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A BILL to amend the Code of Virginia by adding in Article 13 of Chapter 3 of Title 58.1 a section numbered
58.1-439.12:13
, relating to microchip and semiconductor manufacturing and supply chain tax credits; Virginia Economic Development Partnership Authority evaluation; report.
Be it enacted by the General Assembly of Virginia:
1. That the Code of Virginia is amended by adding in Article 13 of Chapter 3 of Title 58.1 a section numbered
58.1-439.12:13
, as follows:
§
58.1-439.12
:
13.
Microchip and semiconductor manufacturing and supply chain
tax credit
s
; report
.
A.
For purposes of this section:
"Capital investment" means an expenditure by or on behalf of a qualified company on or after July 1, 202
6
, in real property, tangible personal property, or both,
at a facility in
Virginia that is properly chargeable to a capital account. The purchase or lease of furniture, fixtures, business personal property, machinery
,
and tools, including under any operating lease, and expected building construction and upfit by or on behalf of a qualified company shall qualify as capital investment.
"
Child
care services expenditures
"
means the
amount of
new, annual
qualified company
expenditures on child
care services whether internal or provided by a third party, including coverage for
a
full or partial discount of employee rates, minus any revenues received by the qualified company through a third-party operator, including rent paid to the qualified company by the child care provider, or employees.
"Eligible project" means a project (i) in Virginia by a qualified company in the semiconductor manufacturing and related equipment and material supplies sector for which a memorandum
of
understanding has been entered into
;
(ii) that includes sustainability measures to mitigate the impact of greenhouse gas emissions over the project's lifetime
and measures to support workforce development, child
care, housing, and education in the locality in which the facility is located
;
(iii)
that
provides project construction salaries that are no less than the
prevailing average wage in the locality in which the facility is located
;
(iv)
that
include
s
commitments to worker and community investment, which shall include training and education benefits paid by the
qualified
company to expand employment opportunities for economically disadvantaged individuals
;
(v)
that
creates or causes to be created at least
100
new jobs within
10
years of project commencement
;
and
(vi)
that
provides a capital investment of at least $
400
million within
10
years of project commencement.
"
Facility
"
means the building, group of buildings, or corporate campus, including any related machinery, equipment and tools, furniture, fixtures, and business personal property, that is located at or near a
qualified company's
operations in Virginia and is owned, leased, licensed, occupied, or otherwise operated by a qualified company as a temporary or permanent manufacturing and distribution facility for use in the administration, management, and operation of its business.
"Memorandum of understanding" means a performance agreement or related documents entered into by a qualified company, the Commonwealth,
and the Virginia Economic Development Partnership Authority that
sets forth the requirements for capital investment and the creation of new full-time jobs by a qualified company in order for a qualified company to be eligible for
the tax credit
s
under this section
.
"New job" means
a new, permanent full-time position of an indefinite duration created by the qualified company as a result of capital investment for an eligible project in the Commonwealth, requiring a minimum of 35 hours of an employee's time a week for the entire normal year of the company's operations, which "normal year" shall consist of at least 48 weeks, or a position of indefinite duration
that
requires a minimum of 35 hours of an employee's time a week for the portion of the taxable year in which the employee was initially hired
by the qualified company for work
in the Commonwealth. Seasonal or temporary positions, or a job created when a job function is shifted from an existing location in the Commonwealth to the
qualified
company
,
and positions in building and grounds maintenance, security, and other such positions
that
are ancillary to the principal activities performed by the employees
for the qualified company in the Commonwealth
shall not qualify as
a new job
.
"
Qualified
company
"
means a company, including its affiliates, that engages in the
microchip and
semiconductor manufacturing and related equipment and material supplies sector and that
between January 1, 202
6
, and
December 31, 203
6
,
(i)
make
s
a
capital
investment of at least $
400 million
, (ii) create
s
at least
100
new jobs related to or supportive of its business
,
(iii) pays an average salary of at least the prevailing wage for any jobs associated with the construction of a facility, and
(iv)
submits a community invest
ment
plan and
commits
to contributing at least $50 million within
10
years of eligible project commencement to
implement such plan
.
A
"
qualified company
"
shall be deemed to be engaged in manufacturing for purposes of Chapter 35 (§
58.1-3500
et seq.) of Title 58.1.
B.
1.
Notwithstanding any other provision of law, f
or taxable years beginning on or after January 1, 202
6
, but before January 1, 20
3
1
, a qualified company with capital investment
expenditures
in
curred for
an eligible project during the taxable year shall be allowed a
refundable
credit against the tax levied pursuant to §
58.1-320
or
58.1-400
in an amount equal to five percent
of such
expenditures that were
paid or incurred by the taxpayer during such taxable year.
2.
Notwithstanding any other provision of law, f
or taxable years beginning on or after January 1, 202
6
, but before January 1, 20
3
1
, a qualified company
shall be allowed a refundable credit against the tax levied pursuant to §
58.1-320
or
58.1-400
in an amount equal to six percent of child
care services expenditures that were paid or incurred by the taxpayer during such taxable year.
3.
Notwithstanding any other provision of law, f
or taxable years beginning on or after January 1, 202
6
, but before January 1, 20
3
1
, a qualified company shall be allowed a refundable credit against the tax levied pursuant to §
58.1-320
or
58.1-400
in an amount equal to 7.5 percent of gross wages
for each new job
that were paid by the taxpayer during such taxable year.
C.
If the amount of the credit
s
exceeds the
qualified company
's liability for such taxable year, the excess shall be refunded by the Tax Commissioner. Tax credits shall be refunded by the Tax Commissioner on behalf of the Commonwealth for 100 percent of face value. Tax credits shall be refunded within 90 days after the filing date of the income tax return on which the taxpayer applies for the refund
.
D
.
Any taxpayer who claims a tax credit
for capital investment expenditures
, child
care services expenditures, or expenditures for the gross wages of new jobs
in an eligible project
pursuant to this section shall not use such
expenditures
as the basis for claiming any other credit
or tax benefit
provided under the Code of Virginia.
E
. Credits granted to a partnership, limited liability company, or electing small business corporation (S corporation) shall be allocated to the individual partners, members, or shareholders, respectively, in proportion to their ownership interests in such entities or in accordance with a written agreement entered into by such individual partners, members, or shareholders.
F
. The Department shall develop and publish guidelines under this section
,
including guidelines for applying for the tax credit
s
. Such guidelines shall be exempt from the Administrative Process Act (§
2.2-4000
et seq.). Applications for the tax credit
s
shall
be received by the Department no later than
February
1 of the calendar year following the close of the taxable year in which the
expenditures in an eligible project
were paid or incurred.
G. 1. A qualified company shall be required to submit and receive approval for a community investment plan to receive
any of the tax credits allowed
pursuant to this section. Such plan shall be submitted in a manner and form prescribed by the Department and approved at the sole discretion of the Department. The Department may consult with the Virginia Economic Development Partnership Authority,
other state agencies, authorities,
a
nd
stakeholders,
and any
host municipalities
regarding such plan to ensure that the areas of investment included in
the plan are aligned with local needs. Such plan shall include
milestones and specific, actionable commitments
for worker and
community investments
that
may include training and education
benefits paid by the
qualified company
to support local workforce
development and employment opportunities for local residents,
including economically
disadvantaged individuals,
over the eligible
project lifetime.
2. Following project commencement, the qualified company shall submit an annual report to the Department in a manner and form prescribed by the Department detailing the performance of the eligible project against the milestones and commitments of its community investment plan submitted pursuant to subdivision 1.
2. That the Virginia Economic Development Partnership Authority (VEDP), in collaboration with the Joint Legislative Audit and Review Commission and the Department of Taxation, shall evaluate the benefits and impacts of new economic development incentives for companies engaging in the microchip, semiconductor, and related equipment and material supplies sector. In conducting its evaluation, VEDP shall assess the feasibility, impacts, benefits, and consequences of any new economic development incentive programs targeting the microchip, semiconductor, and related equipment and material supplies sector. Such assessment shall consider the returns for the Commonwealth from investments in (i) tax credit incentives, in both refundable and nonrefundable forms, for capital investment expenditures in relevant projects, for child care services expenditures, and for new job creation and (ii) any customized or novel incentives. VEDP shall assess the impact of offering any such incentives only on the condition that any potentially eligible businesses commit to making community investments in the Commonwealth and shall make recommendations on the required amount of such investments. VEDP shall submit its findings and any recommendations to the Chairs of the Senate Committee on Finance and Appropriations and the House Committee on Appropriations by November 30, 2026.