
By Steve Haner
Should the 2026 Virginia General Assembly choose to conform state tax laws to the full set of new tax rules at the federal level, Virginia families and businesses might save as much at $1.4 billion annually. That is a fresh estimate from the Tax Foundation, which looked at the impact of full conformity in all 50 states.ย
Jared Walczak is vice president of state projects at the Tax Foundation and is well known and respected in Richmond, where he worked as a legislative aide with a keen interest in tax matters. His teamโs estimates are just that, and the Virginia Department of Taxation may be coming up with different numbers, but the Tax Foundation report can start the debate.ย
They might prefer we didnโt, but the time to press candidates for governor and for the General Assembly about these issues is now, before the November election. The recent good news about the state finishing yet another budget cycle with a healthy surplus should be part of the conversation. In his introduced budget in December, outgoing Governor Glenn Youngkin could propose which of these provisions he would adopt.ย
Virginiaโs default position on the income tax for years has been to conform to federal tax rules and definitions. Generally, conformity should be the goal because of how it simplifies tax compliance. But it has been more than a decade since Virginia was an automatic or โrollingโ conformity state. The list of variances has gotten very long and may now grow again.
Anticipating big changes under new President Donald Trump, the 2025 General Assembly inserted a firm commandment in the final budget making it clear that no federal changes adopted by Congress would be automatically adopted in Virginia, even those with minimal fiscal implications. ย
The Tax Foundation labels our current position as โstatic conformityโ and also reviews the other statesโ postures. That will leave the next governor and the 2026 legislators with a long list of decisions to make, some of them on highly popular federal provisions such as the new individual deductions for tip income and overtime income.ย











