VIRGINIA BUSINESS INCENTIVES

The Virginia corporate income tax rate is a flat 6 percent; however, the sales factor in the state’s income apportionment formula is double weighted, benefiting companies with high payrolls and property in Virginia. 

Virginia does not tax property at the state level. Real estate and tangible personal property are taxed at the local level.  Items not taxed in Virginia include manufacturers’ inventory, intangible property and furniture/fixtures.

Virginia has one of the lowest sales tax rates in the country at 6 percent; however, there are some exemptions that can lower this sales tax rate such as items purchased for resale or used in manufacturing, pollution control devices, purchases used in research and development, and charges for utilities and Internet access. Computer equipment purchased or leased for the processing, storage, retrieval, or communication of data in large data centers will also qualify for this tax exemption.

The COF is a discretionary financial incentive established to support projects that create new jobs and investment in accordance with certain criteria established by state legislation. Grants are made to the community and may be used for such things as site acquisition and development, transportation access, public or private utility extension or capacity development, construction or build-out of publicly or privately-owned buildings, or training. Grants are made at the discretion of the Governor.

Learn more: https://www.vedp.org/incentive/commonwealths-development-opportunity-fund-cof 

This tax credit for “green” companies awards an annual tax credit of $500 for each salary that is $50,000 or more for up to 350 jobs. The credit is allowed in the first taxable year after the job has been filled for at least one year and in each of the four succeeding years. Green jobs are related to the field of renewable, alternative energies. 

Companies locating or expanding in Virginia can receive a corporate income tax credit for each new full-time job created beyond 50 jobs, or 25 jobs for companies locating in an Enterprise Zone or economically distressed area. Jobs that do not qualify include seasonal or building-related/security positions. 

The VEDIG is a discretionary performance incentive designed to assist and encourage companies to invest and create new employment opportunities by locating significant headquarters, administrative or service sector operations in Virginia. 

The VIP Grant and the MEE Grant are discretionary performance incentives designed to encourage continued capital investment by Virginia companies, resulting in added capacity, modernization, increased productivity, or the creation, development and utilization of advanced technology. 

The VJIP is an incentive program offering customized recruiting and training assistance to companies that are creating new jobs or experiencing technological change. The program is designed to reduce human resource development costs by providing direct funding to qualifying new and expanding companies. 

The VALET program assists companies throughout Virginia in expanding their international business. VALET offers a powerful combination of capital resources provided by the state along with professional services from expert, private-sector partners. Each year, 25 qualifying companies ramp up their global marketing efforts through this program. Companies graduate from this comprehensive, two-year business acceleration program with greater focus on the potential of export trade profits. On average, companies experience a 54 percent increase in international sales during and immediately following the program. 

Employers can receive tax credits for 30 percent of expenditures on worker retraining programs for qualified employees. The credit is capped at $2.5 million in a taxable year. Eligible programs include courses at Virginia community colleges certified by the Virginia Department of Business Assistance, or apprenticeship agreements certified by the Virginia Apprenticeship Council. 

FTZs allows businesses to defer paying U.S. Customs duties on imported goods held within the zones until the goods enter the United States for domestic consumption. 

Learn more: https://www.vedp.org/incentive/foreign-trade-zones-ftzs

The Opportunity Zones program provides a tax incentive for investors to re-invest their unrealized capital gains into Opportunity Funds that are dedicated to investing into designated census tracts or Opportunity Zones. Opportunity Zones are designated by the state and are typically located in economically-distressed communities where new investments, under certain conditions, may be eligible for preferential tax treatment. 

Learn more: http://www.dhcd.virginia.gov/index.php/opp-zones.html 

Technology zone benefits vary by county and locality, with each entity designing and administering its own program. Qualified businesses locating or expanding operations in a technology zone may receive benefits such as local permit and user fee waivers, local tax incentives, special zoning treatment, or exemption from ordinances. 

The TROF provides performance-based monetary grants and loans to localities in Virginia’s tobacco-producing regions. Many of the localities that Invest Southern Virginia represents are located in TROF territory. 

Learn more: https://www.vedp.org/incentive/tobacco-region-opportunity-fund-trof 

The CED Grant provides grants to localities that have entered into regional collaborative economic development initiatives to induce the location or expansion of companies meeting certain new job and capital investment requirements in the region. 

Learn more: https://www.vedp.org/incentive/virginia-collaborative-economic-development-performance-ced-grant

The Virginia Enterprise Zone Job Creation Grant provides grants to businesses that create high-wage, full-time, permanent positions with health benefits in an Enterprise Zone that are net new jobs for Virginia. 

Learn more: https://www.vedp.org/incentive/virginia-enterprise-zone-job-creation-grant 

The Virginia Enterprise Zone Real Property Investment Grant provides grants to investors that undertake rehabilitation, expansion or new construction projects within the boundaries of an Enterprise Zone. 

Learn more: https://www.vedp.org/incentive/virginia-enterprise-zone-real-property-investment-grant