{"formats":[{"name":"JSON","format":"json","url":"\/downloads\/2025\/code-json\/58.1-390.3.json"},{"name":"Plain Text","format":"text","url":"\/downloads\/2025\/code-text\/58.1-390.3.txt"},{"name":"XML","format":"xml","url":"\/downloads\/2025\/code-xml\/58.1-390.3.xml"},{"name":"HTML","format":"html","url":"\/downloads\/2025\/code-html\/58.1-390.3.html"}],"law_id":68682,"edition_id":1,"section_id":68682,"structure_id":15650,"section_number":"58.1-390.3","catch_line":"Elective income tax on pass-through entities","history":"2022, cc. 690, 689; 2023, cc. 686, 687; 2025, c. 725.","full_text":"A\n\n1. For taxable years beginning on and after January 1, 2021, but before January 1, 2022, a pass-through entity may make an election, in a format and according to such requirements and procedures to be established by the Department, to pay the tax levied by this section at the entity level for the taxable year. Such election shall be made on or before a date to be determined by the Department, which shall be set no earlier than one year after the extended due date for filing the applicable return. Notwithstanding \u00a7\u00a7 58.1-1812 and 58.1-1833, no interest shall accrue on underpayments or overpayments solely attributable to such election.2\n\nFor taxable years beginning on and after January 1, 2022, but before January 1, 2027, a pass-through entity may make an annual election, on its timely filed return pursuant to § 58.1-392, to pay the tax levied by this section at the entity level for the taxable period covered by such return. Such election shall be made on or before the due date for filing the applicable return, including any extensions that have been granted.B\n\nA tax at the rate of 5.75 percent is hereby annually imposed on the Virginia taxable income, as calculated pursuant to § 58.1-391 but taking into account only the pro rata or distributive share of each item of income, gain, loss, or deduction attributable to eligible owners, for each taxable year of every pass-through entity that makes the election provided under subsection A.C\n\nIn computing the tax imposed by this section, the pro rata or distributive share of the Virginia taxable income of each nonresident eligible owner shall be limited to income that is attributable to Virginia sources and shall be subject to the modifications to income as described in §§ 58.1-322.01 through 58.1-322.04.D\n\nA pass-through entity that elects to pay the tax levied by subsection B shall be eligible for all credits, deductions, or other adjustments to taxable income under § 58.1-391, provided that a pass-through entity’s taxable income shall be adjusted to eliminate any federal deduction for state and local income taxes.E\n\nAny person that is subject to the tax imposed under § 58.1-320 or 58.1-360 and is an eligible owner of a pass-through entity making the election pursuant to this section shall be entitled to a credit against the tax imposed, provided that taxable income has been adjusted to add back any deduction for state and local income taxes paid by the pass-through entity. Such credit shall be in an amount equal to such person’s pro rata share of the tax paid under this section by any pass-through entity of which such person is an owner. If the amount of the credit allowed pursuant to this subsection exceeds such person’s tax liability for the tax imposed under § 58.1-320 or 58.1-360, as applicable, such excess shall be treated as an overpayment and refundable pursuant to § 58.1-499.F\n\nIf any pass-through entity makes an election pursuant to this section, the Department shall assess and collect tax, interest, and penalties as if such tax is a corporate income tax imposed pursuant to the provisions of Article 10 (§ 58.1-400 et seq.).G\n\nThe Department shall develop and make publicly available guidelines implementing the provisions of this section and the credit authorized by subdivision C 2 of § 58.1-332.","order_by":null,"text":{"0":{"id":248637,"text":"1. For taxable years beginning on and after January 1, 2021, but before January 1, 2022, a pass-through entity may make an election, in a format and according to such requirements and procedures to be established by the Department, to pay the tax levied by this section at the entity level for the taxable year. Such election shall be made on or before a date to be determined by the Department, which shall be set no earlier than one year after the extended due date for filing the applicable return. Notwithstanding \u00a7\u00a7 58.1-1812 and 58.1-1833, no interest shall accrue on underpayments or overpayments solely attributable to such election.","type":"section","prefixes":["A"],"prefix":"A","entire_prefix":"A","prefix_anchor":"A","level":1,"next_prefix":"A2"},"1":{"id":248638,"text":"For taxable years beginning on and after January 1, 2022, but before January 1, 2027, a pass-through entity may make an annual election, on its timely filed return pursuant to § 58.1-392, to pay the tax levied by this section at the entity level for the taxable period covered by such return. Such election shall be made on or before the due date for filing the applicable return, including any extensions that have been granted.","type":"section","prefixes":["A","2"],"prefix":"2","entire_prefix":"A2","prefix_anchor":"A2","level":2,"prior_prefix":"A","next_prefix":"B"},"2":{"id":248639,"text":"A tax at the rate of 5.75 percent is hereby annually imposed on the Virginia taxable income, as calculated pursuant to § 58.1-391 but taking into account only the pro rata or distributive share of each item of income, gain, loss, or deduction attributable to eligible owners, for each taxable year of every pass-through entity that makes the election provided under subsection A.","type":"section","prefixes":["B"],"prefix":"B","entire_prefix":"B","prefix_anchor":"B","level":1,"prior_prefix":"A2","next_prefix":"C"},"3":{"id":248640,"text":"In computing the tax imposed by this section, the pro rata or distributive share of the Virginia taxable income of each nonresident eligible owner shall be limited to income that is attributable to Virginia sources and shall be subject to the modifications to income as described in §§ 58.1-322.01 through 58.1-322.04.","type":"section","prefixes":["C"],"prefix":"C","entire_prefix":"C","prefix_anchor":"C","level":1,"prior_prefix":"B","next_prefix":"D"},"4":{"id":248641,"text":"A pass-through entity that elects to pay the tax levied by subsection B shall be eligible for all credits, deductions, or other adjustments to taxable income under § 58.1-391, provided that a pass-through entity’s taxable income shall be adjusted to eliminate any federal deduction for state and local income taxes.","type":"section","prefixes":["D"],"prefix":"D","entire_prefix":"D","prefix_anchor":"D","level":1,"prior_prefix":"C","next_prefix":"E"},"5":{"id":248642,"text":"Any person that is subject to the tax imposed under § 58.1-320 or 58.1-360 and is an eligible owner of a pass-through entity making the election pursuant to this section shall be entitled to a credit against the tax imposed, provided that taxable income has been adjusted to add back any deduction for state and local income taxes paid by the pass-through entity. Such credit shall be in an amount equal to such person’s pro rata share of the tax paid under this section by any pass-through entity of which such person is an owner. If the amount of the credit allowed pursuant to this subsection exceeds such person’s tax liability for the tax imposed under § 58.1-320 or 58.1-360, as applicable, such excess shall be treated as an overpayment and refundable pursuant to § 58.1-499.","type":"section","prefixes":["E"],"prefix":"E","entire_prefix":"E","prefix_anchor":"E","level":1,"prior_prefix":"D","next_prefix":"F"},"6":{"id":248643,"text":"If any pass-through entity makes an election pursuant to this section, the Department shall assess and collect tax, interest, and penalties as if such tax is a corporate income tax imposed pursuant to the provisions of Article 10 (§ 58.1-400 et seq.).","type":"section","prefixes":["F"],"prefix":"F","entire_prefix":"F","prefix_anchor":"F","level":1,"prior_prefix":"E","next_prefix":"G"},"7":{"id":248644,"text":"The Department shall develop and make publicly available guidelines implementing the provisions of this section and the credit authorized by subdivision C 2 of § 58.1-332.","type":"section","prefixes":["G"],"prefix":"G","entire_prefix":"G","prefix_anchor":"G","level":1,"prior_prefix":"F"}},"ancestry":[{"id":15650,"edition_id":1,"name":"Taxation of Partnerships","identifier":"9","label":"article","depth":4,"order_by":1,"parent_id":13152,"metadata":{},"date_created":"2026-06-26 03:57:23","date_modified":"2026-06-26 03:57:23","permalink":{"id":254443,"object_type":"structure","relational_id":15650,"identifier":"9","token":"58.1\/I\/3\/9","url":"\/58.1\/I\/3\/9\/","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":74075,"structure_id":15650,"section_number":"58.1-390","catch_line":"Repealed","url":"\/58.1-390\/","token":"58.1\/I\/3\/9\/58.1-390","metadata":false},{"id":59823,"structure_id":15650,"section_number":"58.1-390.1","catch_line":"Definitions","url":"\/58.1-390.1\/","token":"58.1\/I\/3\/9\/58.1-390.1","metadata":false},{"id":63914,"structure_id":15650,"section_number":"58.1-390.2","catch_line":"Taxation of pass-through entities","url":"\/58.1-390.2\/","token":"58.1\/I\/3\/9\/58.1-390.2","metadata":false},{"id":68682,"structure_id":15650,"section_number":"58.1-390.3","catch_line":"Elective income tax on pass-through entities","url":"\/58.1-390.3\/","token":"58.1\/I\/3\/9\/58.1-390.3","metadata":false},{"id":62953,"structure_id":15650,"section_number":"58.1-391","catch_line":"Virginia taxable income of owners of a pass-through entity","url":"\/58.1-391\/","token":"58.1\/I\/3\/9\/58.1-391","metadata":false},{"id":62314,"structure_id":15650,"section_number":"58.1-392","catch_line":"Reports by pass-through entities","url":"\/58.1-392\/","token":"58.1\/I\/3\/9\/58.1-392","metadata":false},{"id":80179,"structure_id":15650,"section_number":"58.1-393","catch_line":"Repealed","url":"\/58.1-393\/","token":"58.1\/I\/3\/9\/58.1-393","metadata":false},{"id":78819,"structure_id":15650,"section_number":"58.1-393.1","catch_line":"Extension of time for filing return by pass-through entity","url":"\/58.1-393.1\/","token":"58.1\/I\/3\/9\/58.1-393.1","metadata":false},{"id":61557,"structure_id":15650,"section_number":"58.1-394","catch_line":"Repealed","url":"\/58.1-394\/","token":"58.1\/I\/3\/9\/58.1-394","metadata":false},{"id":63527,"structure_id":15650,"section_number":"58.1-394.1","catch_line":"Failure of pass-through entity to make a return","url":"\/58.1-394.1\/","token":"58.1\/I\/3\/9\/58.1-394.1","metadata":false},{"id":74881,"structure_id":15650,"section_number":"58.1-394.2","catch_line":"Fraudulent returns, etc., of pass-through entities; penalty","url":"\/58.1-394.2\/","token":"58.1\/I\/3\/9\/58.1-394.2","metadata":false},{"id":73458,"structure_id":15650,"section_number":"58.1-394.3","catch_line":"Pass-through entity items","url":"\/58.1-394.3\/","token":"58.1\/I\/3\/9\/58.1-394.3","metadata":false},{"id":60426,"structure_id":15650,"section_number":"58.1-395","catch_line":"Nonresident owners","url":"\/58.1-395\/","token":"58.1\/I\/3\/9\/58.1-395","metadata":false}],"previous_section":{"id":63914,"structure_id":15650,"section_number":"58.1-390.2","catch_line":"Taxation of pass-through entities","url":"\/58.1-390.2\/","token":"58.1\/I\/3\/9\/58.1-390.2","metadata":false},"next_section":{"id":62953,"structure_id":15650,"section_number":"58.1-391","catch_line":"Virginia taxable income of owners of a pass-through entity","url":"\/58.1-391\/","token":"58.1\/I\/3\/9\/58.1-391","metadata":false},"metadata":false,"official_url":"https:\/\/law.lis.virginia.gov\/vacode\/58.1-390.3\/","history_text":"

This law was first created in 2022. The record of its establishment is cataloged in chapters 690<\/a> and 689<\/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 2 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 2023, chapters 686<\/a> and 687<\/a>; in 2025, chapter 725<\/a>.<\/p>","references":[{"id":85325,"section_number":"58.1-332","catch_line":"Credits for taxes paid other states","order_by":null,"url":"\/58.1-332\/"},{"id":59823,"section_number":"58.1-390.1","catch_line":"Definitions","order_by":null,"url":"\/58.1-390.1\/"},{"id":63914,"section_number":"58.1-390.2","catch_line":"Taxation of pass-through entities","order_by":null,"url":"\/58.1-390.2\/"}],"refers_to":[{"id":72336,"section_number":"58.1-1812","catch_line":"Assessment of omitted taxes by the Department of Taxation","order_by":null,"url":"\/58.1-1812\/"},{"id":83093,"section_number":"58.1-1833","catch_line":"Interest on overpayments or improper collection","order_by":null,"url":"\/58.1-1833\/"},{"id":62270,"section_number":"58.1-320","catch_line":"Imposition of tax","order_by":null,"url":"\/58.1-320\/"},{"id":85168,"section_number":"58.1-322.01","catch_line":"Virginia taxable income; additions","order_by":null,"url":"\/58.1-322.01\/"},{"id":85325,"section_number":"58.1-332","catch_line":"Credits for taxes paid other states","order_by":null,"url":"\/58.1-332\/"},{"id":82371,"section_number":"58.1-360","catch_line":"Imposition of tax","order_by":null,"url":"\/58.1-360\/"},{"id":62953,"section_number":"58.1-391","catch_line":"Virginia taxable income of owners of a pass-through entity","order_by":null,"url":"\/58.1-391\/"},{"id":62314,"section_number":"58.1-392","catch_line":"Reports by pass-through entities","order_by":null,"url":"\/58.1-392\/"},{"id":60955,"section_number":"58.1-400","catch_line":"Imposition of tax","order_by":null,"url":"\/58.1-400\/"}],"permalink":{"id":254457,"object_type":"law","relational_id":68682,"identifier":"58.1-390.3","token":"58.1\/I\/3\/9\/58.1-390.3","url":"\/58.1-390.3\/","edition_id":1,"permalink":0,"preferred":1},"url":"\/58.1-390.3\/","token":"58.1\/I\/3\/9\/58.1-390.3","dublin_core":{"Title":"Elective income tax on pass-through entities","Type":"Text","Format":"text\/html","Identifier":"\u00a7 58.1-390.3","Relation":"Code of Virginia"},"html":"\n\t\t\t\t\t\t

A.<\/span> 1. For taxable years beginning on and after January 1, 2021, but before January 1, 2022, a pass-through entity<\/span> may make an election, in a format and according to such requirements and procedures to be established by the Department<\/span>, to pay the tax levied by this section at the entity level for the taxable year. Such election shall be made on or before a date to be determined by the Department<\/span>, which shall be set no earlier than one year after the extended due date for filing the applicable return. Notwithstanding \u00a7\u00a7 58.1-1812<\/a> and 58.1-1833<\/a>, no interest shall accrue on underpayments or overpayments solely attributable to such election. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

2.<\/span> For taxable years beginning on and after January 1, 2022, but before January 1, 2027, a pass-through entity<\/span> may make an annual election, on its timely filed return pursuant to § 58.1-392<\/a>, to pay the tax levied by this section at the entity level for the taxable period covered by such return. Such election shall be made on or before the due date for filing the applicable return, including any extensions that have been granted. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

B.<\/span> A tax at the rate of 5.75 percent is hereby annually imposed on the Virginia taxable income, as calculated pursuant to § 58.1-391<\/a> but taking into account only the pro rata or distributive share of each item of income, gain, loss, or deduction attributable to eligible owners<\/span>, for each taxable year of every pass-through entity<\/span> that makes the election provided under subsection A. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

C.<\/span> In computing the tax imposed by this section, the pro rata or distributive share of the Virginia taxable income of each nonresident eligible owner<\/span> shall be limited to income that is attributable to Virginia sources and shall be subject to the modifications to income as described in §§ 58.1-322.01<\/a> through 58.1-322.04<\/a>. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

D.<\/span> A pass-through entity<\/span> that elects to pay the tax levied by subsection B shall be eligible for all credits, deductions, or other adjustments to taxable income under § 58.1-391<\/a>, provided that a pass-through entity<\/span>’s taxable income shall be adjusted to eliminate any federal deduction for state and local income taxes. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

E.<\/span> Any person that is subject to the tax imposed under § 58.1-320<\/a> or 58.1-360<\/a> and is an eligible owner<\/span> of a pass-through entity<\/span> making the election pursuant to this section shall be entitled to a credit against the tax imposed, provided that taxable income has been adjusted to add back any deduction for state and local income taxes paid by the pass-through entity<\/span>. Such credit shall be in an amount equal to such person’s pro rata share of the tax paid under this section by any pass-through entity<\/span> of which such person is an owner. If the amount of the credit allowed pursuant to this subsection exceeds such person’s tax liability for the tax imposed under § 58.1-320<\/a> or 58.1-360<\/a>, as applicable, such excess shall be treated as an overpayment and refundable pursuant to § 58.1-499<\/a>. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

F.<\/span> If any pass-through entity<\/span> makes an election pursuant to this section, the Department<\/span> shall assess and collect tax, interest, and penalties as if such tax is a corporate income tax imposed pursuant to the provisions of Article 10 (§ 58.1-400<\/a> et seq.). <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

G.<\/span> The Department<\/span> shall develop and make publicly available guidelines implementing the provisions of this section and the credit authorized by subdivision C 2 of § 58.1-332<\/a>. <\/i><\/a><\/p><\/section>","plain_text":" CODE OF VIRGINIA\n\nELECTIVE INCOME TAX ON PASS-THROUGH ENTITIES (\u00a7 58.1-390.3)\n\nA. 1. For taxable years beginning on and after January 1, 2021, but before\nJanuary 1, 2022, a pass-through entity may make an election, in a format and\naccording to such requirements and procedures to be established by the\nDepartment, to pay the tax levied by this section at the entity level for the\ntaxable year. Such election shall be made on or before a date to be determined\nby the Department, which shall be set no earlier than one year after the\nextended due date for filing the applicable return. Notwithstanding \u00a7\u00a7\n58.1-1812 and 58.1-1833, no interest shall accrue on underpayments or\noverpayments solely attributable to such election.\n\n 2. For taxable years beginning on and after January 1, 2022, but before\n January 1, 2027, a pass-through entity may make an annual election, on its\n timely filed return pursuant to § 58.1-392, to pay the tax levied by this\n section at the entity level for the taxable period covered by such return.\n Such election shall be made on or before the due date for filing the\n applicable return, including any extensions that have been granted.\n\nB. A tax at the rate of 5.75 percent is hereby annually imposed on the Virginia\ntaxable income, as calculated pursuant to § 58.1-391 but taking into\naccount only the pro rata or distributive share of each item of income, gain,\nloss, or deduction attributable to eligible owners, for each taxable year of\nevery pass-through entity that makes the election provided under subsection A.\n\nC. In computing the tax imposed by this section, the pro rata or distributive\nshare of the Virginia taxable income of each nonresident eligible owner shall be\nlimited to income that is attributable to Virginia sources and shall be subject\nto the modifications to income as described in §§ 58.1-322.01 through\n58.1-322.04.\n\nD. A pass-through entity that elects to pay the tax levied by subsection B shall\nbe eligible for all credits, deductions, or other adjustments to taxable income\nunder § 58.1-391, provided that a pass-through entity’s taxable\nincome shall be adjusted to eliminate any federal deduction for state and local\nincome taxes.\n\nE. Any person that is subject to the tax imposed under § 58.1-320 or\n58.1-360 and is an eligible owner of a pass-through entity making the election\npursuant to this section shall be entitled to a credit against the tax imposed,\nprovided that taxable income has been adjusted to add back any deduction for\nstate and local income taxes paid by the pass-through entity. Such credit shall\nbe in an amount equal to such person’s pro rata share of the tax paid\nunder this section by any pass-through entity of which such person is an owner.\nIf the amount of the credit allowed pursuant to this subsection exceeds such\nperson’s tax liability for the tax imposed under § 58.1-320 or\n58.1-360, as applicable, such excess shall be treated as an overpayment and\nrefundable pursuant to § 58.1-499.\n\nF. If any pass-through entity makes an election pursuant to this section, the\nDepartment shall assess and collect tax, interest, and penalties as if such tax\nis a corporate income tax imposed pursuant to the provisions of Article 10\n(§ 58.1-400 et seq.).\n\nG. The Department shall develop and make publicly available guidelines\nimplementing the provisions of this section and the credit authorized by\nsubdivision C 2 of § 58.1-332.\n\nHISTORY: 2022, cc. 690, 689; 2023, cc. 686, 687; 2025, c. 725.","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}}