The Worker Retraining Tax Credit allows an employer to claim a tax credit for the training costs of providing eligible worker retraining to qualified employees. The credit may be claimed by employers who provide qualifying retraining for certain employees through noncredit classes approved by the Virginia Economic Development Partnership (VEDP) or through an apprenticeship agreement approved by the Commissioner of Labor and Industry.

The credit may be applied against individual income tax, estate and trust tax, corporate income tax, bank franchise tax, and taxes imposed on insurance companies and utility companies.


Tax Credit Unit
Virginia Department of Taxation


Eligible worker retraining means retraining of a qualified employee that promotes economic development in the form of:

  • Noncredit courses at any of the Commonwealth’s comprehensive community colleges or a private school.
  • Worker retraining programs undertaken through an apprenticeship agreement approved by the Commissioner of Labor and Industry.

A qualified employee is an employee in a full-time position requiring a minimum of 1,680 hours in the normal year of the employer’s operation. Standard fringe benefits must be offered to the employee.

A qualified employee shall not be:

  • In a seasonal or temporary position
  • A spouse, child, grandchild, parent, or sibling of any owner or the employer claiming the credit
  • An individual who owns, directly or indirectly, 5% or more of the stock of the corporation claiming the credit

Computation of Credit

For taxable years beginning on and after January 1, 1999, but prior to January 1, 2022, for qualified employees in Virginia community colleges, the employer can claim 30% of all expenditures paid or incurred by the employer during the taxable year for eligible worker retraining.

For taxable years beginning on or after January 1, 2013, for those employees who attend courses conducted at private schools, an employer may claim the actual costs up to $200 per qualified employee or $300 per qualified employee annually if the eligible worker retraining includes retraining in a STEM or STEAM discipline.

The total retraining credits granted to each employer is limited to $2,500,000 for each fiscal year. Any credit not usable in the taxable year earned may be carried over for the next three taxable years.


  • The eligibility of courses or apprenticeship programs for credit is determined.

    • Noncredit Courses: Employers seeking this credit will have retrained employees through noncredit courses. To determine if the training will qualify for this credit, complete Parts I, II, and Schedule 1 of Form WRC and send it to Virginia Economic Development Partnership (VEDP), 901 East Cary Street, Suite 900, Richmond, VA 23219. For questions, call VEDP at 804.545.5706. VEDP will determine if the course qualifies as eligible retraining. VEDP will forward this determination to the Department of Taxation for Step 2.
    • Apprenticeship Programs: Employers seeking this credit will have retrained employees in a Virginia Apprenticeship Council-approved program under the Voluntary Apprenticeship Act. For program information, call Department of Labor and Industry at 804.786.8009. File Form WRC, completing Parts I, III, and Schedule 2 (see EXCEPTION below), with the Department of Taxation, Tax Credit Unit, P.O. Box 715, Richmond, VA 23218-0715, to determine program applicability and authorized credit.
    • EXCEPTION: If applying for retraining credits for noncredit courses and an apprenticeship program, complete all of Form WRC and file it with VEDP. After processing Schedule 1, VEDP will send Form WRC to the Department of Taxation.
  • VEDP or the Department of Taxation will make requests for additional information by May 1. The employer has until May 15 to respond.
  • If acknowledgment of the application from the Department of Taxation has not been received by May 31, please call 804.786.2992.
  • The Department of Taxation issues the credit by June 30. If credit certification has not been received by July 15, please call 804.786.2992. If the tax return upon which this credit will be claimed is due on or before May 1, an automatic extension payment for any tax due may need to be filed, or an amended return filed upon receipt of the credit information.
  • After receiving notification of authorized credit, the credit may be claimed on the applicable Virginia tax return.


What is meant by “training costs”?

Training costs are instruction, instructional materials, facilities fees, and other expenses determined necessary to delivery of the training. Trainee wages and curriculum development costs are not covered.

What is meant by “STEAM” or a “STEAM” discipline?

STEM or STEAM discipline means a science, technology, engineering, mathematics, or applied mathematics-related discipline as determined by VEDP in consultation with the Superintendent of Public Instruction. The term also includes a health-care-related discipline.

What if the employer is a Pass-Through Entity?

The Virginia Department of Taxation will issue a credit certification letter specifying the amount of credit authorized to each partnership, S corporation, or limited liability company qualifying to claim a portion of this credit. Each pass-through entity must File Form PTE with the Department of Taxation within 30 days after the credit is granted. This information should be sent to: Department of Taxation, ATTN: Tax Credit Unit, P.O. Box 715, Richmond, VA 23218-0715, or faxed to 804.786.2800.

What are examples of noncredit courses that are included?

Noncredit courses include, but are not limited to:

  • Specific job-related skills/studies
  • Computer training due to process or equipment change of entry-level computer skills (ongoing computer software upgrades are not included)
  • Continuous improvements such as team-building and quality training
  • Management and supervisory training
  • Safety and environmental training programs
  • Credit or noncredit approved apprenticeship courses

What additional attachments are required for the Worker Retraining Tax Credit applicable for the Apprentice Program?

An Apprenticeship Action Form is required for each student. Applications will not be processed without this form. Students without the form will be excluded from the credit amount granted. Additionally, proof of payment by the employer is required.