{"formats":[{"name":"JSON","format":"json","url":"\/downloads\/2025\/code-json\/58.1-439.12_11.json"},{"name":"Plain Text","format":"text","url":"\/downloads\/2025\/code-text\/58.1-439.12_11.txt"},{"name":"XML","format":"xml","url":"\/downloads\/2025\/code-xml\/58.1-439.12_11.xml"},{"name":"HTML","format":"html","url":"\/downloads\/2025\/code-html\/58.1-439.12_11.html"}],"law_id":85547,"edition_id":1,"section_id":85547,"structure_id":13153,"section_number":"58.1-439.12:11","catch_line":"Major research and development expenses tax credit","history":"2016, cc. 300, 661; 2020, cc. 469, 470; 2021, Sp. Sess. I, cc. 47, 48; 2024, c. 661.","full_text":"A\n\nAs used in this section, unless the context requires a different meaning:\n\t\t\t“Virginia qualified research” means qualified research, as defined in § 41(d) of the Internal Revenue Code, as amended, that is conducted in the Commonwealth.\n\t\t\t“Virginia qualified research and development expenses” means qualified research expenses, as defined in § 41(b) of the Internal Revenue Code, as amended, incurred for Virginia qualified research.B\n\n1. For taxable years beginning on or after January 1, 2016, but before January 1, 2021, a taxpayer with Virginia qualified research and development expenses for the taxable year in excess of $5 million shall be allowed a credit against the tax levied pursuant to \u00a7 58.1-320 or 58.1-400 in an amount equal to 10 percent of the difference between (i) the Virginia qualified research and development expenses paid or incurred by the taxpayer during the taxable year and (ii) 50 percent of the average Virginia qualified research and development expenses paid or incurred by the taxpayer for the three taxable years immediately preceding the taxable year for which the credit is being determined. If the taxpayer did not pay or incur Virginia qualified research and development expenses in any one of the three taxable years immediately preceding the taxable year for which the credit is being determined, the tax credit shall equal five percent of the Virginia qualified research and development expenses paid or incurred by the taxpayer during the relevant taxable year.2\n\nFor taxable years beginning on or after January 1, 2021, but before January 1, 2023, a taxpayer with Virginia qualified research and development expenses for the taxable year in excess of $5 million shall be allowed a credit against the tax levied pursuant to § 58.1-320, 58.1-400, or 58.1-1202 in an amount equal to 10 percent of the difference between (i) the Virginia qualified research and development expenses paid or incurred by the taxpayer during the taxable year and (ii) 50 percent of the average Virginia qualified research and development expenses paid or incurred by the taxpayer for the three taxable years immediately preceding the taxable year for which the credit is being determined. If the taxpayer did not pay or incur Virginia qualified research and development expenses in any one of the three taxable years immediately preceding the taxable year for which the credit is being determined, the tax credit shall equal five percent of the Virginia qualified research and development expenses paid or incurred by the taxpayer during the relevant taxable year.3\n\nFor taxable years beginning on or after January 1, 2023, but before January 1, 2025, a taxpayer with Virginia qualified research and development expenses for the taxable year in excess of $5 million shall be allowed a credit against the tax levied pursuant to § 58.1-320, 58.1-400, or 58.1-1202 in an amount equal to:\n\t\t\t\ta. Ten percent, up to the first $1 million, of the difference between (i) Virginia qualified research and development expenses paid or incurred by the taxpayer during the taxable year and (ii) 50 percent of the average Virginia qualified research and development expenses paid or incurred by the taxpayer for the three taxable years immediately preceding the taxable year for which the credit is being determined.\n\t\t\t\tb. Five percent of the difference in excess of $1 million between (i) any Virginia qualified research and development expenses paid or incurred by the taxpayer during the taxable year and (ii) 50 percent of the average Virginia qualified research and development expenses paid or incurred by the taxpayer for the three taxable years immediately preceding the taxable year for which the credit is being determined.\n\t\t\t\tIf the taxpayer did not pay or incur Virginia qualified research and development expenses in any one of the three taxable years immediately preceding the taxable year for which the credit is being determined, the tax credit shall equal five percent of the Virginia qualified research and development expenses paid or incurred by the taxpayer during the relevant taxable year.\n\t\t\t\tThe aggregate amount of credits allowed to each taxpayer under this subdivision 3 shall not exceed $300,000 for the taxable year, except that the aggregate amount of credits allowed to each taxpayer shall not exceed $400,000 for the taxable year if the Virginia qualified research was conducted in conjunction with a public institution of higher education in the Commonwealth or a private institution of higher education in the Commonwealth.C\n\n1. For taxable years beginning before January 1, 2021, the aggregate amount of credits granted for each fiscal year of the Commonwealth pursuant to this section shall not exceed $20 million.2\n\nFor taxable years beginning on and after January 1, 2021, but before January 1, 2023, the aggregate amount of credits granted for each fiscal year of the Commonwealth pursuant to this section shall not exceed $24 million.3\n\nFor taxable years beginning on or after January 1, 2023, the aggregate amount of credits granted for each fiscal year of the Commonwealth pursuant to this section shall not exceed $16 million.D\n\nIn the event that approved applications for the tax credits allowed under this section exceed the limit described in subsection C for any taxable year, the Department shall apportion the credits by dividing such limit by the total amount of tax credits approved, to determine the percentage of allowed tax credits each taxpayer shall receive.E\n\nThe amount of the credit claimed for the taxable year shall not exceed 75 percent of the total amount of tax imposed by this chapter upon the taxpayer for the taxable year. Any credit not usable for the taxable year for which the credit was first allowed may be carried over for credit against the income taxes of the taxpayer in the next 10 succeeding taxable years or until the total amount of the tax credit has been taken, whichever is sooner.F\n\nAny taxpayer who claims the tax credit for Virginia qualified research and development expenses pursuant to this section shall not use such expenses as the basis for claiming any other credit provided under the Code of Virginia.G\n\nCredits granted to a partnership, limited liability company, or electing small business corporation (S corporation) shall be allocated to the individual partners, members, or shareholders, respectively, in proportion to their ownership interests in such entities or in accordance with a written agreement entered into by such individual partners, members, or shareholders.H\n\nThe Department shall develop and publish guidelines under this section including guidelines for applying for the tax credit. Such guidelines shall be exempt from the Administrative Process Act (§ 2.2-4000 et seq.). Applications for the tax credit must be received by the Department no later than September 1 of the calendar year following the close of the taxable year in which the expenses were paid or incurred.\n\t\t\tThe Department shall also adopt guidelines to prescribe standards for determining when research and development is considered conducted in the Commonwealth for purposes of allowing the credit under this section. In adopting guidelines, the Department may consider (i) the location where the research and development is performed; (ii) the residence or business location of the taxpayer or taxpayers conducting the research and development; (iii) the location where supplies used in the research and development are consumed; and (iv) any other factors that the Department deems to be relevant.I\n\nNo tax credit shall be allowed pursuant to this section, if the otherwise qualified research and development expenses are paid for or incurred by a taxpayer for research conducted in the Commonwealth on human cells or tissue derived from induced abortions or from stem cells obtained from human embryos. The foregoing provision shall not apply to research conducted using stem cells other than embryonic stem cells.","order_by":null,"text":{"0":{"id":306472,"text":"As used in this section, unless the context requires a different meaning:\n\t\t\t“Virginia qualified research” means qualified research, as defined in § 41(d) of the Internal Revenue Code, as amended, that is conducted in the Commonwealth.\n\t\t\t“Virginia qualified research and development expenses” means qualified research expenses, as defined in § 41(b) of the Internal Revenue Code, as amended, incurred for Virginia qualified research.","type":"section","prefixes":["A"],"prefix":"A","entire_prefix":"A","prefix_anchor":"A","level":1,"next_prefix":"B"},"1":{"id":306473,"text":"1. For taxable years beginning on or after January 1, 2016, but before January 1, 2021, a taxpayer with Virginia qualified research and development expenses for the taxable year in excess of $5 million shall be allowed a credit against the tax levied pursuant to \u00a7 58.1-320 or 58.1-400 in an amount equal to 10 percent of the difference between (i) the Virginia qualified research and development expenses paid or incurred by the taxpayer during the taxable year and (ii) 50 percent of the average Virginia qualified research and development expenses paid or incurred by the taxpayer for the three taxable years immediately preceding the taxable year for which the credit is being determined. If the taxpayer did not pay or incur Virginia qualified research and development expenses in any one of the three taxable years immediately preceding the taxable year for which the credit is being determined, the tax credit shall equal five percent of the Virginia qualified research and development expenses paid or incurred by the taxpayer during the relevant taxable year.","type":"section","prefixes":["B"],"prefix":"B","entire_prefix":"B","prefix_anchor":"B","level":1,"prior_prefix":"A","next_prefix":"B2"},"2":{"id":306474,"text":"For taxable years beginning on or after January 1, 2021, but before January 1, 2023, a taxpayer with Virginia qualified research and development expenses for the taxable year in excess of $5 million shall be allowed a credit against the tax levied pursuant to § 58.1-320, 58.1-400, or 58.1-1202 in an amount equal to 10 percent of the difference between (i) the Virginia qualified research and development expenses paid or incurred by the taxpayer during the taxable year and (ii) 50 percent of the average Virginia qualified research and development expenses paid or incurred by the taxpayer for the three taxable years immediately preceding the taxable year for which the credit is being determined. If the taxpayer did not pay or incur Virginia qualified research and development expenses in any one of the three taxable years immediately preceding the taxable year for which the credit is being determined, the tax credit shall equal five percent of the Virginia qualified research and development expenses paid or incurred by the taxpayer during the relevant taxable year.","type":"section","prefixes":["B","2"],"prefix":"2","entire_prefix":"B2","prefix_anchor":"B2","level":2,"prior_prefix":"B","next_prefix":"B3"},"3":{"id":306475,"text":"For taxable years beginning on or after January 1, 2023, but before January 1, 2025, a taxpayer with Virginia qualified research and development expenses for the taxable year in excess of $5 million shall be allowed a credit against the tax levied pursuant to § 58.1-320, 58.1-400, or 58.1-1202 in an amount equal to:\n\t\t\t\ta. Ten percent, up to the first $1 million, of the difference between (i) Virginia qualified research and development expenses paid or incurred by the taxpayer during the taxable year and (ii) 50 percent of the average Virginia qualified research and development expenses paid or incurred by the taxpayer for the three taxable years immediately preceding the taxable year for which the credit is being determined.\n\t\t\t\tb. Five percent of the difference in excess of $1 million between (i) any Virginia qualified research and development expenses paid or incurred by the taxpayer during the taxable year and (ii) 50 percent of the average Virginia qualified research and development expenses paid or incurred by the taxpayer for the three taxable years immediately preceding the taxable year for which the credit is being determined.\n\t\t\t\tIf the taxpayer did not pay or incur Virginia qualified research and development expenses in any one of the three taxable years immediately preceding the taxable year for which the credit is being determined, the tax credit shall equal five percent of the Virginia qualified research and development expenses paid or incurred by the taxpayer during the relevant taxable year.\n\t\t\t\tThe aggregate amount of credits allowed to each taxpayer under this subdivision 3 shall not exceed $300,000 for the taxable year, except that the aggregate amount of credits allowed to each taxpayer shall not exceed $400,000 for the taxable year if the Virginia qualified research was conducted in conjunction with a public institution of higher education in the Commonwealth or a private institution of higher education in the Commonwealth.","type":"section","prefixes":["B","3"],"prefix":"3","entire_prefix":"B3","prefix_anchor":"B3","level":2,"prior_prefix":"B2","next_prefix":"C"},"4":{"id":306476,"text":"1. For taxable years beginning before January 1, 2021, the aggregate amount of credits granted for each fiscal year of the Commonwealth pursuant to this section shall not exceed $20 million.","type":"section","prefixes":["C"],"prefix":"C","entire_prefix":"C","prefix_anchor":"C","level":1,"prior_prefix":"B3","next_prefix":"C2"},"5":{"id":306477,"text":"For taxable years beginning on and after January 1, 2021, but before January 1, 2023, the aggregate amount of credits granted for each fiscal year of the Commonwealth pursuant to this section shall not exceed $24 million.","type":"section","prefixes":["C","2"],"prefix":"2","entire_prefix":"C2","prefix_anchor":"C2","level":2,"prior_prefix":"C","next_prefix":"C3"},"6":{"id":306478,"text":"For taxable years beginning on or after January 1, 2023, the aggregate amount of credits granted for each fiscal year of the Commonwealth pursuant to this section shall not exceed $16 million.","type":"section","prefixes":["C","3"],"prefix":"3","entire_prefix":"C3","prefix_anchor":"C3","level":2,"prior_prefix":"C2","next_prefix":"D"},"7":{"id":306479,"text":"In the event that approved applications for the tax credits allowed under this section exceed the limit described in subsection C for any taxable year, the Department shall apportion the credits by dividing such limit by the total amount of tax credits approved, to determine the percentage of allowed tax credits each taxpayer shall receive.","type":"section","prefixes":["D"],"prefix":"D","entire_prefix":"D","prefix_anchor":"D","level":1,"prior_prefix":"C3","next_prefix":"E"},"8":{"id":306480,"text":"The amount of the credit claimed for the taxable year shall not exceed 75 percent of the total amount of tax imposed by this chapter upon the taxpayer for the taxable year. Any credit not usable for the taxable year for which the credit was first allowed may be carried over for credit against the income taxes of the taxpayer in the next 10 succeeding taxable years or until the total amount of the tax credit has been taken, whichever is sooner.","type":"section","prefixes":["E"],"prefix":"E","entire_prefix":"E","prefix_anchor":"E","level":1,"prior_prefix":"D","next_prefix":"F"},"9":{"id":306481,"text":"Any taxpayer who claims the tax credit for Virginia qualified research and development expenses pursuant to this section shall not use such expenses as the basis for claiming any other credit provided under the Code of Virginia.","type":"section","prefixes":["F"],"prefix":"F","entire_prefix":"F","prefix_anchor":"F","level":1,"prior_prefix":"E","next_prefix":"G"},"10":{"id":306482,"text":"Credits granted to a partnership, limited liability company, or electing small business corporation (S corporation) shall be allocated to the individual partners, members, or shareholders, respectively, in proportion to their ownership interests in such entities or in accordance with a written agreement entered into by such individual partners, members, or shareholders.","type":"section","prefixes":["G"],"prefix":"G","entire_prefix":"G","prefix_anchor":"G","level":1,"prior_prefix":"F","next_prefix":"H"},"11":{"id":306483,"text":"The Department shall develop and publish guidelines under this section including guidelines for applying for the tax credit. Such guidelines shall be exempt from the Administrative Process Act (§ 2.2-4000 et seq.). Applications for the tax credit must be received by the Department no later than September 1 of the calendar year following the close of the taxable year in which the expenses were paid or incurred.\n\t\t\tThe Department shall also adopt guidelines to prescribe standards for determining when research and development is considered conducted in the Commonwealth for purposes of allowing the credit under this section. In adopting guidelines, the Department may consider (i) the location where the research and development is performed; (ii) the residence or business location of the taxpayer or taxpayers conducting the research and development; (iii) the location where supplies used in the research and development are consumed; and (iv) any other factors that the Department deems to be relevant.","type":"section","prefixes":["H"],"prefix":"H","entire_prefix":"H","prefix_anchor":"H","level":1,"prior_prefix":"G","next_prefix":"I"},"12":{"id":306484,"text":"No tax credit shall be allowed pursuant to this section, if the otherwise qualified research and development expenses are paid for or incurred by a taxpayer for research conducted in the Commonwealth on human cells or tissue derived from induced abortions or from stem cells obtained from human embryos. The foregoing provision shall not apply to research conducted using stem cells other than embryonic stem cells.","type":"section","prefixes":["I"],"prefix":"I","entire_prefix":"I","prefix_anchor":"I","level":1,"prior_prefix":"H"}},"ancestry":[{"id":13153,"edition_id":1,"name":"Tax Credits for Corporations","identifier":"13","label":"article","depth":4,"order_by":1,"parent_id":13152,"metadata":{},"date_created":"2026-06-26 03:44:21","date_modified":"2026-06-26 03:44:21","permalink":{"id":253497,"object_type":"structure","relational_id":13153,"identifier":"13","token":"58.1\/I\/3\/13","url":"\/58.1\/I\/3\/13\/","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 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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":59349,"structure_id":13153,"section_number":"58.1-430","catch_line":"Repealed","url":"\/58.1-430\/","token":"58.1\/I\/3\/13\/58.1-430","metadata":false},{"id":79747,"structure_id":13153,"section_number":"58.1-431","catch_line":"Repealed","url":"\/58.1-431\/","token":"58.1\/I\/3\/13\/58.1-431","metadata":false},{"id":87213,"structure_id":13153,"section_number":"58.1-432","catch_line":"Tax credit for purchase of conservation tillage equipment","url":"\/58.1-432\/","token":"58.1\/I\/3\/13\/58.1-432","metadata":false},{"id":78377,"structure_id":13153,"section_number":"58.1-433","catch_line":"Expired","url":"\/58.1-433\/","token":"58.1\/I\/3\/13\/58.1-433","metadata":false},{"id":84600,"structure_id":13153,"section_number":"58.1-433.1","catch_line":"Virginia Coal Employment and Production Incentive Tax Credit","url":"\/58.1-433.1\/","token":"58.1\/I\/3\/13\/58.1-433.1","metadata":false},{"id":72145,"structure_id":13153,"section_number":"58.1-434","catch_line":"Repealed","url":"\/58.1-434\/","token":"58.1\/I\/3\/13\/58.1-434","metadata":false},{"id":62315,"structure_id":13153,"section_number":"58.1-436","catch_line":"Tax credit for purchase of conservation tillage and precision agricultural application equipment","url":"\/58.1-436\/","token":"58.1\/I\/3\/13\/58.1-436","metadata":false},{"id":62397,"structure_id":13153,"section_number":"58.1-437","catch_line":"Repealed","url":"\/58.1-437\/","token":"58.1\/I\/3\/13\/58.1-437","metadata":false},{"id":83316,"structure_id":13153,"section_number":"58.1-438","catch_line":"Not effective","url":"\/58.1-438\/","token":"58.1\/I\/3\/13\/58.1-438","metadata":false},{"id":56216,"structure_id":13153,"section_number":"58.1-438.1","catch_line":"Tax credit for vehicle emissions testing equipment, clean-fuel vehicles and certain 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credit","url":"\/58.1-439.12_10\/","token":"58.1\/I\/3\/13\/58.1-439.12_10","metadata":false},"next_section":{"id":65654,"structure_id":13153,"section_number":"58.1-439.12:12","catch_line":"Food donation tax credit","url":"\/58.1-439.12_12\/","token":"58.1\/I\/3\/13\/58.1-439.12_12","metadata":false},"metadata":false,"official_url":"https:\/\/law.lis.virginia.gov\/vacode\/58.1-439.12:11\/","history_text":"

This law was first created in 2016. The record of its establishment is cataloged in chapters 300<\/a> and 661<\/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 2020, chapters 469<\/a> and 470<\/a>; in 2024, chapter 661<\/a>.<\/p>","references":[{"id":84261,"section_number":"58.1-439.12:08","catch_line":"Research and development expenses tax credit","order_by":null,"url":"\/58.1-439.12_08\/"}],"refers_to":[{"id":86911,"section_number":"2.2-4000","catch_line":"Short title; purpose","order_by":null,"url":"\/2.2-4000\/"},{"id":87019,"section_number":"58.1-1202","catch_line":"Bank capital assessable","order_by":null,"url":"\/58.1-1202\/"},{"id":62270,"section_number":"58.1-320","catch_line":"Imposition of tax","order_by":null,"url":"\/58.1-320\/"},{"id":60955,"section_number":"58.1-400","catch_line":"Imposition of tax","order_by":null,"url":"\/58.1-400\/"}],"permalink":{"id":253599,"object_type":"law","relational_id":85547,"identifier":"58.1-439.12:11","token":"58.1\/I\/3\/13\/58.1-439.12_11","url":"\/58.1-439.12_11\/","edition_id":1,"permalink":0,"preferred":1},"url":"\/58.1-439.12_11\/","token":"58.1\/I\/3\/13\/58.1-439.12_11","dublin_core":{"Title":"Major research and development expenses tax credit","Type":"Text","Format":"text\/html","Identifier":"\u00a7 58.1-439.12:11","Relation":"Code of Virginia"},"html":"\n\t\t\t\t\t\t

A.<\/span> As used in this section, unless the context requires a different meaning:\n\t\t\t“Virginia qualified research<\/span>” means qualified research, as defined in § 41(d) of the Internal Revenue Code, as amended, that is conducted in the Commonwealth.\n\t\t\t“Virginia qualified research<\/span> and development expenses<\/span>” means qualified research expenses, as defined in § 41(b) of the Internal Revenue Code, as amended, incurred for Virginia qualified research<\/span>. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

B.<\/span> 1. For taxable years beginning on or after January 1, 2016, but before January 1, 2021, a taxpayer<\/span> with Virginia qualified research<\/span> and development expenses<\/span> for the taxable year in excess of $5 million shall be allowed a credit against the tax levied pursuant to \u00a7 58.1-320<\/a> or 58.1-400<\/a> in an amount equal to 10 percent of the difference between (i) the Virginia qualified research<\/span> and development expenses<\/span> paid or incurred by the taxpayer<\/span> during the taxable year and (ii) 50 percent of the average Virginia qualified research<\/span> and development expenses<\/span> paid or incurred by the taxpayer<\/span> for the three taxable years immediately preceding the taxable year for which the credit is being determined. If the taxpayer<\/span> did not pay or incur Virginia qualified research<\/span> and development expenses<\/span> in any one of the three taxable years immediately preceding the taxable year for which the credit is being determined, the tax credit shall equal five percent of the Virginia qualified research<\/span> and development expenses<\/span> paid or incurred by the taxpayer<\/span> during the relevant taxable year. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

2.<\/span> For taxable years beginning on or after January 1, 2021, but before January 1, 2023, a taxpayer<\/span> with Virginia qualified research<\/span> and development expenses<\/span> for the taxable year in excess of $5 million shall be allowed a credit against the tax levied pursuant to § 58.1-320<\/a>, 58.1-400<\/a>, or 58.1-1202<\/a> in an amount equal to 10 percent of the difference between (i) the Virginia qualified research<\/span> and development expenses<\/span> paid or incurred by the taxpayer<\/span> during the taxable year and (ii) 50 percent of the average Virginia qualified research<\/span> and development expenses<\/span> paid or incurred by the taxpayer<\/span> for the three taxable years immediately preceding the taxable year for which the credit is being determined. If the taxpayer<\/span> did not pay or incur Virginia qualified research<\/span> and development expenses<\/span> in any one of the three taxable years immediately preceding the taxable year for which the credit is being determined, the tax credit shall equal five percent of the Virginia qualified research<\/span> and development expenses<\/span> paid or incurred by the taxpayer<\/span> during the relevant taxable year. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

3.<\/span> For taxable years beginning on or after January 1, 2023, but before January 1, 2025, a taxpayer<\/span> with Virginia qualified research<\/span> and development expenses<\/span> for the taxable year in excess of $5 million shall be allowed a credit against the tax levied pursuant to § 58.1-320<\/a>, 58.1-400<\/a>, or 58.1-1202<\/a> in an amount equal to:\n\t\t\t\ta. Ten percent, up to the first $1 million, of the difference between (i) Virginia qualified research<\/span> and development expenses<\/span> paid or incurred by the taxpayer<\/span> during the taxable year and (ii) 50 percent of the average Virginia qualified research<\/span> and development expenses<\/span> paid or incurred by the taxpayer<\/span> for the three taxable years immediately preceding the taxable year for which the credit is being determined.\n\t\t\t\tb. Five percent of the difference in excess of $1 million between (i) any Virginia qualified research<\/span> and development expenses<\/span> paid or incurred by the taxpayer<\/span> during the taxable year and (ii) 50 percent of the average Virginia qualified research<\/span> and development expenses<\/span> paid or incurred by the taxpayer<\/span> for the three taxable years immediately preceding the taxable year for which the credit is being determined.\n\t\t\t\tIf the taxpayer<\/span> did not pay or incur Virginia qualified research<\/span> and development expenses<\/span> in any one of the three taxable years immediately preceding the taxable year for which the credit is being determined, the tax credit shall equal five percent of the Virginia qualified research<\/span> and development expenses<\/span> paid or incurred by the taxpayer<\/span> during the relevant taxable year.\n\t\t\t\tThe aggregate amount of credits allowed to each taxpayer<\/span> under this subdivision 3 shall not exceed $300,000 for the taxable year, except that the aggregate amount of credits allowed to each taxpayer<\/span> shall not exceed $400,000 for the taxable year if the Virginia qualified research<\/span> was conducted in conjunction with a public institution of higher education in the Commonwealth or a private institution of higher education in the Commonwealth. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

C.<\/span> 1. For taxable years beginning before January 1, 2021, the aggregate amount of credits granted for each fiscal year of the Commonwealth pursuant to this section shall not exceed $20 million. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

2.<\/span> For taxable years beginning on and after January 1, 2021, but before January 1, 2023, the aggregate amount of credits granted for each fiscal year of the Commonwealth pursuant to this section shall not exceed $24 million. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

3.<\/span> For taxable years beginning on or after January 1, 2023, the aggregate amount of credits granted for each fiscal year of the Commonwealth pursuant to this section shall not exceed $16 million. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

D.<\/span> In the event that approved applications for the tax credits allowed under this section exceed the limit described in subsection C for any taxable year, the Department<\/span> shall apportion the credits by dividing such limit by the total amount of tax credits approved, to determine the percentage of allowed tax credits each taxpayer<\/span> shall receive. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

E.<\/span> The amount of the credit claimed for the taxable year shall not exceed 75 percent of the total amount of tax imposed by this chapter upon the taxpayer<\/span> for the taxable year. Any credit not usable for the taxable year for which the credit was first allowed may be carried over for credit against the income taxes of the taxpayer<\/span> in the next 10 succeeding taxable years or until the total amount of the tax credit has been taken, whichever is sooner. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

F.<\/span> Any taxpayer<\/span> who claims the tax credit for Virginia qualified research<\/span> and development expenses<\/span> pursuant to this section shall not use such expenses as the basis for claiming any other credit provided under the Code of Virginia. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

G.<\/span> Credits granted to a partnership, limited liability company, or electing small business corporation<\/span> (S corporation<\/span>) shall be allocated to the individual<\/span> partners, members, or shareholders, respectively, in proportion to their ownership interests in such entities or in accordance with a written agreement entered into by such individual<\/span> partners, members, or shareholders. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

H.<\/span> The Department<\/span> shall develop and publish guidelines under this section including guidelines for applying for the tax credit. Such guidelines shall be exempt from the Administrative Process Act (§ 2.2-4000<\/a> et seq.). Applications for the tax credit must be received by the Department<\/span> no later than September 1 of the calendar year following the close of the taxable year in which the expenses were paid or incurred.\n\t\t\tThe Department<\/span> shall also adopt guidelines to prescribe standards for determining when research and development is considered conducted in the Commonwealth for purposes of allowing the credit under this section. In adopting guidelines, the Department<\/span> may consider (i) the location where the research and development is performed; (ii) the residence or business location of the taxpayer<\/span> or taxpayers<\/span> conducting the research and development; (iii) the location where supplies used in the research and development are consumed; and (iv) any other factors that the Department<\/span> deems to be relevant. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

I.<\/span> No tax credit shall be allowed pursuant to this section, if the otherwise qualified research and development expenses are paid for or incurred by a taxpayer<\/span> for research conducted in the Commonwealth on human cells or tissue derived from induced abortions or from stem cells obtained from human embryos. The foregoing provision shall not apply to research conducted using stem cells other than embryonic stem cells. <\/i><\/a><\/p><\/section>","plain_text":" CODE OF VIRGINIA\n\nMAJOR RESEARCH AND DEVELOPMENT EXPENSES TAX CREDIT (\u00a7 58.1-439.12:11)\n\nA. As used in this section, unless the context requires a different meaning:\n\t\t\t“Virginia qualified research” means qualified research, as\ndefined in § 41(d) of the Internal Revenue Code, as amended, that is\nconducted in the Commonwealth.\n\t\t\t“Virginia qualified research and development expenses” means\nqualified research expenses, as defined in § 41(b) of the Internal Revenue\nCode, as amended, incurred for Virginia qualified research.\n\nB. 1. For taxable years beginning on or after January 1, 2016, but before\nJanuary 1, 2021, a taxpayer with Virginia qualified research and development\nexpenses for the taxable year in excess of $5 million shall be allowed a credit\nagainst the tax levied pursuant to \u00a7 58.1-320 or 58.1-400 in an amount equal to\n10 percent of the difference between (i) the Virginia qualified research and\ndevelopment expenses paid or incurred by the taxpayer during the taxable year\nand (ii) 50 percent of the average Virginia qualified research and development\nexpenses paid or incurred by the taxpayer for the three taxable years\nimmediately preceding the taxable year for which the credit is being determined.\nIf the taxpayer did not pay or incur Virginia qualified research and development\nexpenses in any one of the three taxable years immediately preceding the taxable\nyear for which the credit is being determined, the tax credit shall equal five\npercent of the Virginia qualified research and development expenses paid or\nincurred by the taxpayer during the relevant taxable year.\n\n 2. For taxable years beginning on or after January 1, 2021, but before January\n 1, 2023, a taxpayer with Virginia qualified research and development expenses\n for the taxable year in excess of $5 million shall be allowed a credit against\n the tax levied pursuant to § 58.1-320, 58.1-400, or 58.1-1202 in an\n amount equal to 10 percent of the difference between (i) the Virginia\n qualified research and development expenses paid or incurred by the taxpayer\n during the taxable year and (ii) 50 percent of the average Virginia qualified\n research and development expenses paid or incurred by the taxpayer for the\n three taxable years immediately preceding the taxable year for which the\n credit is being determined. If the taxpayer did not pay or incur Virginia\n qualified research and development expenses in any one of the three taxable\n years immediately preceding the taxable year for which the credit is being\n determined, the tax credit shall equal five percent of the Virginia qualified\n research and development expenses paid or incurred by the taxpayer during the\n relevant taxable year.\n\n 3. For taxable years beginning on or after January 1, 2023, but before January\n 1, 2025, a taxpayer with Virginia qualified research and development expenses\n for the taxable year in excess of $5 million shall be allowed a credit against\n the tax levied pursuant to § 58.1-320, 58.1-400, or 58.1-1202 in an\n amount equal to:\n \t\t\t\ta. Ten percent, up to the first $1 million, of the difference between (i)\n Virginia qualified research and development expenses paid or incurred by the\n taxpayer during the taxable year and (ii) 50 percent of the average Virginia\n qualified research and development expenses paid or incurred by the taxpayer\n for the three taxable years immediately preceding the taxable year for which\n the credit is being determined.\n \t\t\t\tb. Five percent of the difference in excess of $1 million between (i) any\n Virginia qualified research and development expenses paid or incurred by the\n taxpayer during the taxable year and (ii) 50 percent of the average Virginia\n qualified research and development expenses paid or incurred by the taxpayer\n for the three taxable years immediately preceding the taxable year for which\n the credit is being determined.\n \t\t\t\tIf the taxpayer did not pay or incur Virginia qualified research and\n development expenses in any one of the three taxable years immediately\n preceding the taxable year for which the credit is being determined, the tax\n credit shall equal five percent of the Virginia qualified research and\n development expenses paid or incurred by the taxpayer during the relevant\n taxable year.\n \t\t\t\tThe aggregate amount of credits allowed to each taxpayer under this\n subdivision 3 shall not exceed $300,000 for the taxable year, except that the\n aggregate amount of credits allowed to each taxpayer shall not exceed $400,000\n for the taxable year if the Virginia qualified research was conducted in\n conjunction with a public institution of higher education in the Commonwealth\n or a private institution of higher education in the Commonwealth.\n\nC. 1. For taxable years beginning before January 1, 2021, the aggregate amount\nof credits granted for each fiscal year of the Commonwealth pursuant to this\nsection shall not exceed $20 million.\n\n 2. For taxable years beginning on and after January 1, 2021, but before\n January 1, 2023, the aggregate amount of credits granted for each fiscal year\n of the Commonwealth pursuant to this section shall not exceed $24 million.\n\n 3. For taxable years beginning on or after January 1, 2023, the aggregate\n amount of credits granted for each fiscal year of the Commonwealth pursuant to\n this section shall not exceed $16 million.\n\nD. In the event that approved applications for the tax credits allowed under\nthis section exceed the limit described in subsection C for any taxable year,\nthe Department shall apportion the credits by dividing such limit by the total\namount of tax credits approved, to determine the percentage of allowed tax\ncredits each taxpayer shall receive.\n\nE. The amount of the credit claimed for the taxable year shall not exceed 75\npercent of the total amount of tax imposed by this chapter upon the taxpayer for\nthe taxable year. Any credit not usable for the taxable year for which the\ncredit was first allowed may be carried over for credit against the income taxes\nof the taxpayer in the next 10 succeeding taxable years or until the total\namount of the tax credit has been taken, whichever is sooner.\n\nF. Any taxpayer who claims the tax credit for Virginia qualified research and\ndevelopment expenses pursuant to this section shall not use such expenses as the\nbasis for claiming any other credit provided under the Code of Virginia.\n\nG. Credits granted to a partnership, limited liability company, or electing\nsmall business corporation (S corporation) shall be allocated to the individual\npartners, members, or shareholders, respectively, in proportion to their\nownership interests in such entities or in accordance with a written agreement\nentered into by such individual partners, members, or shareholders.\n\nH. The Department shall develop and publish guidelines under this section\nincluding guidelines for applying for the tax credit. Such guidelines shall be\nexempt from the Administrative Process Act (§ 2.2-4000 et seq.).\nApplications for the tax credit must be received by the Department no later than\nSeptember 1 of the calendar year following the close of the taxable year in\nwhich the expenses were paid or incurred.\n\t\t\tThe Department shall also adopt guidelines to prescribe standards for\ndetermining when research and development is considered conducted in the\nCommonwealth for purposes of allowing the credit under this section. In adopting\nguidelines, the Department may consider (i) the location where the research and\ndevelopment is performed; (ii) the residence or business location of the\ntaxpayer or taxpayers conducting the research and development; (iii) the\nlocation where supplies used in the research and development are consumed; and\n(iv) any other factors that the Department deems to be relevant.\n\nI. No tax credit shall be allowed pursuant to this section, if the otherwise\nqualified research and development expenses are paid for or incurred by a\ntaxpayer for research conducted in the Commonwealth on human cells or tissue\nderived from induced abortions or from stem cells obtained from human embryos.\nThe foregoing provision shall not apply to research conducted using stem cells\nother than embryonic stem cells.\n\nHISTORY: 2016, cc. 300, 661; 2020, cc. 469, 470; 2021, Sp. Sess. I, cc. 47, 48;\n2024, c. 661.","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}}