RICHMOND – Governor Terry McAuliffe today announced key tax cut and credit proposals designed to bolster Virginia’s business climate and generate swift incentives for economic growth.
The Governor’s tax proposals, which support the economic goals in the two-year budget he will unveil on Dec. 17, include a reduction in the corporate income tax rate, a new research and development tax credit, improvements to two existing tax credits and a reduction in the number of merchants required to make accelerated sales tax payments each June.
“In order to build the new Virginia economy, we have to make the Commonwealth competitive in the global market. My tax cut and credit proposals ensure that the Commonwealth will attract more businesses, create jobs, and promote economic development,” said Governor McAuliffe in a speech to reporters from across the Commonwealth gathered for the annual Associated Press Day.
Governor McAuliffe is calling for a reduction in the corporate income tax rate from 6 percent to 5.75 percent effective January 1, 2017. The action will generate nearly $64 million in tax relief for businesses over two years. The broad-based tax proposal will provide significant benefits for all corporations rather than selecting winners and losers.
The Governor noted that North Carolina has reduced its corporate income tax rate from 6.9 percent to 5 percent in the past two years and is scheduled to enact an additional rate reduction on January 1, 2016, bringing the rate to 4 percent.
The Governor is also proposing a new Research and Development Tax Credit with a statewide annual cap of $15 million. The credit is designed to benefit companies with more than $5 million in annual research spending. The new credit becomes effective in Taxable Year 2016 with a sunset date of 2026.
Additionally, Governor McAuliffe proposed to strengthen the existing R&D Tax Credit by raising the statewide cap from $6 million to $7 million and extending the sunset date from 2019 to 2026.
Governor McAuliffe is also proposing an increase in the cap on Virginia’s Angel Investor Tax Credit, from $5 million to $9 million, with $2 million earmarked for bioscience projects.
Finally, Governor McAuliffe announced his commitment to reduce the number of merchants required to provide accelerated payments of sales taxes at the end of the state’s fiscal year each June.
The Governor will unveil his complete budget on December 17.