Virginia updates Code conformity date

Under emergency legislation enacted by the 2018 General Assembly on February 22 and February 23, 2018, Virginia’s fixed-date of conformity to the terms of the Internal Revenue Code (Code) will advance from December 31, 2016, to February 9, 2018.
The legislation is effective for the taxable year 2017 and allows Virginia to conform to the Disaster Tax Relief and Airport and Airway Extension Act of 2017.
The legislation also conforms to most of the provisions of the Tax Cuts and Jobs Act and the Bipartisan Budget Act of 2018 that are effective for Taxable Year 2017. However, this legislation does not conform to the provision of the Tax Cuts and Jobs Act that temporarily increases the medical expenses deduction for Taxable Years 2017 and 2018. In addition, this legislation deconforms from most of the provisions of the Tax Cuts and Jobs Act and the Bipartisan Budget Act of 2018 that are effective for Taxable Year 2018 and thereafter.
Tax Bulletin 18-1 details the conformity adjustments that may be necessary and provides more information on how the changes affect 2017 Virginia income tax returns.
The Tax Cuts and Jobs Act temporarily increases the medical expenses deduction. It lowers the threshold for the deduction from 10% of federal adjusted gross income to 7.5% for tax years 2017 and 2018. Virginia does not conform to the temporary deduction threshold reduction. Taxpayers claiming a deduction on their Virginia returns must add back the difference between the amount of:

  • The medical expense deduction reported on their federal return; and
  • A deduction computed using a threshold equal to 10% of federal adjusted gross income. (Virginia Department of Revenue, Tax Bulletin 18-1, February 26, 2018.)

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