Virginia Business Incentives

Virginia fosters a very pro-business environment that is reflected in all the communities within the state. To support business growth and encourage startups, Virginia offers qualifying businesses statewide incentives to supplement the incentives offered by each locality. Virginia business incentives include financial assistance, facilities development grants, tax credits and exemptions, and are offered in addition to localized incentive programs.

Southern Virginia is home to a diverse range of counties and cities, each offering attractive, localized incentives available to businesses in addition to the state-funded incentives. This provides businesses with competitive incentive packages to ensure they are well-supported from the start. Local Virginia business incentive packages and offerings vary by locality and are unique to the individual business and their needs.

State-Funded Incentive Programs

Corporate Income Tax

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.

Property Tax Incentives

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.

 

Sales and Use Tax Exemptions

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 Commonwealth's Opportunity Fund (COF)

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 

 

The Green Job Creation Tax Credit

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.

The Major Business Facility Job Tax Credit

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.

Virginia Economic Development Incentive Grant (VEDIG)

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.

Virginia Investment Partnership Grant (VIP)/Major Eligible Employer Grant (MEE)

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. 

Virginia Jobs Investment Program (VJIP)

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.

Virginia Leaders in Export Trade (VALET)

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.

Worker Retraining Tax Credit

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.

Locally-Funded Incentive Programs

Foreign Trade Zones (FTZs)

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

Opportunity Zone and Opportunity Fund

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

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.

Tobacco Region Opportunity Fund (TROF)

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 

Virginia Collaborative Economic Development Performance (CED) Grant

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

Virginia Enterprise Zone - Job Creation 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 

Virginia Enterprise Zone - Real Property Investment 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

Resources

There are many incentives available at the local, regional, and state level. Navigating the various programs and criteria can be confusing. We’re here to help.

To get connected to local economic developers within the Southern Virginia region, please contact Lauren Mathena at lauren.mathena@mbc-va.com 

To learn more about incentives available at a state level, visit the Virginia Economic Development Partnership at www.vedp.org/incentives.