                                 CODE OF VIRGINIA

(APPLICABLE TO TAXABLE YEARS BEGINNING ON AND AFTER JANUARY 1, 2023) CONFORMITY
TO INTERNAL REVENUE CODE (§ 58.1-301)

A. Any term used in this chapter shall have the same meaning as when used in a
comparable context in the laws of the United States relating to federal income
taxes, unless a different meaning is clearly required.

B. Any reference in this chapter to the laws of the United States relating to
federal income taxes shall mean the provisions of the Internal Revenue Code of
1954, and amendments thereto, and other provisions of the laws of the United
States relating to federal income taxes, except for:

   1. The special depreciation allowance for certain property provided for under
   &#xA7;&#xA7; 168(k), 168(l), 168(m), 1400L, and 1400N of the Internal Revenue
   Code;

   2. The carry-back of certain net operating losses for five years under &#xA7;
   172(b)(1)(H) of the Internal Revenue Code;

   3. The original issue discount on applicable high yield discount obligations
   under &#xA7; 163(e)(5)(F) of the Internal Revenue Code;

   4. The deferral of certain income under &#xA7; 108(i) of the Internal Revenue
   Code. For Virginia income tax purposes, income from the discharge of
   indebtedness in connection with the reacquisition of an &#8220;applicable debt
   instrument&#8221; (as defined under &#xA7; 108(i) of the Internal Revenue
   Code) reacquired in the taxable year shall be fully included in the
   taxpayer&#8217;s Virginia taxable income for the taxable year, unless the
   taxpayer elects to include such income in the taxpayer&#8217;s Virginia
   taxable income ratably over a three-taxable-year period beginning with taxable
   year 2009 for transactions completed in taxable year 2009, or over a
   three-taxable-year period beginning with taxable year 2010 for transactions
   completed in taxable year 2010 on or before April 21, 2010. For purposes of
   such election, all other provisions of &#xA7; 108(i) of the Internal Revenue
   Code shall apply mutatis mutandis. No other deferral shall be allowed for
   income from the discharge of indebtedness in connection with the reacquisition
   of an &#8220;applicable debt instrument&#8221;;

   5. For taxable years beginning on and after January 1, 2019, the suspension of
   the overall limitation on itemized deductions under &#xA7; 68(f) of the
   Internal Revenue Code;

   6. For taxable years beginning on and after January 1, 2017, but before
   January 1, 2018, and for taxable years beginning on and after January 1, 2019,
   the 7.5 percent of federal adjusted gross income threshold set forth in &#xA7;
   213(a) of the Internal Revenue Code that is used for purposes of computing the
   deduction allowed for expenses for medical care pursuant to &#xA7; 213 of the
   Internal Revenue Code. For such taxable years, the threshold utilized for
   Virginia income tax purposes to compute the deduction allowed for expenses for
   medical care pursuant to &#xA7; 213 of the Internal Revenue Code shall be 10
   percent of federal adjusted gross income;

   7. The provisions of &#xA7;&#xA7; 2303(a) and 2303(b) of the federal
   Coronavirus Aid, Relief, and Economic Security Act, P.L. 116-136 (2020),
   related to the net operating loss limitation and carryback;

   8. The provisions of &#xA7; 2304(a) of the federal Coronavirus Aid, Relief,
   and Economic Security Act, P.L. 116-136 (2020), related to a loss limitation
   applicable to taxpayers other than corporations;

   9. The provisions of &#xA7; 2306 of the federal Coronavirus Aid, Relief, and
   Economic Security Act, P.L. 116-136 (2020), related to the limitation on
   business interest;

   10. For taxable years beginning before January 1, 2021, the provisions of
   &#xA7;&#xA7; 276(a), 276(b)(2), 276(b)(3), 278(a)(2), 278(a)(3), 278(b)(2),
   278(b)(3), 278(c)(2), 278(c)(3), 278(d)(2), and 278(d)(3) of the federal
   Consolidated Appropriations Act, P.L. 116-260 (2020), and &#xA7;&#xA7;
   9672(2), 9672(3), 9673(2), and 9673(3) of the federal American Rescue Plan
   Act, P.L. 117-2 (2021) related to deductions, tax attributes, and basis
   increases for certain loan forgiveness and other business financial
   assistance; and

   11. a. (1) Any amendment enacted on or after January 1, 2023, with a projected
   impact that would increase or decrease general fund revenues by greater than
   $15 million in the fiscal year in which the amendment was enacted or any of
   the succeeding four fiscal years. The provisions of this subdivision shall not
   apply to any amendment to federal income tax law that is either subsequently
   adopted by the General Assembly or a federal tax extender as defined in
   subdivision b.

      2. All amendments enacted on or after January 1, 2023, and occurring between
      adjournment sine die of the previous regular session of the General Assembly
      and the first day of the subsequent regular session of the General Assembly
      if the cumulative projected impact of such amendments would increase or
      decrease general fund revenues by greater than $75 million in the fiscal
      year in which the amendments were enacted or any of the succeeding four
      fiscal years. The provisions of this subdivision shall not apply to any
      amendment to federal income tax law that is (i) subsequently adopted by the
      General Assembly, (ii) a federal tax extender as defined in subdivision b,
      or (iii) enacted before the date on which the cumulative projected impact is
      met. However, any amendment conformed to pursuant to clause (iii) shall be
      included in the calculation of the $75 million threshold for purposes of
      determining whether such threshold has been met.

      3. Beginning January 1, 2024, the threshold provided by subdivision (1)
      shall be adjusted annually based on the preceding change in the Chained
      Consumer Price Index for All Urban Consumers (C-CPI-U), as published by the
      Bureau of Labor Statistics for the U.S. Department of Labor or any successor
      index for the previous year.
      					b. For purposes of this subdivision 11, &#8220;amendment&#8221; means a
      single amendment to federal income tax law or a group of such amendments
      enacted in the same act of Congress that collectively surpass the threshold
      impact, and &#8220;federal tax extender&#8221; means an amendment to federal
      tax law that extends the expiration date of a federal tax provision to which
      Virginia conforms or has previously conformed.
      					c. The Secretary of Finance, in consultation with the Chairmen of the
      Senate Committee on Finance and Appropriations and the House Committees on
      Appropriations and Finance, shall be responsible for determining whether the
      criteria of subdivision a are met.
      					d. The Secretary of Finance shall annually provide a report on or
      before November 15 of each year on the fiscal impact of amendments to
      federal income tax law occurring since the adjournment sine die of the
      preceding regular session of the General Assembly to the Chairmen of the
      Senate Committee on Finance and Appropriations and the House Committees on
      Appropriations and Finance. The Secretary of Finance shall also provide
      updates to the same Chairmen on any further amendments to federal income tax
      law occurring between submission of the required report and the first day of
      the subsequent regular session of the General Assembly.

C. The Department of Taxation is hereby authorized to develop procedures or
guidelines for implementation of the provisions of this section, which
procedures or guidelines shall be exempt from the provisions of the
Administrative Process Act (&#xA7; 2.2-4000 et seq.).

HISTORY: Code 1950, § 58-151.01; 1971, Ex. Sess., c. 171; 1980, c. 633; 1984,
c. 675; 1994, c. 1; 2003, cc. 2, 163; 2004, c. 512; 2005, cc. 5, 26; 2006, cc.
63, 162; 2007, cc. 59, 782; 2008, cc. 1, 2; 2009, cc. 2, 3, 781; 2010, cc. 872,
874; 2011, cc. 2, 866, 890; 2012, cc. 2, 335, 480, 578; 2013, cc. 4, 693; 2014,
cc. 1, 2; 2015, cc. 1, 61; 2016, cc. 2, 19; 2017, cc. 1, 2; 2018, cc. 14, 15;
2019, cc. 17, 18; 2020, cc. 1, 255; 2021, Sp. Sess. I, cc. 117, 118, 552; 2022,
cc. 3, 19; 2022, Sp. Sess. I, cc. 1, 2; 2023, cc. 1, 763, 772, 791; 2023, Sp.
Sess. I, c. 1.