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Bill

HB 2653

Qualified equity and subordinated debt investments tax credit; sunset.

2025 Regular Session Introduced by Elizabeth Bennett-Parker

Virginia creates tax credit for investors in qualified small business equity/subordinated debt, expiring after set period, effective July 1, 2025.

Acts of Assembly Chapter text (CHAP0306)
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Bill Summary · HB 2653

Legislative bill overview

HB 2653 establishes a tax credit in Virginia for investors who provide equity or subordinated debt financing to qualified businesses, with the credit set to expire after a specified period. The bill incentivizes private investment in small and growing companies by allowing investors to offset state tax liability based on their qualifying investments.

Why is this important

Tax credits of this type are designed to increase capital availability for businesses that may struggle to access traditional financing, potentially spurring job creation and economic development in Virginia. However, the fiscal impact depends heavily on uptake rates and whether the credit effectively reaches intended beneficiaries versus displacing investments that would occur anyway.

Potential points of contention

  • Cost to state revenue: The bill creates a direct reduction in tax collections without explicit appropriations language, which could strain the budget if the credit proves popular among investors
  • Definition of "qualified businesses": The criteria for which companies qualify may inadvertently favor certain industries or regions, creating winners and losers in the market
  • Sunset provision clarity: The expiration date's placement and mechanics could create uncertainty for investors planning multi-year investment strategies, or conversely may be too distant to ensure periodic legislative review

Compiled from official sources — confirm details with the bill’s official record.

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