Tax incentive evaluation ratings

Tax Incentive Evaluation Ratings: Virginia

This page was updated 12/5/2017 to reflect Virginia’s improved rating after the publication of new tax incentive evaluations.

Rating: Leading

Key points:

  • Virginia is leading other states because it has a well-designed plan to regularly evaluate tax incentives, experience producing quality evaluations that rigorously measure economic impact, and a process for informing policy choices.
  • The staff of the Joint Legislative Audit and Review Commission has demonstrated the capacity to conduct high-quality analysis of the performance of incentive programs.
  • The first evaluations under Virginia’s process, published in 2017, examined incentives for the film industry.

Virginia evaluation law

Year enacted: 2016.a

Who evaluates: Joint Legislative Audit and Review Commission.

Length of review cycle: Six to eight years, to be determined.

For more information on state ratings, please visit our interactive map.  

The following information was current as of May 3, 2017

Virginia made a major commitment to regular, rigorous evaluation of its economic development incentives with the passage of its 2016-18 biennial budget. The budget requires the professional staff of the state’s Joint Legislative Audit and Review Commission (JLARC) to regularly study the results of the state’s economic development portfolio—including both tax incentives and cash grants and loans, which will help facilitate comparisons among programs with similar goals.b

JLARC has demonstrated the capacity to conduct high-quality analysis of the performance of incentive programs, including a January 2012 assessment of the effectiveness of tax preferences, a November 2012 assessment of grant programs, and a 2016 review of the Virginia Economic Development Partnership’s operations.c Directing a legislative audit office to evaluate incentives is an approach that has been successful in other states. For example, Washington’s legislative auditor has produced detailed evaluations of the state’s incentives for a decade.d As a further boost to its expertise, JLARC plans to contract with an academic institution or private firm to assist with economic impact analyses.e

The budget legislation left the review schedule and other key details up to the legislators who serve on the commission that oversees the work of JLARC’s professional staff.f In late 2016, they identified 76 incentives that JLARC will ultimately study on a six- to eight-year cycle. Three tax incentives for the film industry are up for review first, with the evaluation scheduled for completion in fall 2017.g

The commission includes key members of the House Appropriations and Senate Finance committees and the state auditor of public accounts, who serves as an ex officio, nonvoting member.h The success of the process will depend on the ability of commissioners to translate evaluation recommendations into policy action. And because many of them serve dual roles on committees with leadership responsibility for fiscal policy, they will be well-positioned to ensure that any recommendations receive a full airing in the Legislature.

As JLARC moves forward with implementation, it will need to coordinate with a separate legislative panel, the Joint Subcommittee to Evaluate Tax Preferences. Lawmakers created the subcommittee in 2012 to review the full range to tax credits, exemptions, and deductions.i To date, the subcommittee has not focused primarily on economic development incentives, but the work of the two bodies could eventually overlap.j


  1. Virginia H.B. 30 (2016),
  2. Ibid.
  3. Virginia Joint Legislative Audit and Review Commission, “Review of the Effectiveness of Virginia Tax Preferences” (January 2012),; Virginia Joint Legislative Audit and Review Commission, “Review of State Economic Development Incentive Grants” (November 2012),; Virginia Joint Legislative Audit and Review Commission, “Management and Accountability of the Virginia Economic Development Partnership” (November 2016),
  4. Washington Joint Legislative Audit and Review Committee, “Performance Auditing in Washington State,” accessed Feb. 1, 2017,
  5. Virginia Joint Legislative Audit and Review Commission, “JLARC Economic Development Subcommittee Meeting Minutes” (Nov. 10, 2016),
  6. Virginia H.B. 30 (2016).
  7. Michael Martz, “New Legislative Panel Adds Scrutiny of Virginia Economic Development Incentives,” Richmond Times-Dispatch, Nov. 10, 2016,
  8. Virginia Joint Legislative Audit and Review Commission, “JLARC Members,” accessed Feb. 1, 2017,
  9. Va. Code Ann. § 30-336,
  10. Virginia Division of Legislative Services, “Joint Subcommittee to Evaluate Tax Preferences: Preference Reports,” accessed Feb. 1, 2017,
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State tax incentives

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Tax incentives—including credits, exemptions, and deductions—are one of the primary tools that states use to try to create jobs, attract new businesses, and strengthen their economies. Incentives are also major budget commitments, collectively costing states billions of dollars a year. Given this importance, policymakers across the country increasingly are demanding high-quality information on the results of tax incentives.