Virginia has paused its usual practice of automatically matching federal tax law changes. Normally, Virginia updates its tax rules whenever the IRS makes changes—this is called rolling conformity. But starting January 1, 2025, and continuing through December 31, 2026, that automatic update process is on hold. Any new federal tax laws passed during this period will not automatically apply in Virginia.
Virginia has made the following changes for the upcoming 2025 tax year:
Credits
- Recyclable Materials Credit - Sunset date has been extended to January 1, 2027 (previously January 1, 2025).
- Historic Rehabilitation Tax Credit - The cap for the Historic Rehabilitation Tax Credit will increase from $5 million to $7.5 million for tax years starting on or after January 1, 2025.
- New Firearm Safety Device Tax Credit - Starting with tax years beginning on or after January 1, 2025, the credit now applies to purchases from any commercial retailer. Previously, purchases were limited to those made from federally licensed dealers.
- Virginia Earned Income Tax Credit - For Tax Years 2025 and 2026, the refundable portion of the Virginia Earned Income Tax Credit increases from 15% to 20%. Nonresidents and part-year residents are not eligible for the refundable credit.
Deductions
- Standard Deduction Increase - An increase of the standard deduction for tax year 2025, from $8,500 from $8,750 for single filers and from $17,000 to $17,500 for married filing jointly filers.