{"formats":[{"name":"JSON","format":"json","url":"\/downloads\/2025\/code-json\/58.1-339.4.json"},{"name":"Plain Text","format":"text","url":"\/downloads\/2025\/code-text\/58.1-339.4.txt"},{"name":"XML","format":"xml","url":"\/downloads\/2025\/code-xml\/58.1-339.4.xml"},{"name":"HTML","format":"html","url":"\/downloads\/2025\/code-html\/58.1-339.4.html"}],"law_id":62148,"edition_id":1,"section_id":62148,"structure_id":14016,"section_number":"58.1-339.4","catch_line":"Qualified equity and subordinated debt investments tax credit","history":"1998, c. 491; 2004, c. 614; 2009, c. 853; 2025, c. 306.","full_text":"A\n\nAs used in this section:\n\t\t\t“Commercialization investment” means a qualified investment in a qualified business that was created to commercialize research developed at or in partnership with an institution of higher education.\n\t\t\t“Equity” means common stock or preferred stock, regardless of class or series, of a corporation; a partnership interest in a limited partnership; or a membership interest in a limited liability company, which is not required or subject to an option on the part of the taxpayer to be redeemed by the issuer within three years from the date of issuance.\n\t\t\t“Qualified business” means a business which (i) has annual gross revenues of no more than $3 million in its most recent fiscal year, (ii) has its principal office or facility in the Commonwealth, (iii) is engaged in business primarily in or does substantially all of its production in the Commonwealth, (iv) has 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), and (v) is primarily engaged, or is primarily organized to engage, in the fields of advanced computing, advanced materials, advanced manufacturing, agricultural technologies, biotechnology, electronic device technology, energy, environmental technology, information technology, medical device technology, nanotechnology, or any similar technology-related field determined by regulation by the Department of Taxation to fall under the purview of this section.\n\t\t\t“Qualified investment” means a cash investment in a qualified business in the form of equity or subordinated debt; however, an investment shall not be qualified if the taxpayer who holds such investment, or any of such taxpayer’s family members, or any entity affiliated with such taxpayer, receives or has received compensation from the qualified business in exchange for services provided to such business as an employee, officer, director, manager, independent contractor or otherwise in connection with or within one year before or after the date of such investment. For the purposes hereof, reimbursement of reasonable expenses incurred shall not be deemed to be compensation.\n\t\t\t“Subordinated debt” means indebtedness of a corporation, general or limited partnership, or limited liability company that (i) by its terms required no repayment of principal for the first three years after issuance; (ii) is not guaranteed by any other person or secured by any assets of the issuer or any other person; and (iii) is subordinated to all indebtedness and obligations of the issuer to national or state-chartered banking or savings and loan institutions.B\n\nFor taxable years beginning on or after January 1, 1999, but before January 1, 2026, a taxpayer shall be allowed a credit against the tax levied pursuant to §§ 58.1-320 and 58.1-360 in an amount equal to 50 percent of such taxpayer’s qualified investments during such taxable year. No credit shall be allowed to any taxpayer that has committed capital under management in excess of $10 million and engages in the business of making debt or equity investments in private businesses, or to any taxpayer that is allocated a credit as a partner, shareholder, member or owner of an entity that engages in such business.C\n\nThe amount of any credit attributable to a qualified investment by a partnership, electing small business corporation (S corporation), or limited liability company shall be allocated to the individual partners, shareholders, or members, as the case may be, as they may determine.D\n\nThe aggregate amount of the credit for each taxpayer shall not exceed the lesser of (i) the tax imposed for such taxable year or (ii) $50,000. Any credit not usable for the taxable year in which the credit was allowed may be, to the extent usable, carried over for the next 15 succeeding taxable years or until the total amount of the tax credit has been taken, whichever occurs first.E\n\nThe amount of tax credits available under this section for a calendar year shall be $5 million. Of the amount of available credits, one-half of the amount shall be allocated exclusively for credits for commercialization investments. Such allocation of tax credits shall constitute the minimum amount of tax credits to be allocated for commercialization investments. However, if the amount of tax credits requested for commercialization investments is less than one-half of the total amount of credits available under this section, the balance of such credits shall be allocated for qualified investments in any qualified business under this section.F\n\nUnless the taxpayer transfers the equity received in connection with a qualified investment as a result of (i) the liquidation of the qualified business issuing such equity, (ii) the merger, consolidation or other acquisition of such business with or by a party not affiliated with such business, or (iii) the death of the taxpayer, any taxpayer that fails to hold such equity for at least three full calendar years following the calendar year for which a tax credit for a qualified investment is allocated pursuant to this section shall forfeit both used and unused tax credits and in addition shall pay the Department of Taxation interest on the total allowed credits at the rate of one percent per month, compounded monthly, from the date the tax credits were allocated to the taxpayer. The Department of Taxation shall deposit any amounts received under this subsection into the general fund of the Commonwealth.G\n\nPrior to December 31, 1998, the Department of Taxation shall promulgate regulations in accordance with the Administrative Process Act (§ 2.2-4000 et seq.) (i) establishing procedures for claiming the tax credit provided by this section and (ii) providing for the allocation of tax credits among taxpayers requesting credits in the event the amount of credits for which requests are made exceeds the available amount of credits in any one calendar year. Notwithstanding the foregoing, the Department of Taxation shall permit an application for certification as a qualified business to be filed at any time during the calendar year regardless of when the investment was made during the calendar year.","order_by":null,"text":{"0":{"id":226725,"text":"As used in this section:\n\t\t\t“Commercialization investment” means a qualified investment in a qualified business that was created to commercialize research developed at or in partnership with an institution of higher education.\n\t\t\t“Equity” means common stock or preferred stock, regardless of class or series, of a corporation; a partnership interest in a limited partnership; or a membership interest in a limited liability company, which is not required or subject to an option on the part of the taxpayer to be redeemed by the issuer within three years from the date of issuance.\n\t\t\t“Qualified business” means a business which (i) has annual gross revenues of no more than $3 million in its most recent fiscal year, (ii) has its principal office or facility in the Commonwealth, (iii) is engaged in business primarily in or does substantially all of its production in the Commonwealth, (iv) has 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), and (v) is primarily engaged, or is primarily organized to engage, in the fields of advanced computing, advanced materials, advanced manufacturing, agricultural technologies, biotechnology, electronic device technology, energy, environmental technology, information technology, medical device technology, nanotechnology, or any similar technology-related field determined by regulation by the Department of Taxation to fall under the purview of this section.\n\t\t\t“Qualified investment” means a cash investment in a qualified business in the form of equity or subordinated debt; however, an investment shall not be qualified if the taxpayer who holds such investment, or any of such taxpayer’s family members, or any entity affiliated with such taxpayer, receives or has received compensation from the qualified business in exchange for services provided to such business as an employee, officer, director, manager, independent contractor or otherwise in connection with or within one year before or after the date of such investment. For the purposes hereof, reimbursement of reasonable expenses incurred shall not be deemed to be compensation.\n\t\t\t“Subordinated debt” means indebtedness of a corporation, general or limited partnership, or limited liability company that (i) by its terms required no repayment of principal for the first three years after issuance; (ii) is not guaranteed by any other person or secured by any assets of the issuer or any other person; and (iii) is subordinated to all indebtedness and obligations of the issuer to national or state-chartered banking or savings and loan institutions.","type":"section","prefixes":["A"],"prefix":"A","entire_prefix":"A","prefix_anchor":"A","level":1,"next_prefix":"B"},"1":{"id":226726,"text":"For taxable years beginning on or after January 1, 1999, but before January 1, 2026, a taxpayer shall be allowed a credit against the tax levied pursuant to §§ 58.1-320 and 58.1-360 in an amount equal to 50 percent of such taxpayer’s qualified investments during such taxable year. No credit shall be allowed to any taxpayer that has committed capital under management in excess of $10 million and engages in the business of making debt or equity investments in private businesses, or to any taxpayer that is allocated a credit as a partner, shareholder, member or owner of an entity that engages in such business.","type":"section","prefixes":["B"],"prefix":"B","entire_prefix":"B","prefix_anchor":"B","level":1,"prior_prefix":"A","next_prefix":"C"},"2":{"id":226727,"text":"The amount of any credit attributable to a qualified investment by a partnership, electing small business corporation (S corporation), or limited liability company shall be allocated to the individual partners, shareholders, or members, as the case may be, as they may determine.","type":"section","prefixes":["C"],"prefix":"C","entire_prefix":"C","prefix_anchor":"C","level":1,"prior_prefix":"B","next_prefix":"D"},"3":{"id":226728,"text":"The aggregate amount of the credit for each taxpayer shall not exceed the lesser of (i) the tax imposed for such taxable year or (ii) $50,000. Any credit not usable for the taxable year in which the credit was allowed may be, to the extent usable, carried over for the next 15 succeeding taxable years or until the total amount of the tax credit has been taken, whichever occurs first.","type":"section","prefixes":["D"],"prefix":"D","entire_prefix":"D","prefix_anchor":"D","level":1,"prior_prefix":"C","next_prefix":"E"},"4":{"id":226729,"text":"The amount of tax credits available under this section for a calendar year shall be $5 million. Of the amount of available credits, one-half of the amount shall be allocated exclusively for credits for commercialization investments. Such allocation of tax credits shall constitute the minimum amount of tax credits to be allocated for commercialization investments. However, if the amount of tax credits requested for commercialization investments is less than one-half of the total amount of credits available under this section, the balance of such credits shall be allocated for qualified investments in any qualified business under this section.","type":"section","prefixes":["E"],"prefix":"E","entire_prefix":"E","prefix_anchor":"E","level":1,"prior_prefix":"D","next_prefix":"F"},"5":{"id":226730,"text":"Unless the taxpayer transfers the equity received in connection with a qualified investment as a result of (i) the liquidation of the qualified business issuing such equity, (ii) the merger, consolidation or other acquisition of such business with or by a party not affiliated with such business, or (iii) the death of the taxpayer, any taxpayer that fails to hold such equity for at least three full calendar years following the calendar year for which a tax credit for a qualified investment is allocated pursuant to this section shall forfeit both used and unused tax credits and in addition shall pay the Department of Taxation interest on the total allowed credits at the rate of one percent per month, compounded monthly, from the date the tax credits were allocated to the taxpayer. The Department of Taxation shall deposit any amounts received under this subsection into the general fund of the Commonwealth.","type":"section","prefixes":["F"],"prefix":"F","entire_prefix":"F","prefix_anchor":"F","level":1,"prior_prefix":"E","next_prefix":"G"},"6":{"id":226731,"text":"Prior to December 31, 1998, the Department of Taxation shall promulgate regulations in accordance with the Administrative Process Act (§ 2.2-4000 et seq.) (i) establishing procedures for claiming the tax credit provided by this section and (ii) providing for the allocation of tax credits among taxpayers requesting credits in the event the amount of credits for which requests are made exceeds the available amount of credits in any one calendar year. Notwithstanding the foregoing, the Department of Taxation shall permit an application for certification as a qualified business to be filed at any time during the calendar year regardless of when the investment was made during the calendar year.","type":"section","prefixes":["G"],"prefix":"G","entire_prefix":"G","prefix_anchor":"G","level":1,"prior_prefix":"F"}},"ancestry":[{"id":14016,"edition_id":1,"name":"Tax Credits for Individuals","identifier":"3","label":"article","depth":4,"order_by":1,"parent_id":13152,"metadata":{},"date_created":"2026-06-26 03:46:37","date_modified":"2026-06-26 03:46:37","permalink":{"id":254153,"object_type":"structure","relational_id":14016,"identifier":"3","token":"58.1\/I\/3\/3","url":"\/58.1\/I\/3\/3\/","edition_id":1,"permalink":0,"preferred":1}},{"id":13152,"edition_id":1,"name":"Income Tax","identifier":"3","label":"chapter","depth":3,"order_by":1,"parent_id":12837,"metadata":{},"date_created":"2026-06-26 03:44:21","date_modified":"2026-06-26 03:44:21","permalink":{"id":253267,"object_type":"structure","relational_id":13152,"identifier":"3","token":"58.1\/I\/3","url":"\/58.1\/I\/3\/","edition_id":1,"permalink":0,"preferred":1}},{"id":12837,"edition_id":1,"name":"Taxes Administered by the Department of Taxation","identifier":"I","label":"subtitle","depth":2,"order_by":1,"parent_id":12703,"metadata":{},"date_created":"2026-06-26 03:43:55","date_modified":"2026-06-26 03:43:55","permalink":{"id":252075,"object_type":"structure","relational_id":12837,"identifier":"I","token":"58.1\/I","url":"\/58.1\/I\/","edition_id":1,"permalink":0,"preferred":1}},{"id":12703,"edition_id":1,"name":"Taxation","identifier":"58.1","label":"title","depth":1,"order_by":1,"parent_id":null,"metadata":{},"date_created":"2026-06-26 03:43:49","date_modified":"2026-06-26 03:43:49","permalink":{"id":251959,"object_type":"structure","relational_id":12703,"identifier":"58.1","token":"58.1","url":"\/58.1\/","edition_id":1,"permalink":0,"preferred":1}}],"structure_contents":[{"id":79817,"structure_id":14016,"section_number":"58.1-330","catch_line":"Repealed","url":"\/58.1-330\/","token":"58.1\/I\/3\/3\/58.1-330","metadata":false},{"id":69848,"structure_id":14016,"section_number":"58.1-331","catch_line":"Repealed","url":"\/58.1-331\/","token":"58.1\/I\/3\/3\/58.1-331","metadata":false},{"id":85325,"structure_id":14016,"section_number":"58.1-332","catch_line":"Credits for taxes paid other states","url":"\/58.1-332\/","token":"58.1\/I\/3\/3\/58.1-332","metadata":false},{"id":77703,"structure_id":14016,"section_number":"58.1-332.1","catch_line":"Credit for taxes paid to a foreign country on retirement income","url":"\/58.1-332.1\/","token":"58.1\/I\/3\/3\/58.1-332.1","metadata":false},{"id":65718,"structure_id":14016,"section_number":"58.1-332.2","catch_line":"(Applicable for taxable years beginning on or after January 1, 2007) Definition of income tax","url":"\/58.1-332.2\/","token":"58.1\/I\/3\/3\/58.1-332.2","metadata":false},{"id":72337,"structure_id":14016,"section_number":"58.1-333","catch_line":"Repealed","url":"\/58.1-333\/","token":"58.1\/I\/3\/3\/58.1-333","metadata":false},{"id":73300,"structure_id":14016,"section_number":"58.1-334","catch_line":"Tax credit for purchase of conservation tillage equipment","url":"\/58.1-334\/","token":"58.1\/I\/3\/3\/58.1-334","metadata":false},{"id":64999,"structure_id":14016,"section_number":"58.1-335","catch_line":"Repealed","url":"\/58.1-335\/","token":"58.1\/I\/3\/3\/58.1-335","metadata":false},{"id":76356,"structure_id":14016,"section_number":"58.1-336","catch_line":"Repealed","url":"\/58.1-336\/","token":"58.1\/I\/3\/3\/58.1-336","metadata":false},{"id":80901,"structure_id":14016,"section_number":"58.1-337","catch_line":"Tax credit for purchase of conservation tillage and precision agriculture equipment","url":"\/58.1-337\/","token":"58.1\/I\/3\/3\/58.1-337","metadata":false},{"id":84005,"structure_id":14016,"section_number":"58.1-338","catch_line":"Expired","url":"\/58.1-338\/","token":"58.1\/I\/3\/3\/58.1-338","metadata":false},{"id":68217,"structure_id":14016,"section_number":"58.1-339","catch_line":"Repealed","url":"\/58.1-339\/","token":"58.1\/I\/3\/3\/58.1-339","metadata":false},{"id":66380,"structure_id":14016,"section_number":"58.1-339.1","catch_line":"Repealed","url":"\/58.1-339.1\/","token":"58.1\/I\/3\/3\/58.1-339.1","metadata":false},{"id":61287,"structure_id":14016,"section_number":"58.1-339.10","catch_line":"Riparian forest buffer protection for waterways tax 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credit","url":"\/58.1-339.2\/","token":"58.1\/I\/3\/3\/58.1-339.2","metadata":false},{"id":65078,"structure_id":14016,"section_number":"58.1-339.3","catch_line":"Agricultural best management practices tax credit","url":"\/58.1-339.3\/","token":"58.1\/I\/3\/3\/58.1-339.3","metadata":false},{"id":62148,"structure_id":14016,"section_number":"58.1-339.4","catch_line":"Qualified equity and subordinated debt investments tax credit","url":"\/58.1-339.4\/","token":"58.1\/I\/3\/3\/58.1-339.4","metadata":false},{"id":69444,"structure_id":14016,"section_number":"58.1-339.5","catch_line":"Repealed","url":"\/58.1-339.5\/","token":"58.1\/I\/3\/3\/58.1-339.5","metadata":false},{"id":64454,"structure_id":14016,"section_number":"58.1-339.6","catch_line":"Political candidate contribution tax credit","url":"\/58.1-339.6\/","token":"58.1\/I\/3\/3\/58.1-339.6","metadata":false},{"id":77593,"structure_id":14016,"section_number":"58.1-339.7","catch_line":"Livable Home Tax Credit","url":"\/58.1-339.7\/","token":"58.1\/I\/3\/3\/58.1-339.7","metadata":false},{"id":59088,"structure_id":14016,"section_number":"58.1-339.8","catch_line":"Income tax credit for low-income taxpayers","url":"\/58.1-339.8\/","token":"58.1\/I\/3\/3\/58.1-339.8","metadata":false},{"id":55105,"structure_id":14016,"section_number":"58.1-339.9","catch_line":"Repealed","url":"\/58.1-339.9\/","token":"58.1\/I\/3\/3\/58.1-339.9","metadata":false}],"previous_section":{"id":65078,"structure_id":14016,"section_number":"58.1-339.3","catch_line":"Agricultural best management practices tax credit","url":"\/58.1-339.3\/","token":"58.1\/I\/3\/3\/58.1-339.3","metadata":false},"next_section":{"id":69444,"structure_id":14016,"section_number":"58.1-339.5","catch_line":"Repealed","url":"\/58.1-339.5\/","token":"58.1\/I\/3\/3\/58.1-339.5","metadata":false},"metadata":false,"official_url":"https:\/\/law.lis.virginia.gov\/vacode\/58.1-339.4\/","history_text":"

This law was first created in 1998. The record of its establishment is cataloged in chapter 491<\/a> of that year\u2019s edition of \u201cActs of Assembly,\u201d the annual state publication listing all changes made to the Code of Virginia in that year. It has been modified 3 times. Those modifications are cataloged by \u201cThe Acts of Assembly,\u201d a state publication, by year and chapter. Those modifications that can be read on the General Assembly\u2019s website will be linked accordingly. Those modifications are as follows: in 2004, chapter 614<\/a>; in 2009, chapter 853<\/a>; in 2025, chapter 306<\/a>.<\/p>","references":[{"id":81784,"section_number":"58.1-322.02","catch_line":"Virginia taxable income; subtractions","order_by":null,"url":"\/58.1-322.02\/"},{"id":56970,"section_number":"58.1-402","catch_line":"Virginia taxable income","order_by":null,"url":"\/58.1-402\/"}],"refers_to":[{"id":86911,"section_number":"2.2-4000","catch_line":"Short title; purpose","order_by":null,"url":"\/2.2-4000\/"},{"id":62270,"section_number":"58.1-320","catch_line":"Imposition of tax","order_by":null,"url":"\/58.1-320\/"},{"id":82371,"section_number":"58.1-360","catch_line":"Imposition of tax","order_by":null,"url":"\/58.1-360\/"}],"permalink":{"id":254235,"object_type":"law","relational_id":62148,"identifier":"58.1-339.4","token":"58.1\/I\/3\/3\/58.1-339.4","url":"\/58.1-339.4\/","edition_id":1,"permalink":0,"preferred":1},"url":"\/58.1-339.4\/","token":"58.1\/I\/3\/3\/58.1-339.4","dublin_core":{"Title":"Qualified equity and subordinated debt investments tax credit","Type":"Text","Format":"text\/html","Identifier":"\u00a7 58.1-339.4","Relation":"Code of Virginia"},"html":"\n\t\t\t\t\t\t

A.<\/span> As used in this section:\n\t\t\t“Commercialization investment<\/span>” means a qualified investment<\/span> in a qualified business<\/span> that was created to commercialize research developed at or in partnership with an institution of higher education.\n\t\t\t“Equity<\/span>” means common stock or preferred stock, regardless of class or series, of a corporation<\/span>; a partnership interest in a limited partnership; or a membership interest in a limited liability company, which is not required or subject to an option on the part of the taxpayer<\/span> to be redeemed by the issuer within three years from the date of issuance.\n\t\t\t“Qualified business<\/span>” means a business which (i) has annual gross revenues of no more than $3 million in its most recent fiscal year, (ii) has its principal office or facility in the Commonwealth, (iii) is engaged in business primarily in or does substantially all of its production in the Commonwealth, (iv) has not obtained during its existence more than $3 million in aggregate gross cash proceeds from the issuance of its equity<\/span> or debt investments (not including commercial loans from chartered banking or savings and loan institutions), and (v) is primarily engaged, or is primarily organized to engage, in the fields of advanced computing, advanced materials<\/span>, advanced manufacturing, agricultural technologies, biotechnology, electronic device technology, energy, environmental technology, information technology, medical device technology, nanotechnology, or any similar technology-related field determined by regulation by the Department<\/span> of Taxation to fall under the purview of this section.\n\t\t\t“Qualified investment<\/span>” means a cash investment in a qualified business<\/span> in the form of equity<\/span> or subordinated debt<\/span>; however, an investment shall not be qualified if the taxpayer<\/span> who holds such investment, or any of such taxpayer<\/span>’s family members, or any entity affiliated<\/span> with such taxpayer<\/span>, receives or has received compensation<\/span> from the qualified business<\/span> in exchange for services provided to such business as an employee, officer, director, manager, independent contractor or otherwise in connection with or within one year before or after the date of such investment. For the purposes hereof, reimbursement of reasonable expenses incurred shall not be deemed to be compensation<\/span>.\n\t\t\t“Subordinated debt<\/span>” means indebtedness of a corporation<\/span>, general or limited partnership, or limited liability company that (i) by its terms required no repayment of principal for the first three years after issuance; (ii) is not guaranteed by any other person or secured by any assets<\/span> of the issuer or any other person; and (iii) is subordinated to all indebtedness and obligations of the issuer to national or state-chartered banking or savings and loan institutions. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

B.<\/span> For taxable years beginning on or after January 1, 1999, but before January 1, 2026, a taxpayer<\/span> shall be allowed a credit against the tax levied pursuant to §§ 58.1-320<\/a> and 58.1-360<\/a> in an amount equal to 50 percent of such taxpayer<\/span>’s qualified investments<\/span> during such taxable year. No credit shall be allowed to any taxpayer<\/span> that has committed capital under management in excess of $10 million and engages in the business of making debt or equity<\/span> investments in private businesses, or to any taxpayer<\/span> that is allocated a credit as a partner, shareholder, member or owner of an entity that engages in such business. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

C.<\/span> The amount of any credit attributable to a qualified investment<\/span> by a partnership, electing small business corporation<\/span> (S corporation<\/span>), or limited liability company shall be allocated to the individual<\/span> partners, shareholders, or members, as the case may be, as they may determine. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

D.<\/span> The aggregate amount of the credit for each taxpayer<\/span> shall not exceed the lesser of (i) the tax imposed for such taxable year or (ii) $50,000. Any credit not usable for the taxable year in which the credit was allowed may be, to the extent usable, carried over for the next 15 succeeding taxable years or until the total amount of the tax credit has been taken, whichever occurs first. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

E.<\/span> The amount of tax credits available under this section for a calendar year shall be $5 million. Of the amount of available credits, one-half of the amount shall be allocated exclusively for credits for commercialization investments<\/span>. Such allocation of tax credits shall constitute the minimum amount of tax credits to be allocated for commercialization investments<\/span>. However, if the amount of tax credits requested for commercialization investments<\/span> is less than one-half of the total amount of credits available under this section, the balance of such credits shall be allocated for qualified investments<\/span> in any qualified business<\/span> under this section. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

F.<\/span> Unless the taxpayer<\/span> transfers the equity<\/span> received in connection with a qualified investment<\/span> as a result of (i) the liquidation<\/span> of the qualified business<\/span> issuing such equity<\/span>, (ii) the merger, consolidation<\/span> or other acquisition of such business with or by a party<\/span> not affiliated<\/span> with such business, or (iii) the death of the taxpayer<\/span>, any taxpayer<\/span> that fails to hold such equity<\/span> for at least three full calendar years following the calendar year for which a tax credit for a qualified investment<\/span> is allocated pursuant to this section shall forfeit both used and unused tax credits and in addition shall pay the Department<\/span> of Taxation interest on the total allowed credits at the rate of one percent per month, compounded monthly, from the date the tax credits were allocated to the taxpayer<\/span>. The Department<\/span> of Taxation shall deposit any amounts received under this subsection into the general fund of the Commonwealth. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

G.<\/span> Prior to December 31, 1998, the Department<\/span> of Taxation shall promulgate regulations in accordance with the Administrative Process Act (§ 2.2-4000<\/a> et seq.) (i) establishing procedures for claiming the tax credit provided by this section and (ii) providing for the allocation of tax credits among taxpayers<\/span> requesting credits in the event the amount of credits for which requests are made exceeds the available amount of credits in any one calendar year. Notwithstanding the foregoing, the Department<\/span> of Taxation shall permit an application for certification as a qualified business<\/span> to be filed at any time during the calendar year regardless of when the investment was made during the calendar year. <\/i><\/a><\/p><\/section>","plain_text":" CODE OF VIRGINIA\n\nQUALIFIED EQUITY AND SUBORDINATED DEBT INVESTMENTS TAX CREDIT (\u00a7 58.1-339.4)\n\nA. As used in this section:\n\t\t\t“Commercialization investment” means a qualified investment in a\nqualified business that was created to commercialize research developed at or in\npartnership with an institution of higher education.\n\t\t\t“Equity” means common stock or preferred stock, regardless of\nclass or series, of a corporation; a partnership interest in a limited\npartnership; or a membership interest in a limited liability company, which is\nnot required or subject to an option on the part of the taxpayer to be redeemed\nby the issuer within three years from the date of issuance.\n\t\t\t“Qualified business” means a business which (i) has annual gross\nrevenues of no more than $3 million in its most recent fiscal year, (ii) has its\nprincipal office or facility in the Commonwealth, (iii) is engaged in business\nprimarily in or does substantially all of its production in the Commonwealth,\n(iv) has not obtained during its existence more than $3 million in aggregate\ngross cash proceeds from the issuance of its equity or debt investments (not\nincluding commercial loans from chartered banking or savings and loan\ninstitutions), and (v) is primarily engaged, or is primarily organized to\nengage, in the fields of advanced computing, advanced materials, advanced\nmanufacturing, agricultural technologies, biotechnology, electronic device\ntechnology, energy, environmental technology, information technology, medical\ndevice technology, nanotechnology, or any similar technology-related field\ndetermined by regulation by the Department of Taxation to fall under the purview\nof this section.\n\t\t\t“Qualified investment” means a cash investment in a qualified\nbusiness in the form of equity or subordinated debt; however, an investment\nshall not be qualified if the taxpayer who holds such investment, or any of such\ntaxpayer’s family members, or any entity affiliated with such taxpayer,\nreceives or has received compensation from the qualified business in exchange\nfor services provided to such business as an employee, officer, director,\nmanager, independent contractor or otherwise in connection with or within one\nyear before or after the date of such investment. For the purposes hereof,\nreimbursement of reasonable expenses incurred shall not be deemed to be\ncompensation.\n\t\t\t“Subordinated debt” means indebtedness of a corporation, general\nor limited partnership, or limited liability company that (i) by its terms\nrequired no repayment of principal for the first three years after issuance;\n(ii) is not guaranteed by any other person or secured by any assets of the\nissuer or any other person; and (iii) is subordinated to all indebtedness and\nobligations of the issuer to national or state-chartered banking or savings and\nloan institutions.\n\nB. For taxable years beginning on or after January 1, 1999, but before January\n1, 2026, a taxpayer shall be allowed a credit against the tax levied pursuant to\n§§ 58.1-320 and 58.1-360 in an amount equal to 50 percent of such\ntaxpayer’s qualified investments during such taxable year. No credit shall\nbe allowed to any taxpayer that has committed capital under management in excess\nof $10 million and engages in the business of making debt or equity investments\nin private businesses, or to any taxpayer that is allocated a credit as a\npartner, shareholder, member or owner of an entity that engages in such\nbusiness.\n\nC. The amount of any credit attributable to a qualified investment by a\npartnership, electing small business corporation (S corporation), or limited\nliability company shall be allocated to the individual partners, shareholders,\nor members, as the case may be, as they may determine.\n\nD. The aggregate amount of the credit for each taxpayer shall not exceed the\nlesser of (i) the tax imposed for such taxable year or (ii) $50,000. Any credit\nnot usable for the taxable year in which the credit was allowed may be, to the\nextent usable, carried over for the next 15 succeeding taxable years or until\nthe total amount of the tax credit has been taken, whichever occurs first.\n\nE. The amount of tax credits available under this section for a calendar year\nshall be $5 million. Of the amount of available credits, one-half of the amount\nshall be allocated exclusively for credits for commercialization investments.\nSuch allocation of tax credits shall constitute the minimum amount of tax\ncredits to be allocated for commercialization investments. However, if the\namount of tax credits requested for commercialization investments is less than\none-half of the total amount of credits available under this section, the\nbalance of such credits shall be allocated for qualified investments in any\nqualified business under this section.\n\nF. Unless the taxpayer transfers the equity received in connection with a\nqualified investment as a result of (i) the liquidation of the qualified\nbusiness issuing such equity, (ii) the merger, consolidation or other\nacquisition of such business with or by a party not affiliated with such\nbusiness, or (iii) the death of the taxpayer, any taxpayer that fails to hold\nsuch equity for at least three full calendar years following the calendar year\nfor which a tax credit for a qualified investment is allocated pursuant to this\nsection shall forfeit both used and unused tax credits and in addition shall pay\nthe Department of Taxation interest on the total allowed credits at the rate of\none percent per month, compounded monthly, from the date the tax credits were\nallocated to the taxpayer. The Department of Taxation shall deposit any amounts\nreceived under this subsection into the general fund of the Commonwealth.\n\nG. Prior to December 31, 1998, the Department of Taxation shall promulgate\nregulations in accordance with the Administrative Process Act (§ 2.2-4000\net seq.) (i) establishing procedures for claiming the tax credit provided by\nthis section and (ii) providing for the allocation of tax credits among\ntaxpayers requesting credits in the event the amount of credits for which\nrequests are made exceeds the available amount of credits in any one calendar\nyear. Notwithstanding the foregoing, the Department of Taxation shall permit an\napplication for certification as a qualified business to be filed at any time\nduring the calendar year regardless of when the investment was made during the\ncalendar year.\n\nHISTORY: 1998, c. 491; 2004, c. 614; 2009, c. 853; 2025, c. 306.","edition":{"id":1,"name":"2025","slug":"2025","date_created":"2026-06-21 22:39:22","date_modified":"2026-06-21 22:39:22","current":1,"order_by":1,"last_import":null}}