R&D Tax Credits
in Virginia

The tax credit is calculated at 15% on the first $300,000 of expenses that exceed a certain base amount, with a maximum limit of $45,000.

The eligibility for the tax credit extends to both C-Corporations and pass-through entities.

To qualify for the Virginia R&D Tax Credit, businesses may claim expenses related to qualifying research and development (R&D) activities performed within Virginia. These expenses may include wages and salaries paid to employees involved in R&D, supplies and materials used in R&D activities, contract research expenses paid to third-party service providers, equipment and facilities used in R&D activities, and certain expenses related to obtaining patents, including legal fees. It’s important to note that these expenses must be properly documented and substantiated to claim the credit. Furthermore, only expenses related to qualifying R&D activities within Virginia are eligible for the Virginia R&D Tax Credit.

To claim this tax credit, eligible taxpayers must complete and submit Form RDC, also known as the Application for the Research and Development Expenses Tax Credit, to the Department along with any necessary supporting documentation. Along with any other documentation required by the Department, the documentation typically includes a thorough account of the research activities and costs incurred during the tax year. It is important to note that this tax credit is refundable and transferable. All things considered, the Research and Development Costs Tax Credit gives qualified taxpayers the chance to get a refundable and transferable tax credit for qualifying research and development expenses.