A nonrefundable credit is a credit that can reduce your tax to $0 but will not produce a refund. A refundable credit can reduce your tax to $0 and produce a refund on your return.
On the Virginia return, the credits are separated into groups: Credit for taxes paid to another state, Nonrefundable Credits and Refundable Credits.
Credit for taxes paid to another state
If the same income (from wages) was taxed on both the Virginia resident return and another state's part year or nonresident return, you may be able to claim this credit. For specific details, see Virginia Credit for Taxes Paid to Another State.
Nonrefundable Credits:
- Enterprise Zone Act Credit -The investment credit can be carried forward until the full amount is used. These credits are authorized through the 2019 fiscal year.
- Neighborhood Assistance Act Credit - provides tax credits to individuals and businesses that make qualified donations directly to pre-approved Neighborhood Assistance Program organizations whose main function is to administer educational or other services to benefit low-income families.
- Recyclable Materials Credit – credit for the purchase of equipment to make products out of recyclable materials in a manufacturing environment.
- Conservation Tillage Equipment Credit- may be claimed by individuals that buy conservation tillage equipment to produce agricultural products.
- Fertilizer and Pesticide Credit – credit for approved nutrient management plan for agricultural purposes by the Soil and Water Conservation District.
- Major Research and Development Credit – credit against taxes for major research and development expenses incurred.
- Vehicle Emissions and Clean-Fuel Vehicle Credit – EXPIRED - no longer allowed-only carry forward credits from prior years
- Major Business Job Tax Credit - credit for the creation of at least 50 fulltime positions when expanding a business, if in an enterprise zone may be 25 new jobs.
- Foreign Source Retirement Income Tax Credit – credit for individuals who paid tax on pension earned in foreign county.
- Historic Rehabilitation Tax Credit – credit for rehabilitation work of a historic structure.
- Food Crop Donation Credit – tax credit for the donation of crops by any individual operating a farm in Virginia which makes a donation to a nonprofit food bank located in Virginia. The credit is equal to 30% of the fair market value of said crops.
- VA Coal Employment and Production Tax Credit – credit for employment levels and the amount of coal produced in the year in the coal mines in VA
- Equity & Debt Investments Tax Credit – you may qualify for a credit equal to 50% of your investment during the taxable year.
- Worker Retraining Tax Credit – this credit grants an employer eligibility to take a tax credit to cover training costs for employees that qualify for worker retraining.
- Waste Motor Oil Burning Equipment Credit -allowable tax credit for a business that operates a facility in Virginia that acquires/receives motor oil from the public and purchases equipment to burn the used motor oil may be eligible for a tax credit.
- Purchase of Long-Term Care Insurance – EXPIRED - Carry forward for prior years only, credit expired 12/31/2013
- Livable Home Tax Credit – Taxpayers or contractors (licensed) can be eligible for a credit up to $5,000, for the purchase or construction of a new accessible residence or by retrofitting an existing residence.
- Riparian Waterway Buffer Credit -25% tax credit of the cost of the timber on the land specified as a riparian buffer for the waterway
- Credit for Preservation of Land – Credit for the transfer of land or interests for preservation or conservation reasons, after 2007 the tax credit is equal to 40% of the fair market value.
- Biodiesel & Green Diesel Fuels Tax Credit – credit for Virginia producers of green diesel fuel or biodiesel fuel which produce up to two million gallons in a year
- Community of Opportunity Tax Credit – tax credit for landlords which have rental property in low income, poverty-stricken areas.
- Green Jobs Creation Tax Credit – tax credit allowed for the generation of new green jobs with an annual salary of at least $50,000. The credit is worth $500, and the taxpayer can create up to 350 jobs and still receive the credit.
- Farm Wineries and Vineyards Tax Credit – tax credit to establish Virginia wineries and vineyards or the renovation and enhancement of already established wineries and vineyards in Virginia.
- International Trade Facility Tax Credit -credit for adding jobs to an international trade facility or investing into a facility that will then increase trade activities and add new employees for a $3500 per fulltime employee credit.
- Port Volume Increase Tax Credit – tax credit for increasing the amount of cargo you ship through the ports located in Virginia via your manufacturing, agricultural, mining, or gas facility/entities.
- Barge Rail Usage Tax Credit – a tax credit to ship your goods via a barge or by rail rather than using trucks or other type of vehicles on the State of Virginia highways.
- Research and Development Tax Credit – tax credit for eligible expenses for research and development for tax year 2011 through 2021. You can’t claim this credit and the Major Research and Development Expenses Tax Credit in the same tax year.
- Education Improvement Tax Credit -a tax credit may be claimed for the donation of money or securities made to scholarship foundations listed on an eligible Virginia Department of Education list.
- Worker Training Tax Credit- a tax credit for certain expenses paid by a business after January 1, 2019 and before July 1, 2022 for eligible worker training. Businesses may claim up to $500 per year per qualified employee or $1000 for a non-highly compensated worker.
Refundable Credits:
- VA Coal Employment Production Credit - credit for employment levels and the amount of coal produced in the year in the coal mines in Virginia based on ownership interest in the mine.
- Agricultural Best Management Tax Credit – credit is for eligible taxpayers which have agricultural production for selling or have equine which generate the need to have a best management practice agriculturally to reduce pollutants.
- Credit Authorized by Virginia Film Office (VFO) – Eligible motion picture production companies receive several refundable tax credits through the VFO along with other incentives.
- Research and Development Expenses Tax Credit Authorized - A refundable individual and corporate tax credit is allowable for eligible research and development expenses for taxable years beginning on or after January 1, 2011, but before January 1, 2022.
Where do I enter it?
To enter these credits within your account, follow the steps below:
- State Section
- Edit
- Credits
- Choose the section you need based on the credit you are claiming
What else do I need to know?
Some credits require you send an attachment of the PDF, form, supporting documents, certificate, etc. needed to qualify for the credit. The program has provided a space to upload those documents. If you are required to send proof and there is no place to upload the document, please print and mail the return with the supporting documents. If the required information is missing, the state will remove the credit until such time they receive the information.
For additional information about all of these Virginia credits, see the Instructions for Schedule CR