Taxes And Incentives - Hampton Roads Alliance

Taxes + Incentives

It Pays To Do Business In Hampton Roads

The Hampton Roads region offers companies a highly competitive business environment, benefiting from the state and local tax system and incentive structure. Statewide, our corporate income tax rate has stayed at 6% since 1972, a rate below the national average, highlighting our dedication to support business growth and excellence. Additional taxes are levied at a local level, and therefore are dependent upon your location within the region. Unlike most states, however, Virginia only has one local taxing authority; cities and counties are distinct and separate entities that do not overlap.

In terms of incentives, both the state and individual localities offer different packages regarding existing qualifications. Contact an Alliance team member today to learn more about the wealth of benefits for businesses in Hampton Roads.

#1

Virginia ranked #1 Best State to Do Business in 2019 & 2021 by CNBC

7%

The mean annual wage rate across all occupations in Hampton Roads is nearly 7% below the U.S. average."

6%

Virginia’s corporate tax rate is 6% - Unchanged since 1972

State Taxes

Corporate Income Tax: 6%

In Virginia, we have a corporate income tax rate in addition to federal income tax. This 6% tax is applied to federal taxable income and it functions as a deduction from federal taxes. If a corporation is engaged in multi-state activities and its income is subject to tax in Virginia and other states, it pays tax only on the portion of its income from Virginia sources. In determining this portion, income is divided into allocable and apportionable income. Apportionment is based on a formula of payroll, property, and sales that weighs the corporation’s Virginia operations against its total operations. The sales factor is double weighted.

Unemployment Insurance: $108

U.S. Median: $144

Virginia: $108

Employers must register with the Virginia Employment Commission and pay their unemployment insurance tax if they had one or more persons employed for 20 or more weeks or if they paid wages of $1,500 or more in any calendar quarter in either the current or preceding calendar year. New employers pay at a special rate for an initial period, usually 18-29 months, unless the computed rate, based on claims, exceeds the new employer rate. After the initial period, the employer’s rate is determined by operational experience and the state’s unemployment level is reflected in the financial condition of the Unemployment Compensation Trust Fund.

Workers’ Compensation Employment Insurance Costs: $0.76

U.S. Median: $1.30

Virginia: $0.76

Since 1994, Virginia has had a partially regulated “competitive rate” or “loss costs” system to determine workers’ compensation rates. The State Corporation Commission (SCC) approves the cost of losses for each industry classification and insurance companies determine the average overhead and profits. “Multipliers’’ to cover these expenses are filed with the SCC and are subject to periodic review. Studies by Actuarial & Technical Solutions show that Virginia has one of the lowest comparative costs of Workers’ Compensation for manufacturers in the nation.

Incentives

Hampton Roads offers a variety of performance-based incentives designed to target the needs of companies considering investment opportunities. These incentives include both state-wide and locally specific options. Eligibility is dependent on a variety of factors, including location, industry, number of employees, etc.

To learn more about what incentive packages your company may qualify for, contact a member of the Alliance team.

Discretionary Incentives

Commonwealth’s Opportunity Fund – Discretionary fund available to secure a business location or expansion project.

Agriculture and Forestry Industries Development Fund (AFID) – Fund available to support businesses that add value to Virginia-grown agricultural and forestry products.

Major Eligible Employer Grant Program (MEE) – Provides grants to companies to make significant investments and provide a significant number of stable jobs through expansion or new operation of a significant size.

Virginia Economic Development Incentive Grant (VEDIG) – A grant for companies whose location of a significant headquarters, administrative, or service sector operation led to new employment in Virginia.

Virginia Investment Performance Grant (VIP) – Provides grants to existing manufacturers or manufacturing R&D entities that continue capital investment in Virginia.

Recruitment and Training Incentives

Virginia Jobs Investment Program – Program that offers customized recruiting and training assistance to companies creating new jobs or experiencing technological change.

Virginia Talent Accelerator Program – Customized recruitment and training services designed to fit a company’s specific operations, requirements, standards, and culture. This program will be offered at no cost to companies who qualify for job creation incentives.

Location-Based Incentives

Foreign Trade Zones – Hampton Roads is a foreign trade zone which can effectively eliminate or reduce customs duties.

Enterprise Zones – Provides state and local incentives to businesses that create new jobs and invest in real property.

Job Creation Grants – Grants for permanent, full-time job creation over a 4-job threshold that meet wage requirements.

Real Property Investment Grants – Grants for qualified real property investments.

Technology Zones – Grants specific to individual localities in Hampton Roads which assist technology based companies.

Tax Incentives

Property Tax Exemptions – Property is not taxed at the state level; real estate and tangible personal property are locally taxed. There are no taxes on intangible property, manufacturers’ inventory and manufacturers’ furniture, fixtures and corporate aircraft.

Sales and Use Tax Exemption – Virginia offers the broadest sales and use tax exemptions in the U.S for certain purchases used directly in production

Data Center Retail Sales & Use Tax Exemption – Exemption for qualifying computer equipment or software purchased for use in certain data centers that meet requirements.

Major Business Facility Job Tax Credit – Offers $1,000 income tax credit for new full-time jobs created over a certain job threshold Major

R&D Expenses Tax Credit – A tax credit for qualifying companies that incur more than $5 million of R&D expenses

Virginia Port Incentives

Port Volume Increase Tax Credit – Credit available to companies who increase port cargo through public or private facilities located in Virginia by a minimum of 5% in a single year.

Barge and Rail Usage Tax Credit – Credit available to companies who move cargo by barge or rail, rather than truck, on Virginia’s highways

International Trade Facility Tax Credit – Tax credit for either new job creation or capital investment in an international trade facility as a result of moving 10% more cargo through a Virginia Port Authority-operated cargo facility than in the preceding taxable year.

Port of Virginia Economic and Infrastructure Development Grant Program – Grants companies can obtain for construct new or expand existing maritime-related employment centers.