The inventionINDEX measures innovation output by comparing GDP growth with patent production growth. 

Anything over C grade is positive sentiment; anything under C is negative outlook/sentiment. Using that sentiment, it is possible to observe trends over time, and also compare states/countries. In doing so, we can predict which states have the best chance to recover economically from the pandemic (or any other economic incident that may occur).

Virginia inventionINDEX Scores – Last 12 months

The most recent data from March 2026 reveals a robust performance for the Virginia inventionINDEX, which currently sits at 2.17% with an A+ rating. This figure represents a near-record high within the 60-month observation period, falling just short of the 2.18% peak recorded in October 2023. When compared to the broader historical context, the current score signifies a period of sustained strength and reliability. The index has consistently maintained an A+ rating for the vast majority of the last three years, suggesting that the underlying drivers of innovation and intellectual property in the region are operating at a highly efficient level.

Looking back over the last five years, the trajectory of the index shows a clear evolution from earlier volatility toward a more stable, elevated position. In late 2021 and early 2022, the index experienced its most significant downturns, reaching a low of 1.29% in December 2021. This period was characterized by more frequent fluctuations into the B and A- categories, reflecting a landscape that was still finding its footing. However, the subsequent years have demonstrated a remarkable recovery and expansion. The transition from the 1.4% range in early 2022 to the current levels consistently above 2.0% indicates a maturing ecosystem that has successfully navigated previous economic or structural challenges.

The attainment of higher grades, specifically the A+ rating seen in March 2026, carries substantial benefits for the state economic and developmental prospects. A high inventionINDEX score often correlates with increased investor confidence, as it signals a fertile environment for research, development, and the commercialization of new ideas. Such a rating suggests that the workforce is highly engaged in creative problem-solving and that the infrastructure supporting new ventures is functioning optimally. These positive outcomes foster a virtuous cycle where success attracts further capital and talent, reinforcing the state position as a leader in technical and intellectual advancement.

Conversely, a lower score or a downward trend in ratings can signal potential systemic risks that require immediate attention. The dips observed in late 2021, where the index fell to a B rating, serve as a reminder that innovation capacity is not guaranteed and can be sensitive to external pressures. Lower scores may indicate a stagnation in patent filings, a reduction in research funding, or a loss of competitive talent to other regions. If these lower figures persist, they could lead to reduced economic dynamism and a slower rate of industrial growth. Maintaining the current high standards is therefore essential to prevent the erosion of the regional competitive edge and to ensure long-term prosperity.

Discussion:

In March, the Virginia inventionINDEX scored a positive sentiment which was higher than the previous year’s average and outperformed the downward trend for the year. This is in contrast to the prior 12 months, which experienced an upward trend. 

As the economy continues to stabilize in the post-pandemic era, it remains uncertain whether any backlog of applications still exists or if the department has returned to normal processing timelines. The inventionINDEX could also be affected by lingering consequences from the pandemic, such as company closures, reduced workforces, and limited R&D capabilities, which may still be impacting current operations.

Learn More:

Are you thinking of patenting any of your bright ideas? Did you know your research work could be eligible for the R&D Tax Credit and you can receive up to 14% back on your expenses? To find out more, please check out our free online eligibility test.

Swanson Reed’s Virginia office provides R&D tax credit consulting and advisory services to Virginia Beach, Norfolk, Chesapeake, Richmond, Newport News, Alexandria, Hampton, Roanoke, Portsmouth, and Suffolk.

Feel free to book a quick teleconference with one of R&D tax specialists if you would like to learn more about R&D tax credit opportunities.

Who We Are:

Swanson Reed is the largest Specialist R&D tax credit advisory firm in the United States. With offices nationwide, we are one of the only firms globally to exclusively provide R&D tax credit consulting services to our clients. We have been exclusively providing R&D tax credit claim preparation and audit compliance solutions for over 30 years. 

Swanson Reed hosts daily free webinars and provides free IRS CE and CPE credits for CPAs.  For more information please visit us at www.swansonreed.com/free-webinars or contact your usual Swanson Reed representative.