In 2017, Virginia contractors earned more than $7.5 billion in state and federal tax credits.
What does that mean for you?
The state earned $6.7 billion from the federal tax credit, but that’s only one component of a complex incentive system that incentivizes contractors to keep their services running.
This incentive also incentivizes them to provide their services to the highest bidder, and it’s the incentive that has allowed Virginia contractors to maintain a low tax rate and a relatively high volume of contracts.
For more information on incentives, check out the Virginia Department of Finance.
In 2018, the federal government announced a $3 billion incentive program for contractors to increase their efficiency, which is an important component of their incentive system.
It will provide a 10 percent increase in tax credits, which means that contractors that use less than half their workforce will receive a $1,000 tax credit.
If you are considering a drain contract, it’s important to keep in mind that the incentives only apply to one contract.
If that contract includes more than one drain contract in the same year, the incentive will not apply to that contract.
Contractors who are required to pay more in state taxes or penalties can still receive the incentive, but they may not receive a significant tax credit from the state.
The tax credits are subject to certain conditions, including that the contractor must pay all of their own payroll taxes, provide employees with at least 90 days’ notice of termination and pay a fee of at least $1.50 per hour.
This fee is waived for workers who have worked in the business for more than six months and for employees who have completed at least one year of service.
It’s important for contractors with multiple drain contracts to understand how their incentives work.
To find out how to determine the value of a drain subcontract, visit our Virginia Drain Contractor’s Guide .
