The Virginia R&D tax credit, explained
Virginia's R&D credits expired for tax years starting in 2025, leaving only the federal R&D credit for now.
Last verified July 2026 against Virginia Department of Taxation guidance.
The short answer
Virginia does not have an active state R&D tax credit right now. Both of its former credits, the refundable RDC credit for smaller research budgets and the nonrefundable Major R&D credit for larger ones, expired for tax years beginning on or after January 1, 2025.
Where that leaves Virginia startups
A bill to extend both credits, House Bill 1969, died in a conference committee in February 2025. That leaves Virginia companies doing research in 2025 and 2026 without a state credit to stack on top of the federal one, at least for now.
Companies that earned Major R&D credit before 2025 can still carry forward and use that balance, since it had a 10 year carryforward. But no new Virginia R&D credit is being generated for current research spending.
How it stacks with the federal credit
Without an active state credit, the federal R&D credit is the main tool available to Virginia companies doing research today. It applies whether or not a company owes Virginia income tax.
Example: a Virginia software company with 9 engineers and an average salary of $118,000 spends $1,062,000 on qualified research this year. There is no Virginia state credit to add on top of that spending anymore. The federal credit alone can run roughly $64,000 to $106,000, using the typical 6% to 10% range. If the company is under $5 million in revenue and pre-profit, it can apply up to $500,000 of that federal credit directly against its payroll tax bill instead of waiting to owe federal income tax.
Companies that already have unused Major R&D credit from a tax year before 2025 should still claim that carryforward balance on their Virginia return, since it does not disappear just because new credit stopped generating.
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Claiming the federal credit instead
Because the state credit is expired, there is no current Virginia application process for new research spending. The Virginia Department of Taxation's own credit guidance still shows both the RDC and Major R&D credit as closed for tax years starting in 2025.
The federal R&D credit remains fully available to Virginia companies, based on qualified research expenses under the same federal rules used nationwide. This includes wages, supplies, and contract research tied to developing or improving a product, process, or software.
Claimship prepares the federal research study and Form 6765 package for the company's CPA to file. If Virginia reinstates its state credit in a future legislative session, Claimship will track that change and update this guidance. The company's CPA remains the one who files any return or credit claim.
Official source: Virginia Department of Taxation.
Carryforward and deadlines
There is no Virginia state R&D credit deadline right now, since the program is not currently generating new credit. Companies with an existing Major R&D credit carryforward balance from before 2025 should confirm the remaining years on that 10 year carryforward with their CPA.
Virginia's General Assembly meets every year and reinstating the R&D credit has come up in recent sessions. Companies should check back each year, since a future session could bring the credit back with new deadlines.