Virginia R&D Expenses + Major R&D Tax Credit

Virginia R&D Expenses + Major R&D Tax Credit

Funds Virginia companies through income tax credits for qualifying innovation as a legacy incentive.

Virginia's Research and Development Tax Credit program comprised two separate income-tax credits: the refundable R&D Expenses Tax Credit, which offered 15% of the first $300,000 in qualifying Virginia R&D expenses per year and was subject to a $7.77 million annual statewide cap, and the non-refundable Major Research and Development Credit, which offered 10% of qualifying R&D expenses exceeding a $5 million base amount. Both credits were administered by the Virginia Department of Taxation and claimed on the annual state income-tax return.

Both credits have expired and no longer accept new applications. The R&D Expenses Tax Credit (refundable) sunset on December 31, 2024. The Major R&D Credit is listed on the Virginia Department of Taxation's "Expired or Repealed Credits" roster alongside the Major Business Facility Job Credit and the Worker Retraining Tax Credit. Taxpayers who accumulated carryover balances prior to expiration may continue to claim against eligible prior-year tax liability until those balances are exhausted, but no new credit can accrue.

With both credits now retired, Virginia has effectively exited the R&D income-tax incentive space. Businesses seeking state-level R&D or innovation support in Virginia should instead evaluate VEDP grant programs, the Virginia Innovation Partnership Corporation (VIPC), and the still-active Worker Training Tax Credit, which targets workforce development costs rather than research expenditure.