For taxable years beginning on and after January 1, 2019, but before July 1, 2022, businesses are allowed a tax credit equal to 35% of all classroom training costs, for eligible worker training. Eligible worker training includes credit or noncredit courses that results in the employee or receiving a workforce credential, or instruction or training that is part of an apprenticeship.

The credit is limited to $500 per qualified employee per year, or $1,000 if the employee is considered a non-highly compensated worker

Companies may claim this credit against their individual income tax, fiduciary income tax, corporation income tax, bank franchise tax, and taxes imposed on insurance companies and utilities.

Contacts

Tax Credit Unit
Virginia Department of Taxation

Eligibility

Eligible Worker Training

  • Training courses that are part of programs from providers listed on the Commonwealth’s Eligible Training Provider list that results in the qualified employee or non-highly compensated worker receiving a workforce credential. Virginia’s Workforce Innovation Opportunity Act Title I Administrator maintains this list. 
  • Instruction or training that is part of an apprenticeship agreement approved by the Commissioner of Labor and Industry.  For information on pre-approved apprenticeship programs, contact your Virginia Department of Labor and Industry apprenticeship representative. 

Manufacturing training or instruction for middle and high school students

  • Programs offered by manufacturers that:
    • Provide orientation, instruction, or training in the type of manufacturing the business in engaged in,
    • Are for students in grades 6 through 12,
    • Are coordinated with the local school district, 
    • Are held at the business’s plant or facility, or a public middle or high school, and
    • Are certified by the Virginia Department of Education (VDOE).
  • These programs qualify for this credit beginning in taxable year 2018. The total credit granted to all employers and businesses is limited to $1 million for each fiscal year. If the total qualifying credits exceed this amount, the credit will be prorated.

Process

  1. All applicants must complete Form WTC, Sections I and III. The specific requirements for each portion of the credit are provided below.
    • Credit or Noncredit Courses: To qualify, employers must provide training to a qualified employee or non-highly compensated worker in the form of credit or noncredit courses at any institution recognized on the Eligible Training Provider List that results in the qualified employee or non-highly compensated worker receiving a workforce credential.
    • For a list of providers, visit the Virginia Workforce Connection homepage at www.vawc.virginia/gov and navigate to the “Training Providers” page. Be sure to limit your search to Workforce Innovation & Opportunity Act Eligible Training Providers.
    • The Virginia median wage for the prior taxable year can be found on the Virginia Employment Commission’s website at www.virginiaworks.com. Select “Wages” and then “Occupational Employment Statistics (OES).”
    • To determine if the training will qualify for this credit, complete the following: • Form WTC, Section II, Part A, • Form WTC, Schedule A.
    • Apprenticeship Programs: To qualify, employers must provide instruction or training that is part of an apprenticeship agreement approved by the Commissioner of Labor and Industry. For program information, call Department of Labor and Industry at (804) 786-8009.
    • To determine if the training will qualify for this credit, complete the following: • Form WTC, Section II, Part B, • Form WTC, Schedule B.
    • Manufacturing-Related Orientation, Instruction, and Training Programs: To qualify, businesses that are primarily engaged in manufacturing must conduct orientation, instruction, and training relating to the manufacturing activities undertaken by the business and meet the criteria listed in the General Information section above. For program information, call the Virginia Department of Education at (804) 225-2052. To determine if the training will qualify for this credit, complete the following: • Form WTC, Section II, Part C, • Form WTC, Schedule C.
  2. Requests for Additional Information and Notification of Authorized Credit Additional Information If additional information is needed, we will contact you by May 15 and you will have until May 31 to respond. If you have not received acknowledgment of your application from the Department of Taxation by May 31, call (804) 786-2992. The Department of Taxation will issue the credit by June 30. If you have not received your credit certification by July 15, call (804) 786-2992.
  3. Claim Worker Training Credit on Your Return After receiving notification of authorized credit, you may claim the credit on the applicable Virginia income tax return. See the income tax return instructions for computation and enclosure details.

FAQ

Is this credit refundable?

No. Your credit cannot be greater than your tax liability. You may carry forward any unused credits for 3 years.

What is the maximum amount of credits granted in any year?

The total amount of tax credits granted under this section for each fiscal year shall not exceed $1 million.

Can a business claim the credit if?

No. Your credit cannot be greater than your tax liability. You may carry forward any unused credits for 3 years.

How do I calculate my potential credit?

The credit is equal to 35% of expenses incurred by the business during the taxable year for the eligible worker training. If the recipient of the training is a qualified employee, the credit cannot exceed $500 per qualified employee annually. If the recipient of the training is a non-highly compensated worker, the credit cannot exceed $1,000 per non-highly compensated worker annually.

Expenses include:

  • Salaries or wages paid to instructors and trainers, prorated for the period of instruction or training;
  • Costs for orientation, instruction, and training materials;
  • Amounts paid for machinery and equipment used primarily for the instruction and training; and
  • The cost of leased or rented space used primarily for conducting the program.

For manufacturing training for middle and high school students, no one manufacturer can claim more than $2,000 credit per year.