Virginia Worker Training Tax Credit

Virginia Worker Training Tax Credit

Supports workforce development in Virginia by helping employers invest in training through a state tax credit mechanism.

The Virginia Worker Training Tax Credit is a non-refundable Virginia state tax credit equal to 35% of qualifying costs for providing eligible training to employees, or 35% of direct costs for providing manufacturing instruction to students in grades 6 through 12. The credit applies to tax year 2026 and is claimed on Virginia income, corporation, fiduciary, bank franchise, or insurance/utility tax returns via Schedule CR (individuals/fiduciaries), Schedule 500CR (corporations), or Schedule 502ADJ (pass-through entities).

For employee training, the per-employee annual cap is $500, rising to $1,000 for employees earning below Virginia's prior-year median wage. For the manufacturing instruction track, the cap is $2,000 per manufacturer per year. A statewide aggregate cap of $1,000,000 applies annually across all claimants; if total claims exceed this cap, all approved credits are prorated. Eligible training must be provided by a vendor on Virginia's Eligible Training Provider list maintained under WIOA Title I, by any Virginia public college or community college, or under an apprenticeship agreement approved by the Commissioner of Labor and Industry. The manufacturing training track additionally requires coordination with the local school district and certification by the Virginia Department of Education.

The credit is non-refundable, meaning it offsets Virginia tax liability but does not generate a cash refund. Unused credit carries forward for up to three years. Pass-through entities must allocate the credit to members or partners using Form TCA within 30 days after the credit is granted. Employers seeking to maximise the credit should verify that their training providers appear on the Eligible Training Provider list before incurring costs, and track training expenses by employee to calculate the applicable per-employee cap.