Virginia continues on a rolling basis to conform with the Internal Revenue Code (IRC), with limited exceptions.
Virginia will continue to not conform with the following:
- The bonus depreciation allowed for certain assets under federal law;
- the five-year carryback of certain federal net operating loss (NOL) deductions generated in the 2008 or 2009 taxable years;
- the federal income treatment of applicable high yield discount obligations; and
- the federal income tax treatment of cancellation of debt income realized in connection with certain business debts.
According to the state of Virginia instructions, "for the above conformity adjustments, the taxpayer may be required to make additions and/or subtractions in the account." Virginia stated they will continue to not conform from the following temporary changes made by the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act: suspension of certain NOL limitations for Taxable Years 2018, 2019, and 2020 and increasing the business interest limitation for Taxable Year 2019 and 2020.
Taxpayers should continue to reference the instructions for Federal Schedule A (Form 1040) when itemizing deductions, but with certain exceptions. According to the Virginia website, "for taxable years beginning on or after January 1, 2019, Virginia deconforms from the suspension of the overall limitation on itemized deductions, commonly known as the Pease limitation".
What do I need to know for 2024?
For taxable year 2024, if a change in tax law results in change to the IRC, the taxpayer may need to make adjustments to their Virginia return. Information about any such adjustments will be posted on the state's website at www.tax.virginia.gov