Recycling Tax Credit

 A. Tax Credit

A state income tax credit is available to  “C” Corporations for the purchase of machinery and equipment for processing recyclable materials.  Individuals and “Pass-through” Corporations are entitled to claim the tax credit for machinery and equipment purchased after January 1, 2008.  The current statute (§ 58.1-439.7 of the Code of Virginia) has a sunset date of January 1, 2015.  For more information on the recycling tax credit, review the Code of Virginia section that details the tax credit. 

The credit is equal to 10 percent of the original total capitalized cost of the purchase price for machinery and equipment for processing recyclable materials, and the total credit allowed cannot exceed 40 percent of the Virginia income tax liability in any taxable year.  The unused amount of the credit can be carried over for next 10 years.  Before the individual or corporation is entitled to the tax credit, the Department of Environmental Quality (DEQ) shall certify that such machinery and equipment are integral to the recycling process.  Obtaining the tax credit is a three step process:  1.) Submit DEQ Form 50-11S with supporting documents to the DEQ; 2.) The DEQ certifies the equipment and 3.) Submit the DEQ certification with the Virginia state tax return. (Forms and Guidance are available online).  For questions concerning certification of applicable equipment, contact: Sanjay V. Thirunagari

B. Alternate Tax Credit

Beginning on and after January 1, 1998, a corporation making an investment of at least $350 million within the Commonwealth before January 1, 2003, shall be allowed a credit against the state taxes.  The credit is equal to 10 percent of the purchase price paid for machinery and equipment for processing recyclable materials.  The total credit allowed cannot exceed 60 percent of the Virginia income tax liability in any taxable year.  The unused amount of the credit can be carried over for 20 years.  Before the corporation is entitled to the tax credit, the Department of Environmental Quality shall certify that such machinery and equipment are integral to the recycling process.  Use Form DEQ 50-11S (Forms and Guidance are available online).  For questions concerning certification of applicable equipment, contact: Sanjay V. Thirunagari

Sales and Use Tax Exemptions for Pollution Prevention Equipment

Manufacturers and other commercial enterprises receive exemptions from state sales and use taxes for the purchase of pollution control equipment certified by the agency requiring the equipment as a permit condition. Applicability of this exemption to a specific project can be determined during project planning when preliminary discussions are held between the permit applicant and the pollution control agency. Please contact the DEQ regional office where the facility is located.

Local Real Estate and Personal Property Tax Exemptions for Recycling Equipment

Local governments in Virginia have the option of exempting or partially recycling facilities and equipment from property tax. For more information on recycling, visit the DEQ regulations page  or contact: Sanjay V. Thirunagari

Local Real Estate and Personal Property Tax Exemptions for Pollution Control Equipment

Manufacturers and other commercial enterprises may receive exemptions from personal property taxes for the purchase of pollution control equipment certified by the agency requiring the equipment as a permit condition. Certified pollution control equipment and facilities shall mean any property, including real or personal property, equipment, facilities, or devices, used primarily for the purpose of abating or preventing pollution of the atmosphere or waters of the Commonwealth and which the state certifying authority having jurisdiction with respect to such property has certified to the Department of Taxation as having been constructed, reconstructed, erected, or acquired in conformity with the state program or requirements for abatement or control of water or atmospheric pollution or contamination. Applicability of this exemption to a specific project can be determined during project planning when preliminary discussions are held between the permit applicant and the pollution control agency.  Please contact the DEQ regional office where the facility is located.

Virginia's Tax Credit for Investing in Equipment to Burn Waste Motor Oil

Beginning January 1, 1999, a state income tax credit is available to taxpayers who operate a business facility within the Commonwealth which accepts waste motor oil from the public. The credit is equal to 50 percent of the purchase price paid for equipment used exclusively for burning waste motor oil at the business facility. The total credit allowed to any taxpayer shall not exceed $5,000 and any credit shall be used only for the taxable year in which the purchase price of the waste oil burning equipment was paid. Before the taxpayer is entitled to the tax credit, the Department of Environmental Quality shall certify that such equipment is used to burn waste motor oil at a business facility within the Commonwealth, which accepts waste motor oil from the public. Use Form DEQ 50-12 (Forms are available online). For certification of applicable equipment, contact: Katy Turner (804-527-5082).  For more information on the waste motor oil tax credit, review the Code of Virginia section that details the tax credit.