- House Bill 29, Chapter 7 of the 2026 Acts of the Assembly (the Bill) was signed by Governor Abigail Spanberger of the Commonwealth of Virginia on February 20th, 2026.
- The Bill sets Virginia’s static conformity date to the Internal Revenue Code (the “Code”) to December 31, 2025.
- The Bill also specifically addresses Virginia’s conformity to various provisions of the One Big Beautiful Bill Act (“OBBBA”).
- The Department of Taxation has also published Virginia Tax Bulletin 26-1 that offers additional guidance to taxpayers.
Background
The passage of OBBBA has led to a flurry of state activity whereby the various jurisdictions have updated their tax laws to either conform or decouple to certain changes that the federal legislation made to the Code. Virginia recently passed its version of such legislation, addressing the way by which it conforms to the Code, as well as specifically addressing certain provisions in the OBBBA.
Conformity
Historically, Virginia was a static conformity state, meaning it conformed to the Code as of a specific date. However, in 2023, Governor Glenn Younkin signed legislation adopting rolling conformity – it would automatically adopt enacted federal tax changes. There was one significant exception to the rolling conformity provisions – it put a temporary pause on changes to the Code that would have a significant fiscal impact to the Commonwealth in the year of the change or in any of the next four years. The Bill reverts to traditional static conformity with the current conformity date being December 31, 2025, though future amendments in the nature of extenders of benefits to which Virginia has previously conformed will be incorporated into Virginia tax law.
Forvis Mazars Insight: Taxpayers should continue to monitor Virginia’s conformity date as it is updated to have the proper baseline by which to evaluate future tax law changes.
Specific Provisions
The law explicitly decouples Virginia from the OBBBA bonus depreciation provisions found in Section 168(k) of the Code and the provisions allowing the immediate expensing of qualified production property under Section 168(n) of the Code. It also decouples from the changes made to the deductibility research and experimental (“R&E”) expenses under OBBBA found in Sections 174 and 174A of the Code. The statute expressly provides that such R&E expenses shall, “…continue to be subject to the applicable amortization period.”
Virginia will conform to the changes made to adjusted taxable income for purposes of calculating deductible business interest expense under Section 163(j) of the Code. However, the Bill reduces the additional Virginia deduction for federally disallowed business interest expense from 50% to 20% of that amount.
Forvis Mazars Insigh: As with the conformity date, taxpayers will need to stay informed as to the status of these decoupling provisions. Since these are written into the statute, updating the conformity date alone would not change the Virginia tax results regarding these provisions; rather, the statutory language would need to be affirmatively changed to recouple to the OBBBA federal law changes.
How Forvis Mazars Can Help
Conformity and decoupling considering the OBBBA continues to be an ever-changing and complicated issue. We are monitoring state level law changes and can help you navigate the tax implications of OBBBA conformity and decoupling.