Virginia Tax Conformity Legislation Begins to Move

After a slow start to the 2026 Virginia General Assembly session, tax conformity legislation is finally gaining momentum. On Jan. 28, 2026, the House Finance Committee unanimously passed a substitute version of HB 977, marking an important step forward in addressing Virginia’s annual conformity process.

In addition to addressing conformity to federal bill HR 1, HB 977:

• Makes the pass-through entity tax (PTET) permanent.
• Restores rolling tax conformity with appropriate guardrails effective Jan. 1, 2026.
• Includes an emergency clause to help provide timely clarity for taxpayers and practitioners.

While this progress is encouraging, there is still a long road ahead. The bill now moves to House Appropriations for further review, and the Senate has not yet taken up conformity legislation. We are also hearing continued concerns about the fiscal impact of several federal provisions included in HR 1, which could complicate the path forward.

Timely tax conformity decisions are essential to ensuring taxpayers and tax practitioners understand how to comply with Virginia law — particularly as filing season begins each year. While VSCPA does not advocate for specific federal provisions, we consistently stress the importance of certainty, predictability, and sound tax administration.

Decisions on tax conformity are happening now!

VSCPA members are encouraged to contact their legislators today and emphasize the need for timely, predictable conformity that supports compliance and certainty.