A BILL to amend the Code of Virginia by adding in Article 13 of Chapter 3 of Title 58.1 a section numbered 58.1-439.12:13, relating to income tax; energy-efficient homes tax credits.
HB760 creates a new Virginia income tax credit for eligible contractors who build qualifying energy-efficient new single-family homes in the Commonwealth. The credit applies to taxable years beginning on and after January 1, 2026, and before January 1, 2033, and is set at $2,500 per entry-level energy-efficient home and $1,875 per move-up energy-efficient home. To qualify, homes must meet Energy Star New Homes standards or specified HERS index thresholds, and the bill defines entry-level and move-up homes by habitable square footage.
The bill allows unused credits to be transferred to another taxpayer, subject to the same carryforward rules, and caps the amount an eligible contractor may claim in a year at $500,000 unless the credits are fully transferred. Credits are nonrefundable, may be carried forward for up to seven taxable years, and are subject to an annual statewide cap of $10 million, with the Department of Taxation allocating credits pro rata if demand exceeds the cap. The credit amounts would also be adjusted annually for inflation beginning in 2027 based on CPI-U.
HB760 would add a new section to Title 58.1 of the Code of Virginia establishing a targeted corporate and individual income tax incentive for residential construction tied to energy-efficiency standards. It would affect contractors and manufacturers of manufactured homes that build qualifying homes, while also requiring the Tax Commissioner and Department of Energy to issue guidance and create an electronic system for registration and transfer tracking. The bill also requires annual public reporting of credit usage by county and by home category, without disclosing taxpayer identities.
The available record shows no committee transcript, recorded votes, or other debate, so there is no direct evidence of support or opposition in the materials provided. The bill was left in the House Finance Committee, which suggests it did not advance out of committee during the available legislative process. Based on the text alone, the measure appears designed as an economic and housing-policy incentive rather than a controversial regulatory change.
The main potential points of contention are fiscal and administrative: the bill creates a new tax expenditure with a $10 million annual statewide cap, allows transferability of credits, and requires annual inflation adjustments, all of which could raise concerns about revenue loss and program complexity. Another possible issue is policy design, including whether the credit should favor certain home sizes, whether the HERS/Energy Star thresholds are appropriate, and whether the pro rata allocation and transfer rules are sufficiently simple and transparent. Because no debate transcript is available, it is not possible to attribute these concerns to any specific legislator or stakeholder from the record provided.