The 2026 Virginia “Fixed-Date” Conformity Crisis A Guide for Businesses

he 2026 Virginia General Assembly session has concluded, leaving a transformed tax landscape for businesses. The most seismic shift is the formal end of Virginia’s decades-long policy of “rolling conformity” to the Internal Revenue Code. With the enactment of the 2026 Amendments to the 2025 Appropriation Act (House Bill 29), Virginia has transitioned to a fixed-date conformity of December 31, 2025 . This creates a “tax wall”: any federal tax changes signed into law after December 31, 2025, will not automatically apply to Virginia returns. For businesses, this means maintaining two separate sets of books for several high-impact areas where Virginia has deliberately “deconformed” from recent federal incentives.

The most critical deconformities for the 2025-2026 biennium directly affect cash flow and capital planning. First, while the federal government increased Section 179 expensing limits, Virginia has decoupled from these higher limits, forcing taxpayers to calculate depreciation as if the federal changes never happened . Second, Virginia remains one of the few states that strictly deconforms from federal bonus depreciation provisions under IRC Section 168(k) . Third, and most significantly for Northern Virginia’s tech corridor, the Commonwealth has rejected federal moves toward immediate expensing for domestic Research & Experimental (R&E) expenditures. Under HB 29, Virginia still requires these costs to be amortized over five years, severely impacting the cash flow of technology and innovation-driven companies . Navigating these complex, permanent “Virginia-only” adjustments requires expert guidance. At Nova Tax & Accounting Services, our Expert Tax Solutions team is dedicated to helping businesses reconcile federal and state depreciation schedules and optimize their tax positions under the new conformity rules.