\n<\/p>\n
Federal tax legislation can ripple into state tax filings but in Virginia, those ripple effects depend heavily on conformity<\/em> rules and (often) General Assembly action. Below is an overview of how H.R. 1<\/a> could affect Virginia taxpayers and why early 2026 will be a key timeframe.<\/p>\n H.R. 1 extends and modifies certain current federal tax provisions and introduces new federal tax policies. Some of those provisions may affect Virginia returns either automatically or only if Virginia acts to adopt them.<\/p>\n Virginia begins its income tax calculations using federal starting points:<\/p>\n When federal law changes those starting points, Virginia will generally follow unless Virginia \u201cdeconforms\u201d<\/em> or the state pauses conformity.<\/p>\n Virginia adopted rolling conformity in 2023<\/a>, but with important exceptions. Virginia deconforms from:<\/p>\n Separately, the 2025 Appropriation Act<\/a> pauses rolling conformity for provisions enacted in 2025 or 2026 that would have any<\/em> Virginia revenue impact during the next five years. The practical result: Virginia will generally need new legislation to adopt federal changes passed in 2025\u20132026, even if Virginia would normally \u201croll\u201d with federal law.<\/p>\n Virginia will, however, continue to automatically conform to federal tax extenders.<\/p>\n The following provides a concise overview:<\/p>\n A \u201cflow-through\u201d provision is one that changes FAGI or FTI and therefore changes the starting point for Virginia income tax.<\/p>\n An \u201cextender\u201d generally continues an existing federal provision that was scheduled to expire. Because these extensions are assumed in forecasting, they are treated as having no revenue impact.<\/p>\n H.R. 1 includes extender-type provisions such as:<\/p>\n H.R. 1 extends\/modifies federal provisions that flow into Virginia if<\/em> Virginia updates its conformity date, including:<\/p>\n H.R. 1 also introduces new items that would flow through to Virginia (again, only if Virginia updates conformity), such as:<\/p>\n If Virginia does not<\/strong> conform to flow-through provisions, taxpayers may need to make Virginia-specific modifications on their returns some of which can be complicated\u2014because federal taxable income and Virginia taxable income would diverge.<\/p>\n Virginia\u2019s preliminary estimates show that updating Virginia\u2019s date of conformity to fully adopt H.R. 1 flow-through provisions could reduce state revenue by approximately:<\/p>\n The largest estimated driver is the domestic research deduction (including \u201ccatch-up\u201d amounts tied to the prior amortization rules).<\/p>\n Virginia will likely need conformity legislation during the 2026 Regular Session. Due to tax return filing season timing, it may need to be emergency legislation.<\/p>\n If conformity is not resolved by early February 2026<\/strong>, Virginia warns it could create administrative issues such as:<\/p>\n H.R. 1 also includes new provisions that would not automatically apply to Virginia just by updating conformity. Virginia would need separate state-level legislation to create Virginia versions of these.<\/p>\n Examples include:<\/p>\n The Keiter Tax team will continue to monitor tax legislation affecting Virginia businesses and individual taxpayers. If you have questions on Virginia tax conformity and how it impacts you, please contact your\u00a0Keiter Opportunity Advisor<\/a>\u00a0|\u00a0Email<\/a>\u00a0| 804.747.0000<\/p>\n<\/div>\n\n","protected":false},"excerpt":{"rendered":" Virginia\u2019s response to federal tax changes Federal tax legislation can ripple into state tax filings but in Virginia, those ripple effects depend heavily on conformity rules and (often) General Assembly action. Below is an overview of how H.R. 1 could affect Virginia taxpayers and why early 2026 will be a key timeframe. What is happening […]<\/p>\n","protected":false},"author":1,"featured_media":348986,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11759],"tags":[20915,11558,73699,13460,5296,7356,14607],"dealstore":[],"offerexpiration":[],"class_list":["post-348985","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-accounting","tag-consequences","tag-federal","tag-h-r","tag-reform","tag-state","tag-tax","tag-virginia"],"yoast_head":"\nWhat is happening at the federal level?<\/h3>\n
A quick refresher: What does \u201cVirginia conformity\u201d mean?<\/h3>\n
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Virginia\u2019s conformity rules (and why they matter now)<\/h3>\n
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(Virginia still conforms to \u201ctax extenders,\u201d regardless of these triggers.)<\/em><\/li>\n<\/ul>\nWhich H.R. 1 provisions require Virginia action?<\/h3>\n
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What does \u201cflow-through\u201d mean?<\/h3>\n
Extenders included in H.R. 1 (automatic conformity)<\/h3>\n
H.R. 1 \u201cflow-through\u201d provisions Virginia may need to address<\/h3>\n
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New \u201cflow-through\u201d provisions in H.R. 1<\/h3>\n
Reasons for taxpayer consideration<\/h3>\n
Preliminary revenue impact: What full conformity could mean<\/h3>\n
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Timing risk: Why early 2026 is important<\/h3>\n
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Provisions that do not<\/em> \u201cflow through\u201d (still require action, but will not complicate filing)<\/h3>\n
How to prepare<\/h3>\n
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