For the first time in decades, Virginia's tax code and the federal tax code are no longer moving in lockstep. Virginia has always used "rolling conformity" -- automatically adopting federal tax law changes as they happen. Effective this year, that's gone. Virginia Tax announced in February 2026 that the Commonwealth has switched to a fixed conformity date of December 31, 2025, meaning Virginia no longer automatically absorbs every subsequent federal change (Virginia Tax, Tax Bulletin 26-1).
That single administrative decision, combined with new provisions from the One Big Beautiful Bill Act ("OBBBA") and Virginia's own 2026-2028 budget, means the state and federal tax math for high earners and business owners now genuinely diverge -- right as Q3 estimated payments come due.
What Changed, and Why It Matters
Under rolling conformity, if Congress changed a deduction or a depreciation rule, Virginia's tax code changed with it automatically. Under the new fixed-date approach, Virginia picks up federal changes only as of a specific date -- currently December 31, 2025 -- and anything after that requires separate state action to adopt. Virginia has already used that flexibility to decouple from at least two OBBBA provisions: it keeps its own itemized deduction limitation rather than adopting the federal repeal of the "Pease" limitation, and it reduced the state subtraction for disallowed business interest from 50% down to 20% (Virginia Tax, Tax Bulletin 26-1).
In plain terms: a federal tax strategy that looks favorable on your 1040 may not translate dollar-for-dollar onto your Virginia return anymore. That gap is new, and it's easy to miss if your tax preparation and your tax planning happen at different times of year, with different people, working from different assumptions.
What's New Under OBBBA for 2026
On the federal side, several OBBBA provisions are affecting real numbers for the first time this year. The qualified business income (QBI) deduction for pass-through business owners rises from 20% to 23%, and is now permanent. Bonus depreciation is restored to 100% for qualifying property, and the Section 179 expensing limit rises to $2,560,000. The SALT deduction cap increases to $40,400 for 2026, but phases out for joint filers with modified adjusted gross income above $505,000 -- and there's a new, separate cap on itemized deductions for taxpayers in the top 37% bracket, which effectively values those deductions at 35 cents on the dollar rather than 37 (sources: IRS; Anchin; Morgan Stanley 2026 tax planning guidance).
A Real Example -- Denise's Practice
Denise owns a physical therapy practice with locations in Chesapeake and Suffolk. Her CPA modeled her 2026 federal SALT deduction under the new $40,400 cap and it looked like meaningful relief compared to prior years. What that projection didn't capture: Virginia's fixed conformity date means the Commonwealth's own itemized deduction limitation didn't move in tandem, so her actual state tax benefit is smaller than the federal number suggested. Multiply that gap across estimated payments, and it's real money to get wrong.
Do You Need to Recalculate Your Estimated Taxes?
For many business owners and high earners, yes. Third-quarter 2026 estimated payments are due September 15. Safe-harbor calculations that simply carry forward last year's combined federal-and-state liability may no longer hold up, because federal and Virginia liability are no longer moving at the same rate. If your business uses Virginia's pass-through entity tax election (PTET) -- the workaround that lets pass-through businesses pay the entity-level tax and sidestep the federal SALT cap for their owners -- that election was recently extended and is now scheduled to sunset January 1, 2027, one year later than previously planned. That's good news, but it's worth confirming your entity is actually making the election correctly under the current rules.
Where Integrated Planning Pays Off
This is exactly the kind of gap that shows up when tax preparation, tax planning, and legal and wealth planning aren't talking to each other. A tax preparer filing your return in March has no reason to flag a Roth conversion opportunity that needs to close by December 31; a wealth advisor managing your portfolio has no visibility into your entity's PTET election; and neither one necessarily knows that your estate plan's income-tax assumptions were built around the old conformity rules. When those functions sit under one roof and share the same set of facts, a change like this year's conformity split gets caught in July, not discovered as a surprise in April.
What This Means for You
If you're a business owner or high earner in Virginia, don't assume your federal tax plan and your state tax bill are still moving together automatically -- for the first time in years, they're not guaranteed to. Before your September 15 estimate is due, it's worth confirming your projections account for Virginia's fixed conformity date, not just the federal changes making headlines.
Let's Talk. If you want a second look at how the federal-Virginia split affects your 2026 numbers, contact us to schedule a conversation. At Alperin Law & Wealth, our tax, legal, and wealth teams work from the same numbers, so a change like this doesn't fall through the cracks between your accountant and your advisor.
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