Tax Bulletins
Document Number:12-12
Bulletin Number: VTB 12-2
Tax Type:Land Preservation Tax Credit
Brief Description: Information Regarding the Land Preservation Tax Credit
Topics:Land Preservation Tax Credit
Date Issued:03/02/2012

TAX BULLETIN 12-2


Virginia Department of Taxation

March 2, 2012

IMPORTANT INFORMATION REGARDING
THE LAND PRESERVATION INCOME TAX CREDIT

New Cap Amount

House Bill 5019 (Chapter 4, Special Session I of 2006) made several changes to the
Land Preservation Tax Credit. One of these changes established a $100 million cap on the amount of total credits that may be issued by the Department of Taxation (“the Department”) during a calendar year.

In addition, the legislation provided a mechanism by which this cap may be increased because of inflation. Under Va. Code 58.1-512 D 4b, beginning with calendar year 2008, the $100 million cap must be increased by an amount equal to $100 million multiplied by the percentage by which the consumer price index for all-urban consumers published by the United States Department of Labor (CPI-U) for the 12-month period ending August 31 of the preceding year exceeds the CPI-U for the 12-month period ending August 31, 2006.

For example, for calendar year 2011, the average CPI-U for the 12-month period ending August 31, 2010 increased by approximately 8.4 percent over the average for the 12-month period ending August 31, 2006. Therefore, for calendar year 2011, the cap was $108,424,000.

Using information obtained from United States Bureau of Labor Statistics, the average CPI-U for the 12-month period ending August 31, 2011 increased by approximately 11.05 percent over the average for the 12-month period ending August 31, 2006. As a result, the cap for the Land Preservation Income Tax Credit will be increased to $111,054,000 for calendar year 2012.

The following chart depicts the growth in the CPI-U from 2006 through the applicable year for each year that the $100,000,000 has been increased. It also shows the amount of the cap for each applicable year.


Year
CPI-U Amount Over 2006 Base Year
Cap Amount
2007
-
$100,000,000
2008
2.29%
$102,287,000
2009
6.6%
$106,647,000
2010
6.8%
$106,845,000
2011
8.4%
$108,424,000
2012
11.05%
$111,054,000
If you have additional questions, please visit our website at www.tax.virginia.gov, or contact the Tax Credit Unit at (804) 786-2992.