Virginia Implements Fixed Date of Conformity Effective Dec. 31, 2025
February 24, 2026
During the 2026 General Assembly Session, the 2026 amendments to the 2025 Appropriation Act (known as the caboose budget bill) replaced Virginia’s rolling income tax conformity to the Internal Revenue Code with a fixed conformity date of Dec. 31, 2025.
Virginia will continue to automatically conform to any federal tax law amendment that extends the expiration date of a federal tax provision to which Virginia conforms or has previously conformed. Additionally, the legislation allows Virginia to conform to most of the provisions of the 2025 federal Budget Reconciliation Act and decreases Virginia’s deduction for disallowed business interest beginning in tax year 2025.
The VSCPA is disappointed by the repeal of rolling tax conformity, which was enacted in 2023 following significant member advocacy and provided greater predictability for taxpayers and practitioners. That said, we are appreciative of the timely resolution to HR 1 conformity questions, the move to automatic conformity for federal extenders, and the permanence of the pass-through entity tax (PTET) . Addressing these issues through the caboose budget provides clarity well ahead of filing season and avoided the political and procedural hurdles a standalone emergency bill likely would have faced this year.
On Feb. 20, 2026, the Virginia Department of Taxation released Tax Bulletin 26-1, which provides information on the changes to income tax conformity.