EDC: Taxpayer Application for Qualified Equity and Subordinated Debt Investments Credit (2025)
Virginia · Virginia Tax · Used for tax years 2025
Virginia Form EDC is an application for the Qualified Equity and Subordinated Debt Investments Tax Credit. It reports qualifying businesses, investment types, dates and amounts, and the total credit requested. The Department of Taxation determines the allowable credit, which must
Who files this form
Submit Form EDC if you made a cash investment in a qualifying business as qualified equity or subordinated debt and want to apply for the credit. The Department determines the allowable credit before you claim it on your Virginia income tax return.
The form lists these applicant types: individual, partnership, LLC, S corporation, and trust. You must have a Department-issued qualified business certification for each qualifying business.
Use one name and one SSN or FEIN per application. Married investors cannot receive the credit jointly. Each spouse must invest individually and provide a separate Form EDC and business statement.
When it's due
For qualified investments made during calendar year 2025, the application schedule is in the following year, 2026:
- April 1: Submit Form EDC and all supporting documentation no later than this date. Submit as soon as possible after receiving all Form QBA certifications and before your tax filing deadline.
- May 1: The Department will contact you by this date if it needs more information.
- May 15: Deadline to respond to that request.
- May 31: If you have not received acknowledgment of your application by this date, call (804) 786-2992.
- June 30: The Department will issue the credit by this date.
- July 15: If you have not received your credit certification by this date, call (804) 786-2992.
If the return claiming the credit is due on or before May 1 in this application cycle, you may need to submit an extension payment for tax due or file an amended return after receiving certification.
If an application has no postmark, the Department uses the date it receives the application to determine timeliness. A handwritten postmark is not accepted.
What you'll need
Include these supporting documents with Form EDC:
- A copy of each qualified business certification issued by the Department.
- A statement on each business's letterhead listing the investor's name and each investment's amount, type, and specific date.
- Verification in the business statement that the investment meets the definition of a qualified investment under Virginia Code § 58.1-339.4.
The business statement must be signed by a company officer. For an investor affiliated with the business, such as a corporate officer or CFO, another company member should sign it.
To complete the form, have your taxpayer identification and contact information, each business's Form QBA certificate number, and the name, type, date, and amount of each investment. Add pages if needed to list all qualifying investments.
How to file
- Enter your taxpayer information and check your entity type. A business entity should be registered with the Department before completing Form EDC. Unregistered businesses can register through Online Services for Businesses at www.tax.virginia.gov.
- Complete Part I for each qualifying investment.
- In Part II, total all qualifying investments, including those on added pages. Multiply that total by 0.5 and enter the number of qualifying investments.
- Sign and date Part III and attach the required documents.
- Mail the application and enclosures to:
Department of Taxation
ATTN: Tax Credit Unit
P.O. Box 715
Richmond, VA 23218-0715
Or fax them to (804) 774-3902.
Wait for notification of the allowable credit before claiming it on the applicable Virginia income tax return.
Pass-through entities: When allocating the credit to participants, file Form TCA within 30 days after the credit is granted, but at least 90 days before participants file their income tax returns. Send Form TCA to the same Tax Credit Unit mailing address or fax number. Do not do both. Give each participant receiving a share of the credit a Schedule VK-1.
Common mistakes
- Claiming the credit before approval. The Department must approve the credit before it is claimed on a tax return.
- Including an investment connected to paid services. Do not include investments if you, a covered family member, or an affiliated entity receive or received compensation from the business for services in connection with, or within one year before or after, the investment. Reimbursement of reasonable expenses is not treated as compensation.
- Combining benefits for the same investment. You cannot take this credit and receive a Small Business Investment Grant Fund grant for the same investment. You also cannot claim the specified subtraction for certain long-term capital gains for that investment.
- Missing the holding period. Equity must generally be held for at least three full calendar years following the calendar year for which the credit is allocated. Subordinated debt must generally be held for at least three years from issuance. Unless a listed exception applies, failing this requirement means forfeiting unused credit and being assessed for credit used, plus interest at 1% per month, compounded monthly from when the credits were claimed.
- Entering an email address unintentionally. Providing an email address means you consent to emailed communications about the application. Leave the email spaces blank if you do not want those communications.
- Skipping Form TCA for a pass-through allocation. Failure to file it may cause the participant's credit claim to be disallowed or delay return processing.
Questions people ask
How much is the credit?
The credit equals 50% of qualifying investments made during the taxable year. The amount claimed per taxpayer per year is limited to the lesser of the tax amount or $50,000. The Department determines the allowable amount.
Can I get a refund for unused credit?
No. The credit is nonrefundable, but excess credit may be carried forward for up to 15 years.
Could the Department reduce the credit I request?
Yes. The annual credit cap is $5 million. Half is allocated to commercialization investments and half to other qualifying investments. Requests exceeding either allocation are prorated. Unused amounts from one allocation are available for the other.
Are there exceptions to the holding period?
The listed exceptions are liquidation of the qualified business, its merger, consolidation, or other acquisition with or by an unaffiliated party, and the taxpayer's death.
Where can I get help?
Call the Department's Tax Credit Unit at (804) 786-2992. To order forms or a copy of the regulations, call (804) 367-8031. Most Virginia income tax forms and additional information are available at www.tax.virginia.gov.