During the 2011 Session, the Virginia General Assembly passed legislation that created a refundable income tax credit for qualified research and development expenses paid or incurred during the taxable year. The credit amount is equal to
- 15 percent of the first $167,000 in Virginia qualified research and development expenses; or
- 20 percent of the first $175,000 in Virginia qualified research and development expenses if the research was conducted in conjunction with a Virginia public college or university.
The total amount tax credits allowed is $5 million. If the total amount of tax credits is less than the $5 million limit, TAX will allocate the remaining amount to the taxpayers already approved for the tax credits.
The Department of Taxation (“TAX”) is developing guidelines to carry out the provisions of this credit, including rules regarding the location where the research and development is performed, the residence or business location of the taxpayer or taxpayers conducting the research and development and the location where supplies used in the research and development are consumed.
Virginia's research and development credit draft guidelines were released 11/21/11.
The final guidelines are expected to be released 1/31/2012.
To access the guidelines and learn if your company can take advantage of the credit, go to VA R&D CREDIT.