Department of Forestry, 900 Natural
Resources Dr., Suite 800, Charlottesville, VA 22903, or
call 434.977.6555.

The amount of the credit is $0.01 per gallon, not to exceed
$5,000 annually. Any credit not used for the taxable year
may be carried over to the next 3 taxable years. The amount
of the credit allowed cannot exceed the tax liability for the
tax year the credit is being claimed.
The amount of the credit attributable to a partnership,
electing small business corporation (S corporation), or limited
liability company must be allocated to the individual partners,
shareholders, or members in proportion to their ownership or
interest within the business entity using Form TCA.
The credit may be transferred to another taxpayer. The
transfer of the credit must be completed before the end of a
tax year in order to use the credit for that tax year. Enclose
the letter of certification from the Virginia Department of
Taxation authorizing the credit with your return. For more
information, contact: Virginia Department of Taxation,
Tax Credit Unit, P.O. Box 715, Richmond, VA 232180715, or call 804.786.2992.

Land Preservation Tax Credit
This tax credit is for taxpayers that convey land or interest in
land located in Virginia to a public or private agency eligible to
hold such land or interests for conservation or preservation
purposes. The conveyance must be in perpetuity.

Livable Home Tax Credit

Credits for conveyances made in 2007 and thereafter
are equal to 40% of the land’s fair market value. All fair
market valuations must be substantiated by a “qualified
appraisal” and prepared by a “qualified appraiser,” as
those terms are defined under applicable federal law and
regulations governing charitable contributions. Beginning
with calendar year 2015, the maximum amount of credits
that may be issued in a calendar year may not exceed $75
million. For taxable years 2009, 2010, and 2011, the total
amount of credit per taxpayer per taxable year was limited
to $50,000 or the total tax liability, whichever was less. For
the taxable years 2012, 2013 and 2014, the credit limit per
taxpayer per taxable year was $100,000. For Taxable Years
2015 through 2022, the credit was limited to $20,000 per
taxpayer per taxable year. For Taxable Years beginning on
and after January 1, 2023, the credit is limited to $50,000
per taxpayer per taxable year. However, for any fee simple
donation of land conveyed to the Commonwealth on or after
January 1, 2015, the amount of the credit claimed shall not
exceed $100,000 for each taxable year, provided that no
part of the charitable contributions deduction under § 170
of the Internal Revenue Code related to such fee simple

For taxable years beginning on and after January 1, 2023,
individuals or licensed contractors may be eligible for
an income tax credit of up to $6,500 for the purchase or
construction of a new accessible residence or up to 50% of
the cost of retrofitting activities on an existing residence, not
to exceed $6,500. Any tax credit that exceeds the eligible
individual’s or licensed contractor’s tax liability may be carried
forward for up to 7 years.
For fiscal years beginning before July 1, 2023, the total
amount of tax credits granted for any fiscal year cannot
exceed $1 million. For fiscal years beginning on and after
July 1, 2023, the total amount of tax credits granted for any
fiscal year cannot exceed $2 million. If the total amount of
tax credits issued under this program exceeds the fiscal
year cap, Virginia Department of Housing and Community
Development (DHCD) will prorate the amount of credits
among the eligible applicants. Individuals or licensed
contractors must obtain pre-approval before claiming the
credit on their income tax returns. Applications are to be
filed with the DHCD by January 31 of the year following
the year in which the purchase/construction or retrofitting
5

donation is allowable by reason of a sale or exchange of
property. For taxpayers affected by the credit reductions for
taxable years 2009, 2010, 2011, and 2015 and thereafter,
an additional 3-year carryforward will be added to the credit.
Any unused credit not affected by the usage limits will retain
the original carryforward periods (10 years for donations
originating on or after January 1, 2007).

10% to qualify for the credit. This tax credit is intended to
decentralize poverty by enhancing low-income Virginians’
access to affordable housing units in higher income areas.
Eligible properties include one or more units where the
landlord has in place a Housing Choice Voucher Housing
Assistance Payments (HAP) contract(s) for all or part of a
tax year. Units must have in place executed Housing Choice
Voucher Housing Assistance Payments (HAP) contract(s)
with the public housing authority (PHA) or PHA contractor
for the tax year. All units must be determined to be rent
reasonable and pass PHA or contractor Housing Quality
Standards within a year of the applicable tax year.

Any taxpayer holding a Land Preservation Tax Credit that
originated on or after January 1, 2002, may transfer unused
but otherwise allowable credit for use by another taxpayer
on Virginia income tax returns. Transfers and pass-through
allocations derived from donations recorded on or after
January 1, 2007, are generally subject to a 2 percent
transfer fee. See Schedule A of Form LPC-1 or Form LPC-2
for further information.

The amount of tax credit for an eligible property is equal
to 10% of the annual fair market rent for that specific unit
and prorated when units are qualified for less than the full
tax year. Prorations are based on full calendar months. A
landlord may receive tax credits on 1 or more units within
the same taxable year. Credits taken for any tax year cannot
exceed the tax liability for that year. Credits not taken for the
year for which they are allocated may be carried forward,
but cannot be carried forward for more than 5 years.

A subtraction is allowed for any gain or income recognized
by a taxpayer on the application of a Land Preservation Tax
Credit against a Virginia income tax liability, to the extent
the gain is included in and not otherwise subtracted from
federal adjusted gross income. The transfer of the credit
and its application against a tax liability shall not create gain
or loss for the transferor or the transferee.

Should eligible applications received by the January 31
deadline exceed the annual appropriation, tax credits will
be prorated based on the total amount of qualified requests
received and the total amount of credits available.

Before claiming the credit, complete and file Form LPC‑1
and/or Form LPC-2 with the Department of Taxation at
least 90 days before filing your income tax return. For
land or an interest in land conveyed before January 1,
2020, no credit will be allowed unless a completed
co
credit
application with regard to such conveyance has been filed
with the Department of Taxation by December 31 of the 3rd
year following the calendar year of the conveyance. For a
conveyance made on or after January 1, 2020, no credit will
be allowed unless a completed credit application with regard
to such conveyance has been filed with the Department by
December 31 of the 2nd year following the calendar year
of the conveyance. Additionally, applicants filing for tax
credits of $1 million or more must apply to the Department
of Conservation and Recreation to receive verification of
the conservation value. For conveyances made on and
after January 1, 2017, if verification of conservation value
is being performed by DCR and verification takes more
than 90 days, the deadline to submit Form LPC-1 may be
extended for any number of days during which verification is
pending, provided the application was otherwise complete
at the time of the original filing deadline. The Department of
Taxation will issue a letter acknowledging the amount of the
credit. For assistance, contact the Virginia Department of
Taxation, Tax Credit Unit, P.O. Box 715, Richmond, VA
23218-0715, or call 804.786.2992.

Credits granted to a partnership, limited liability company,
or electing small business corporation (S corporation)
shall be allocated to the individual partners, members, or
shareholders in proportion to their ownership or interest
in such business entity. The landlord must assume
responsibility for distributing credits in this manner.
For additional information, please contact: Virginia
Department of Housing and Community Development,
Main Street Centre, 600 East Main Street, Suite 300,
Richmond VA 23219, or call 804.371.7000.
Green and Alternative Energy Job Creation Tax Credit
For taxable years beginning on and after January 1, 2010,
but before January 1, 2025, a $500 income tax credit is
allowed for the creation of green jobs paying an annual
salary in excess of $50,000. Each taxpayer is allowed a
credit for up to 350 new green jobs. In order to qualify for
the tax credits, the taxpayer must have created the green
job and filled it during the taxable year in which the credit is
claimed. The credit is allowed for the taxable year in which
the job has been filled for at least 1 year and for each of
the 4 succeeding taxable years, provided that the job is
continuously filled during the respective taxable year. Any
unused tax credits may be carried over for 5 taxable years.

Community of Opportunity Tax Credit
For taxable years beginning on or after January 1, 2010,
but before January 1, 2025, the Community of Opportunity
Tax Credit may be claimed by landlords who participate in
the Housing Choice Voucher program and rent qualified
housing units.

To apply for this credit, complete and file Form GJC with
the Department of Taxation, Tax Credit Unit, P.O. Box
715, Richmond, VA 23218-0715. All applications must
be submitted at least 90 days prior to the due date of
your return. Approved applicants will receive a letter from
the Department certifying their credit. To claim the credit
you must complete Section 1, Part 20 of Schedule CR.

Effective January 1, 2022, the credit has been expanded by
permitting landlords with qualified housing units located in
all census tracts in Virginia with poverty rates of less than
6

For assistance, contact the Department of Taxation, Tax
Credit Unit, P.O. Box 715, Richmond, VA 23218‑0715, or
call 804.786.2992.

letter will be sent to certify the credit. For assistance contact
the Department of Taxation, Tax Credit Unit, P. O. Box
715, Richmond, VA 23218-0715 or call 804.786.2992.

Farm Wineries and Vineyards Tax Credit

Port Volume Increase Tax Credit

For taxable years beginning on and after January 1, 2011,
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.

For taxable years beginning on or after January 1, 2011, but
before January 1, 2025, a taxpayer that is an agricultural
entity, a manufacturing-related entity (manufacturer or
distributor of manufactured goods) or a mineral and gas
entity that uses Virginia maritime port facilities and increases
its port cargo volume through these facilities may be eligible
to claim this tax credit.

The total amount of tax credits available for a calendar
year cannot exceed $250,000. If applications for this credit
exceed $250,000, the Department of Taxation will allocate
the credits on a pro rata basis. Any credit amounts that
exceed a taxpayer’s liability can be carried forward for 10
years.

To qualify for the credit, a taxpayer must generally increase
its port cargo volume at Virginia port facilities in a single
calendar year by 5% over its base year port cargo volume.
Base year port cargo volume is equal to the total amount of net
tons of non-containerized cargo or 20-foot equivalent units
(TEUs) or units of roll-on/roll-off cargo actually transported
by way of a waterborne ship or vehicle through a port
facility during the 2022 calendar year or the first calendar
year in which it meets the requirements of 75 tons of noncontainerized cargo, 10 loaded TEUs or 10 units of roll-on/
roll-off cargo. Base year cargo volume must be recalculated
each calendar year after the initial base year. The amount
of the credit is generally equal to $50 for each TEU, unit
of roll-on/roll-off cargo, or 16 net tons of non-containerized
cargo above the base year port cargo volume. However, a
qualifying major facility may apply for a credit equal to $50
for each TEU unit of roll-on/roll-off cargo, or 16 net tons of
non-containerized cargo transported through a port facility
during the major facility’s first calendar year.

Taxpayers cannot claim both this credit and a federal
deduction for the same expenses under IRC § 179.
The business must apply by April 1st using Form FWV.
Submitting a late application will disqualify you from the credit.
All applications must be sent to the Virginia Department of
Taxation, Tax Credit Unit, P.O. Box 715, Richmond, VA
23218-0715. This credit requires certification from the Tax
Credit Unit to be claimed on your tax return. A letter will be
sent to certify the credit.
For assistance, contact the Department of Taxation, Tax
Credit Unit, P. O. Box 715, Richmond, VA 23218‑0715, or
call 804.786.2992.

Any taxpayer claiming this credit must first submit an
application to the Virginia Port Authority by March 1 of the
calendar year after the taxable year in which the increase
in port cargo volume occurs. The maximum amount of tax
credits is capped at $3.2 million for each calendar year. If, on
March 15 of each year, the cumulative amount of tax credits
requested by qualifying taxpayers for the prior year exceeds
$3.2 million, the credits will be prorated among the qualifying
taxpayers who requested the credit. A qualifying taxpayer is
generally not permitted to receive more than $250,000 each
calendar year. However, if, on March 15 of each year, the $3.2
million credit amount is not fully allocated among qualifying
taxpayers, those taxpayers who have already been allocated
a credit for the prior year are allowed a pro rata share of the
remaining credit amount. Any unused tax credits may be
carried over for 5 taxable years.

International Trade Facility Tax Credit
For taxable years beginning on or after January 1, 2011,
but before January 1, 2025, an income tax credit is allowed
for either increasing jobs related to an international trade
facility or capital investment in an international trade facility.
Taxpayers can elect to claim either credit, but cannot claim
both credits in the same taxable year. The amount of the
credit is equal to $3,500 per new qualified full-time employee
that results from increased qualified trade activities by the
taxpayer or 2% of the amount of capital investment made by
the taxpayer to facilitate the increased eligible trade activities.
No more than $1.25 million in tax credits can be issued in any
fiscal year. If the amount of tax credits requested exceeds
$1.25 million, the credits will be allocated proportionately
among all qualified taxpayers. The Virginia Department of
Taxation will determine the credit amount for the taxable
year and provide a written certification to each taxpayer. The
amount of the credit will be limited to 50% of the taxpayer’s
tax liability for the taxable year. Any unused credit amount
can be carried forward for 10 years.
The business must apply by April 1st using Form ITF.
Submitting a late application will disqualify you from
the credit. All applications must be sent to the Virginia
Department of Taxation, Tax Credit Unit, P.O. Box 715,
Richmond, VA 23218-0715. This credit requires certification
from the Tax Credit Unit to be claimed on your tax return. A
7

Any taxpayer holding a Port Volume Increase Tax Credit
issued in taxable years beginning on and after January 1,
2018, but before January 1, 2025, may transfer unused but
otherwise allowable credits to another taxpayer for use on
the Virginia income tax return. The transferred credits may be
retroactively applied from the date the credits were originally
issued, and the transferee may file an amended return to
claim the transferred credit for a prior tax year. However,
this provision does not extend the statute of limitations for
filing an amended return. Port Volume Increase Tax Credits
are only transferable within one calendar year of the original
credit holder earning the credits. A taxpayer who transfers

any amount of Port Volume Increase Tax Credits must
complete and submit Form PVT to the Virginia Department
of Taxation, Tax Credit Unit, P.O. Box 715, Richmond,
VA 23218-0715. For more information about credit transfers,
call the Tax Credit Unit at 804.786.2992.

and development expenses in any 1 of the 3 taxable years
immediately preceding the taxable year for which the credit
is being determined, the credit is equal to 5% of the Virginia
qualified research and development expenses paid or
incurred by the taxpayer during the taxable year. A taxpayer
may claim up to $45,000 of credits for a taxable year, or
$60,000 of credits for a taxable year if the Virginia qualified
research was conducted in conjunction with a Virginia public
or private college or university.

For more information, contact: Virginia Port Authority,
600 World Trade Center, Norfolk, VA 23510, or call
757.683.2167.
Barge and Rail Usage Tax Credit

There is a cap on the total amount of credits allowed in any
fiscal year. If the total amount of approved tax credits is less
than the credit cap amount, the Department of Taxation will
allocate the remaining amount to the taxpayers already
approved for the tax credit on a pro rata basis. If the total
amount of approved credits exceeds the credit cap amount,
the Department will allocate credits on a pro rata basis. For
taxable years beginning on and after January 1, 2021, the
maximum annual amount of tax credits that may be issued
is $7.7 million.

For taxable years beginning on and after January 1, 2011, but
before January 1, 2025, a business may receive an income tax
credit for the usage of barge and rail to move cargo containers
throughout the Commonwealth rather than using trucks or
other motor vehicles on the Commonwealth’s highways.
The amount of the credit is $25 per 20-foot equivalent unit
(TEU) or 16 tons of noncontainerized cargo or 1 unit of
roll-on/roll-off cargo moved by barge or rail. To receive this
credit, an international trade facility is required to apply to
the Department. No more than $500,000 in tax credits can
be issued in any fiscal year. The Department will determine
the allowable credit amount for the taxable year and provide
a written certification of the credit amount to each taxpayer.
Taxpayers can claim this credit against the individual income
tax, the corporate income tax, the tax on estates and trusts,
the bank franchise tax, the insurance premiums tax, and the
tax on public service corporations. Any unused tax credits
may be carried over for 5 taxable years.

No taxpayer may claim both the Research and Development
Expenses Tax Credit and the Major Research and
Development Expenses Tax Credit for the same taxable year.
The business must apply by September 1st using Form RDC
and the applicable schedules. Taxpayers electing to use the
primary method to determine the proposed credit amount
must complete Section 1 - Primary Credit Calculation.
Taxpayers electing to use the simplified method to determine
the proposed credit amount must complete Section 2 Alternative Simplified Credit Calculation. Submitting a late
application will disqualify you for the credit. All applications
must be sent to the Virginia Department of Taxation, Tax
Credit Unit, P.O. Box 715, Richmond, VA 23218-0715.
This credit requires certification from the Tax Credit Unit in
order to be claimed on your tax return. A letter will be sent to
certify the credit.

The business must apply by April 1st using Form BRU.
Submitting a late application will disqualify you from the credit.
All applications must be sent to the Virginia Department of
Taxation, Tax Credit Unit, P.O. Box 715, Richmond, VA
23218-0715. This credit requires certification from the Tax
Credit Unit to be claimed on your tax return. A letter will be
sent to certify 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 in the business entity using Form TCA within 30
days after the credit is granted.

Research and Development Expenses Tax Credit
A refundable individual income, corporate income and bank
franchise tax credit is allowed for qualified research and
development expenses for taxable years beginning on or after
January 1, 2011, but before January 1, 2025. The tax credit
is equal to (i) 15% of the first $300,000 in Virginia qualified
research and development expenses, or (ii) 20% of the first
$300,000 of Virginia qualified research and development
expenses if the research was conducted in conjunction with
a Virginia public or private college or university, to the extent
the expenses exceed a base amount.

Any taxpayer that is allowed a Research and Development
Expenses Tax Credit is not allowed to use the same
expenses as the basis for claiming any other Virginia tax
credit. Research and development expenses that are paid
or incurred for research conducted in Virginia on human
cells or tissue derived from induced abortions or from stem
cells obtained from embryos do not qualify for the credit.
However, if a taxpayer engages in research in Virginia on
human cells or tissue derived from induced abortions or from
stem cells obtained from human embryos, it may receive a
nonrefundable credit for other Virginia qualified research
and development expenses. If the amount of nonrefundable
credit that a taxpayer is allowed to claim exceeds the
taxpayer’s tax liability for the taxable year, then the excess
amount of credit will not be refunded to the taxpayer and
cannot be carried over to future taxable years.

For taxable years beginning on or after January 1, 2016,
taxpayers may elect to determine the credit using a simplified
method. Under the simplified method, the credit is equal to
10% of the difference of (i) the Virginia qualified research
and development expenses paid or incurred by the taxpayer
during the taxable year; and (ii) 50% of the average Virginia
qualified research and development expenses paid or
incurred by the taxpayer for the 3 taxable years immediately
preceding the taxable year for which the credit is being
determined. If a taxpayer electing to use the simplified
method did not pay or incur Virginia qualified research
8

If you did not conduct embryonic stem cell research in Virginia,
then the tax credit is refundable. Enter the amount of the credit
that is allowed on Schedule CR, Section 3, Part 4, Line 4A.

incur Virginia qualified research and development expenses
in any 1 of the 3 taxable years immediately preceding the
taxable year for which the credit is being determined, the
tax credit is equal 5% of the Virginia qualified research and
development expenses paid or incurred by the taxpayer
during the relevant taxable year.

If you did conduct embryonic stem cell research in Virginia,
then the tax credit is nonrefundable. Enter the amount of the
credit that is allowed on Schedule CR, Section 1, Part 25.

For taxable years beginning on and after January 1, 2021, no
more than $24 million in tax credits can be issued in any fiscal
year. If the approved applications for the tax credits allowed
exceed $24 million for any taxable year, the credits will be
allocated proportionately among all qualified taxpayers.

Education Improvement Scholarships Tax Credit
For taxable years beginning on or after January 1, 2014,
but before January 1, 2028, an income tax credit may be
claimed for monetary or marketable securities donations
made to scholarship foundations included on an approved
list published by the Virginia Department of Education.
Credits may be earned in taxable years beginning on or after
January 1, 2013, but before January 1, 2028. Tax credits
earned during the taxable year must be claimed beginning
with the taxable year during which they were earned.
The credit is equal to 65% of the monetary or marketable
securities donation made to the scholarship foundation.
The credit can be claimed against the individual income
tax, corporate income tax, bank franchise tax, insurance
premiums license tax, or tax on public service corporations.
For individuals, the minimum value of any monetary or
marketable securities donation eligible for a tax credit is
$500 in a taxable year, and the maximum value of monetary
or marketable securities donations eligible for tax credits is
the first $125,000 in value of donations made in a taxable
year. Such limitations on the minimum and maximum values
of donations eligible for tax credits in a taxable year do not
apply to donations made by any business entity, including a
sole proprietorship.

No taxpayer is permitted to claim credits in excess of 75%
of the income tax imposed on the taxpayer for the taxable
year. Any credit not usable for the taxable year for which
the credit was first allowed may be carried over for credit
against the income taxes of the taxpayer in the next 10
succeeding taxable years or until the total amount of the tax
credit has been taken, whichever is sooner.
Any taxpayer who claims the tax credit for Virginia qualified
research and development expenses pursuant to this
section may not use such expenses as the basis for claiming
any other credit provided under the Code of Virginia.
Applications for the tax credit must be received by the
Department no later than September 1 of the calendar
year following the close of the taxable year in which the
expenses were paid or incurred. To apply the business must
file Form MRD and the applicable schedules. Submitting
a late application will disqualify you from the credit. All
applications must be sent to the Virginia Department of
Taxation, Tax Credit Unit, P.O. Box 715, Richmond, VA
23218-0715. This credit requires certification from the Tax
Credit Unit to be claimed on your tax return. A letter will be
sent to certify the credit.

Tax credits will be awarded to taxpayers on a first-come, firstserved basis in accordance with procedures established by
the Virginia Department of Education. The total amount of
credits available in any fiscal year is capped at $25 million.
Any unused tax credits may be carried over for the next
5 succeeding taxable years or until the total amount of
credit has been taken, whichever is sooner. For additional
information on how to qualify for certification, contact the
Virginia Department of Education, 23rd Floor, P.O. Box
2120, Richmond, VA 23218-2120, Attn: Scholarships Tax
Credits Program or email [email protected].

No taxpayer may claim both the Research and Development
Expenses Tax Credit and the Major Research and
Development Expenses Tax Credit for the same taxable year.
No tax credit will be allowed for any expenses that are paid
for or incurred by a taxpayer for research conducted in
the Commonwealth on human cells or tissue derived from
induced abortions or from stem cells obtained from human
embryos. The foregoing provision will not apply to research
conducted using stem cells other than embryonic stem cells.

Major Research and Development Expenses Tax Credit

Food Donation Tax Credit

For taxable years beginning on or after January 1, 2016, but
before January 1, 2025, a taxpayer with Virginia qualified
research and development expenses for the taxable year in
excess of $5 million may claim a nonrefundable tax credit
against the tax levied against the individual or corporate
income taxes or bank franchise tax in an amount equal
to 10% of the difference between (i) the Virginia qualified
research and development expenses paid or incurred by
the taxpayer during the taxable year and (ii) 50% of the
average Virginia qualified research and development
expenses paid or incurred by the taxpayer for the 3 taxable
years immediately preceding the taxable year for which the
credit is being determined. If the taxpayer did not pay or

For taxable years beginning on or after January 1, 2023,
but before January 1, 2028, any person engaged in the
business of farming as defined under 26 C.F.R. § 1.175-3
that donates food crops or wholesome food produced in the
Commonwealth to a nonprofit food bank may claim a credit
against the tax levied against the individual or corporate
income taxes for the taxable year of the donation.
“Wholesome food” means food that meets all quality standards
imposed by federal, state, and local laws or regulations, including
food that may not be readily marketable due to appearance, age,
freshness, grade, surplus, or other condition.

9

The amount of the credit is equal to 50% of the fair market value
of the crops or wholesome foods donated during the taxable
year, but not to exceed $10,000 in credits. No taxpayer is
permitted to claim more than $10,000 in credits for a taxable
year. Any unused credit amount can be carried forward for
5 years.

For more information regarding the Eligible Training Provider
List see the Virginia Workforce Connection website at www.
vawc.virginia.gov.
For taxable years beginning on or after January 1, 2019, but
prior to January 1, 2025, businesses primarily engaged in
manufacturing may claim the Worker Training Tax Credit on
the basis of manufacturing-related orientation, instruction, and
training programs for students in grades 6 through 12. The
credit is equal to 35% of direct costs incurred during the taxable
year in connection with the program, not to exceed $2,000.

The credit is only allowed if (i) the use of the donated
food crops or wholesome foods by the donee nonprofit
food bank is related to providing food to the needy, (ii) the
donated food crops or wholesome foods 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 (iii) the donated food
crops or wholesome foods, 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 or
wholesome foods to provide food to the needy.

Before claiming the credit on their income tax return,
employers and businesses must apply for certification of
the amount of allowable credit using Form WTC, Worker
Training Tax Credit Application, by April 1 of the year following
the year in which the training expenses or orientation,
instruction, and training program expenses were paid or
incurred. All approved employers and businesses filing a
timely Form WTC will be notified of their allowable credit
by June 30 of the calendar year following the year in which
the expenses were incurred. The maximum Worker Training
Credits granted to all employers and businesses is limited to
$1 million annually. If the total credits approved exceed this
amount, each will be prorated. This credit is nonrefundable
but excess credit may be carried over for up to the next
3 taxable years. To claim this credit, complete Section 1,
Part 30 of Schedule CR. For information on pre-approved
apprenticeship programs, contact the Virginia Department
of Labor and Industry at 804.786.1035. For information
on approved orientation, instruction, and training programs
for manufacturers, please contact the Virginia Department
of Education, Office of Career, Technical, and Adult
Education, P.O. Box 2120, Richmond, VA 23218-2120,
call 804.225.2051 or email [email protected].

No more than $250,000 in tax credits can be issued in any
fiscal year.
The nonprofit food bank must supply a completed Virginia
Food Donation Certification (Form FCD-2) to the donor. The
FCD-2 must be prepared and furnished by the nonprofit food
bank to the donor within 30 days of the date of the donation.
This credit requires certification from the Tax Credit Unit to
be claimed on your tax return. A letter will be sent to certify
the credit.
The business must apply for the credit by February 1 using
Form FCD-1. Submitting a late application will disqualify
you from the credit. All applications must be sent to the
Virginia Department of Taxation, Tax Credit Unit, P. O.
Box 715, Richmond, VA 23218-0715.
Worker Training Tax Credit

Virginia Housing Opportunity Tax Credit

For taxable years beginning on and after January 1, 2019,
but before July 1, 2025, businesses may claim the Worker
Training Tax Credit for the training costs of providing eligible
worker training to qualified employees. The credit is 35% of
expenses incurred by the business during the taxable year
for eligible worker training, subject to certain limitations. If
the recipient of the training is a qualified employee, the credit
may not exceed $500 per qualified employee annually. If
the recipient of the training is a non-highly compensated
worker, the credit may not exceed $1,000 per non-highly
compensated worker annually.

Effective for taxable years beginning on and after January 1,
2021, but before January 1, 2026, a housing opportunity tax
credit (HOTC) is available for certain low-income building
projects in an amount up to the amount of federal lowincome housing tax credit (LIHTC) allocated or allowed by
the Virginia Housing Development Authority (VHDA). To be
qualified, the project is required to be a qualified low-income
building, as defined under federal law, that is:
•	 Located in Virginia;
•	 Placed in service on or after January 1, 2021; and
•	 Allocated HOTC by VHDA

“Eligible worker training” means the training of a qualified
employee or non-highly compensated worker in the form of:
•	

•	

For taxable years beginning on and after January 1, 2021,
but before January 1, 2026, a qualified taxpayer may claim
a HOTC against Virginia tax liability prior to reduction by
any other credits allowed the taxpayer.

credit or noncredit courses at any institution recognized
on the Eligible Training Provider List or at any Virginia
public institution of higher education, as such term is
defined in Va. Code § 23.1-100, or as described in
Va. Code §§ 23.1-3111, 23.1-3115, 23.1-3120, and
23.1-3125, that results in the qualified employee or
non-highly compensated worker receiving a workforce
credential; or

The credit is allowed against the individual income tax,
estate and trust income tax, corporate income tax, bank
franchise tax, insurance premiums license tax, and license
tax on telegraph, telephone, water, heat, light, power, and
pipeline companies.

instruction or training that is part of an apprenticeship
agreement approved by the Commissioner of Labor
and Industry.

The HOTC may be allocated by pass-through entities
to some or all of its partners, members, or shareholders
10

in any manner agreed to regardless of whether or not the
taxpayer is allocated or allowed any portion of any federal
low-income housing tax credit with respect to the qualified
project, whether or not the allocation of the HOTC under the
terms of the agreement has substantial economic effect within
the meaning of § 704(b) of the Internal Revenue Code, and
whether or not the taxpayer is deemed a partner for federal
income tax purposes, as long as the partner or member
meets the definition under applicable state law, and has been
admitted as a partner or member on or prior to the date for
filing the return, including any amendments, with respect
to the year of the HOTC. Pass-through entities or qualified
taxpayers may assign all or any part of the interest, including
interest in the tax credits, to one or more pass-through entities
or qualified taxpayers, and the qualified taxpayer shall be able
to claim the HOTC as long as the interest is acquired prior to
the filing of the tax return claiming the HOTC.

In order to claim the credit, the taxpayer is required to
submit a forest management plan to DOF to review for best
practices. After approval of the plan and completion of the
implementation of the plan, DOF will certify the plan and
completed practices are eligible for the credit. Approval of
the plan and completion of the best practices must occur
the same year in which the credit is claimed.
DOF will allocate credits on a first-come, first-served basis.
If the amount of the credit exceeds a taxpayer’s tax liability
for the taxable year in which the eligible expenditures
occurred, the taxpayer may carry over the excess amount
for credit against the taxpayer’s income taxes for the next
five taxable years or until the total amount of the tax credit
has been taken, whichever occurs first.

If a taxpayer participates in a cost-share or incentive
program, the taxpayer may claim the credit for any remaining
For calendar years 2022 through 2025, the total amount of liability after cost-share.
housing opportunity tax credits authorized for qualified projects For more information, write to Virginia Department of
shall not exceed $60 million per calendar year. Credits issued Forestry, 900 Natural Resources Drive, Suite 800,
each calendar year shall be allowed ratably, with one-tenth of Charlottesville, VA. 22903, call 434.977.6555, or email
the total amount of credits allowed annually for 10 years over [email protected].
the credit period, except that there shall be a reduction in the
Firearm Safety Device Tax Credit
tax credit allowable in the first year of the credit period due to
a federal law calculation, and any reduction in the credit in the For taxable years beginning on and after January 1, 2023,
first taxable year of the credit period shall be allowable for the but before January 1, 2028, a nonrefundable individual
first taxable year following the credit period.
income tax credit is available for up to $300 for the cost
Twenty million of credits shall be first allocated exclusively incurred for the purchase of one or more firearm safety
for qualified projects in a locality with a population no greater devices. Only one credit is allowed per taxable year.
than 35,000 as determined by the most recent United States A “firearm safety device” means a safe, gun safe, gun case, lock
census. Allocation of Virginia HOTC shall constitute the box, or other device used to store a firearm that can be unlocked
minimum amount of tax credits allocated for qualified projects with a key, a combination or other similar means. Eligible
in these localities. However, if the amount of the tax credits transactions include purchases of a device(s) from a federally
requested for qualified projects in these localities is less than licensed dealer and does not include firearms purchases.
the total amount of credits available, the balance of credits shall
The amount of credit claimed in any single taxable year cannot
be allocated for any qualified project, regardless of location.
exceed the individual’s liability for that taxable year. Any
For more information, contact Virginia Housing Development amount exceeding the taxpayer’s liability in the taxable year in
Authority, 601 S. Belvidere Street, Richmond, VA 23220, which the transaction occurred, may be carried over for credit
call Stephanie Flanders at 804.343.5939, or visit www. against liability in the next five taxable years or until the to