United States

Virginia extends green jobs creation tax credit


On March 17, 2015, Virginia enacted 2015 SB 1037, which extends the state’s green jobs creation tax credit through Dec. 31, 2017.

Virginia’s green jobs creation tax credit provides up to a $2,500 credit against corporate or individual income tax for each new green job added with a salary of $50,000 or more, which is applied ratably starting with the tax year in which the job has been filled for one year and each of the four succeeding tax years.

Year Credit Amount
Job Added $0
1 Year Anniversary $500
2 Year Anniversary $500
3 Year Anniversary $500
4 Year Anniversary $500
5 Year Anniversary $500

A taxpayer’s credit is limited to 350 total new green jobs, or a maximum of $875,000 in credit. The credit is not subject to recapture, but is earned ratably on a year-by-year basis each year the job remains continuously filled. For example:

Year Credit Amount
Job Added $0
1 Year Anniversary $500
2 Year Anniversary $500
3 Year Anniversary $500
Job No Longer Filled in Year 4 $0
Job No Longer Filled in Year 5 $0

If the credit is earned by a pass-through entity, the credit amount is allocated to the entity’s partners, members or shareholders, respectively, in proportion to their ownership interest.

For the purposes of qualifying for the credit, the term “green job” is defined as “employment in industries relating to the field of renewable, alternative energies, including the manufacture and operation of products used to generate electricity and other forms of energy from alternative sources that include hydrogen and fuel cell technology, landfill gas, geothermal heating systems, solar heating systems, hydropower systems, wind systems, and biomass and biofuel systems.” The term “job” is defined as “employment of an indefinite duration […] for which the standard fringe benefits are paid by the taxpayer, requiring a minimum of either (i) 35 hours of an employee's time per week for the entire normal year of such taxpayer's operations, which "normal year" must consist of at least 48 weeks, or (ii) 1,680 hours per year.” Jobs moved to Virginia from another state qualify for the credit, but jobs moved between facilities in Virginia do not.

Although the credit amount is relatively small on a job-by-job basis, the cumulative amount can be significant, qualification is automatic, and the administrative burden is light. Taxpayers adding jobs within Virginia prior to the new sunset date should consider whether those jobs qualify as green jobs for the purposes of the credit, and should consider maintaining the appropriate job creation and retention documentation and claiming the credit accordingly.


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