Virginia R&D Tax Credit Summary

VIRGINIA R&D TAX CREDIT SUMMARY

Virginia State R&D Tax Credit

For taxable years beginning on or after January 1, 2011, but before January 1, 2022, a taxpayer is allowed a credit against corporate income tax in an amount equal to:

15% of the first $300,000 in Virginia qualified research and development expenses paid or incurred by the taxpayer during the taxable year; or
20% of the first $300,000 in Virginia qualified research and development expenses paid or incurred by the taxpayer during the taxable year if the qualified research was conducted in conjunction with a Virginia public or private college or university, to the extent the expenses exceed the Virginia base amount for the taxpayer

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Other Important Information:

The total amount of credits granted for each fiscal year cannot exceed $7 million
If the amount of the credit allowed exceeds the taxpayer’s tax liability for the taxable year, the amount that exceeds the tax liability is refunded to the taxpayer

The Department may require taxpayers applying for the credit to provide information including:

The number of full-time employees employed by the taxpayer in the Commonwealth during the taxable year for which the credit is sought
The taxpayer’s sector or sectors according to the 2012 edition of the North American Industry Classification System (NAICS) as published by the United State Census Bureau
A brief description of the area, discipline, or field of Virginia qualified research performed by the taxpayer
The total gross receipts or anticipated total gross receipts of the taxpayer for the taxable year the credit is sought; and
Whether the Virginia qualified research was conducted in conjunction with a Virginia public or private college or university

How to Calculate Your Credit

The Primary Credit Calculation Method
The Alternative Simplified Method

Important Deadlines

Credit applications are due July 1.

How to Obtain the Credit?

An eligible taxpayer must submit Form RDC (Application for the Research and Development Expenses Tax Credit), and any supporting documentation to the Department.

Refundable/Transferable Tax Credit – Yes

Flow-Through Entities

This credit may be allocated among owners in proportion to each owner’s percentage of ownership or interest in the pass-through entity, or as the owners mutually agree, or as provided in the partnership agreement or other entity document using Form PTE within 30 days after the credit is granted but at least 90 days before filing an income tax return. Effective for the tax year 2014, pass-through entities may elect to claim the entire granted amount at the entity level.

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Virginia R&D Tax Credit Summary