Eligible new Main Street businesses could claim a tax credit

The proposal would allow eligible businesses to claim a $2,500 credit against Virginia income taxes. The business must be in retail, accommodation, or food services; meet the federal small-business size standard for its industry; and begin operations and lease or buy a business location in a designated Virginia Main Street Community during the tax year. A business could claim the credit only once per taxpayer, and the state would allocate credits first come, first served, up to $5 million each tax year. The credit could not exceed the tax owed for the year. Any unused amount could be carried forward for up to five following tax years. Credits granted to partnerships, limited liability companies, and S corporations would be divided among their owners based on their ownership interests. The credit would apply to tax years beginning on or after January 1, 2026, and before January 1, 2031.

The Tax Commissioner would issue guidelines for applying for and allocating the credits. The guidelines would cover applications and credit allocation among participating taxpayers. The guidelines would be exempt from Virginia's Administrative Process Act.