Recyclable Materials Processing Equipment Tax Credit

An income tax credit is available to manufacturers for the purchase of certified machinery and equipment used for processing recyclable materials in taxable years beginning before January 1, 2025. The credit is equal to 20% of the purchase price of equipment you buy to make things from recycled materials, or to convert waste products into raw materials during the taxable year that the machinery or equipment is purchased. Contact Tax Credit Unit Virginia Department of Taxation 804.367.8037 Eligibility Machinery and equipment must produce items of tangible personal property from recyclable materials or you recycle waste products into raw materials used to manufacture items The Department of Environmental Quality (DEQ) must certify that all machinery and equipment are integral to the recycling process before the taxpayer may apply the tax credit More information on eligibility for Recyclable Materials Processing Equipment Tax Credit is available at Code of Virginia 58.1-439.7 . Process Submit DEQ Form 50-11S with supporting documents to the DEQ before March 1st for equipment purchased in the previous calendar year. Taxpayers will also submit purchase receipts and invoices to confirm the taxpayer’s statement of purchase price paid for the recycling machinery and equipment. DEQ will then certify the equipment. Then, the company will submit the DEQ certification with the Virginia state tax return. If the application is submitted and approved after May 1, then the taxpayer will be required to submit an amended tax return claiming the credit along with the credit certification. All business taxpayers should be registered with the Department of Taxation before completing Form RMC. If the tax return upon which this credit will be claimed is due on or before June 1, you may need to either submit an extension payment for any tax due or file an amended return once you have received the credit certification. The company should complete Form RMC by the deadline of June 1st. The credit must be approved before being claimed on your return. The Department of Taxation will review all applications for completeness and notify taxpayers of any errors by August 1.  If any additional information is required, it must be provided to the Department of Taxation no later than August 15 to be considered for the credit. All eligible taxpayers will be notified as to the amount of credits that they may claim by September 1. To claim the tax credit, a corporation must file Form 500CR an individual and fiduciary returns must file Schedule CR . Applications must include copies of certification of the machinery and equipment from DEQ, proof of purchase of certified machinery and equipment (such as an invoice or receipt), and a summary of all other capitalized costs to make the machinery and equipment operational. The summary should include a date of cost. Resources Code of Virginia 58.1-439.7 DEQ Form 50-11S Form RMC Form 500CR Download Schedule CR Form FAQ When can I claim the Recyclable Materials Processing Equipment Tax Credit? A taxpayer may claim the Recyclable Materials Processing Equipment Tax Credit only for the taxable year in which such taxpayer purchases qualifying machinery or equipment. If such machinery or equipment does not qualify for the credit in the year of purchase, the taxpayer may not claim the credit for a later taxable year when the machinery or equipment meets the credit requirements. How is the credit calculated? Tax credits are equal to 20% of the purchase price paid during the taxable year for machinery and equipment used predominantly in or on the premises of manufacturing facilities or plan units which produce items of tangible personal property from recyclable materials, within the Commonwealth, for sale. Total tax credits must not exceed 40% of the Virginia income tax liability of one taxpayer.

Eligibility Machinery and equipment must produce items of tangible personal property from recyclable materials or you recycle waste products into raw materials used to manufacture items