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Refundable Research and Development Tax Credit
The Refundable Research & Development Tax Credit provides a credit against income tax owed up to 15% credit of first $300,000 of qualified research (or 20% of first $300,000 if the research was done with a Virginia University). If the Company is not profitable or otherwise owes no tax in a year, the credit is refundable in cash. The maximum credit to any one company is $45,000 ($60,000). There is a $7 million cap of available credits per year from 2016-2022.
Major Research and Development Tax Credit
This is an alternative R&D tax credit for taxpayers with large R&D expenditures, and is effective for taxable years beginning on or after January 1, 2016, but before January 1, 2022. Eligible applicants must incur R&D expenses in excess of $5 million. The credit is equal to 10% of the difference between (i) the Virginia qualified research and development expenses paid or incurred by the taxpayer during the taxable year and (ii) 50% of the average Virginia qualified research and development expenses paid or incurred by the taxpayer for the 3 taxable years immediately preceding the taxable year for which the credit is being determined. Application for the Major company R&D Tax Credit. Due July 1st.
100% Capital Gains Tax Exclusion for Founders and Investors
Capital Gains Tax Exclusion provides a 100% capital gains tax exclusion for founders of and investors in high technology (including life sciences) start-up companies primarily engaged in business and with principal office in Virginia. (May be used instead of the Angel Investor Tax Credit). The Company must have had less than $3M revenue in the fiscal year prior to the investment. The exemption has been extended to June 30, 2020.
Virginia Angel Investor Tax Credit (Virginia Qualified Equity and Subordinated Debt Credit)
The Angel Investor Tax Credit (Virginia Qualified Equity and Subordinated Debt Credit) provides tax credits for individuals or corporations making an investment in a prequalified Virginia small businesses in biotechnology, medical device or other qualified similar technology, to commercialize technology developed at or in partnership with a Virginia institution of higher learning equal to 50% of qualified investment, up to $50,000. There is a $5 million cap in available credits each year, after which credits are prorated. Credit is non-refundable but may be carried forward 15 years.