State R&D Tax Credits

State R&D Tax Credits

Virginia

Credit Name: Research and Development Expenses Tax Credit – Form RDC

Expiration Date: Tax years beginning before January 1, 2025

Does it apply to C corps and pass-through entities?: Individual, corporation, or pass-through entities

Credit Carry forward: N/A Refundable credit

Description: Refundable income tax credit for qualified research and development expenses. 15 percent of the first $300,000 of Virginia QREs over a base amount or 20 percent of the first $300,000 if the research was conducted in with a VA college or university. $7M credit cap (2019-2020, $7.7M cap for 2021-2024) for the entire state. If less than $7M in credits is applied for, the remainder will be distributed to filers; if more than $7M is applied for, each entity shall be allocated a pro-rata share.

Alternative simplified method beginning in 2016: the credit is equal to 10 percent of the difference between:

  • the qualified research and development expenses paid or incurred during the taxable year; and
  • 50 percent of the average qualified research and development expenses paid or incurred during the three taxable years preceding the year for which the credit is being claimed.

An eligible taxpayer must submit an Application for the Research and Development Expenses Tax Credit to the Department of Taxation in the year following the credit year, due by September 1.

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