Va. Code » Title 58.1. Taxation » Subtitle I. Taxes Administered by the Department of Taxation » Chapter 3. Income Tax » Article 10. Taxation of Corporations
Virginia Code

Va. Code Ann. § 58.1-418 (2026)

Financial corporations; apportionment

✓ current as of May 2026
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A. The Virginia taxable income of a financial corporation, as defined herein, excluding income allocable under § 58.1-407, shall be apportioned within and without this Commonwealth in the ratio that the business within this Commonwealth is to the total business of the corporation. Business within this Commonwealth shall be based on cost of performance in the Commonwealth over cost of performance everywhere.

B. "Financial corporation" means any corporation not exempted from the imposition of tax under the provisions of § 58.1-401, which derives more than seventy percent of its gross income from the classes of income enumerated in subdivisions 1 through 4 below, without reference to the state wherein such income is earned, including but not limited to small loan companies, sales finance companies, brokerage companies and investment companies:

1. Fees, commissions, other compensation for financial services rendered;

2. Gross profits from trading in stocks, bonds, or other securities;

3. Interest; and

4. Dividends received to the extent included in Virginia taxable income.

C. In computing the amounts referred to in subdivisions 1 through 4 of subsection B of this section, any amount received by a member of an affiliated group, determined under § 1504(a) of the Internal Revenue Code but without reference to whether any such corporation is an includable corporation under § 1504(b) of the Internal Revenue Code, from another member of such group shall be included only to the extent such amount exceeds expenses of the recipient directly related thereto.

D. Any eligible company, as defined in § 58.1-405.1, may subtract the value of its business within any qualified locality or qualified localities, as defined in § 58.1-405.1, during the taxable year from the numerator of the ratio in subsection A. Such eligible company may make such modification for the taxable year in which it first becomes eligible and for the six subsequent, consecutive taxable years, except for any year in which the eligible company's (i) total, cumulative new capital investment falls below the applicable initial threshold or (ii) number of new jobs falls below the applicable initial threshold.

Code 1950, § 58-151.050:1; 1976, c. 436; 1979, c. 32; 1981, c. 402; 1984, c. 675; 2018, cc. 801, 802.

Notes of Decisions
Cited in 3 cases, 1989–2004 · leading case: Gen. Motors Corp. v. Dept. of Taxation, 602 S.E.2d 123 (Va. 2004).
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Gen. Motors Corp. v. Dept. of Taxation, 602 S.E.2d 123 (Va. 2004). · cites it 28× “In this appeal, we consider whether the interpretation of the term "cost of performance" by regulations promulgated in 23 VAC § 10-120-250 by the Commonwealth of Virginia Department of Taxation (the Department) is consistent with the use of that term in Code § 58.1-418 for…”
Gen. Motors Corp. v. Virginia Dept. of Taxation, 62 Va. Cir. 4 (Fairfax Cir. Ct. 2003). · cites it 9× “”) may exclude from taxable income subject to the apportionment part of its interest income from investment of cash; and (3) whether the reference to “cost of performance” in Virginia Code §58.1-418 was properly interpreted by Virginia Regulation 23 VAC 10-120-250 (formerly VR…”
Dominion Bankshares v. Dep't of Taxation, 15 Va. Cir. 401 (Richmond County Cir. Ct. 1989). · cites it 13× “" If all seven entities are, in fact, financial corporations, all would be subject to one single-factor apportionment, and Dominion’s 1982 and 1983 filings of a single consolidated tax return would have been correct.”
Va. Code Ann. § 58.1-418(A): 1 case
Gen. Motors Corp. v. Dept. of Taxation, 602 S.E.2d 123 (Va. 2004). “In this appeal, we consider whether the interpretation of the term "cost of performance" by regulations promulgated in 23 VAC § 10-120-250 by the Commonwealth of Virginia Department of Taxation (the Department) is consistent with the use of that term in Code § 58.1-418 for…”
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