What is State Conformity and Why Do You Care?

You’re probably aware that federal tax laws and state tax laws don’t always agree. As you do your tax planning and prepare for filing season, it’s important to know the provisions that differ for your state.

State tax conformity is the practice of state governments adopting the federal Internal Revenue Code (IRC) for their own income tax systems. States can adopt changes automatically (rolling conformity), as of specific dates (static conformity), or selectively decouple from federal rules.

Most states start with the IRC, which provides states and taxpayers the ability to rely on consistency in federal rulings and interpretations. Taxpayers can simply copy line items directly from their federal tax forms onto their state returns. However, no state adopts the IRC without modification. States often depart from federal rules on items like bonus depreciation, state and local tax (SALT) deductions, and other income items.

With all of the 2025 changes inherent in the OBBBA, some states – even those with rolling conformity – may be reluctant to adopt all federal changes. OBBBA provisions such as the higher standard deduction, an enhanced deduction for seniors, deductions for car loans, tips, and overtime all have significant lost income implications for state tax systems.

What does this mean to the average taxpayer?

If Kindred prepares your tax return, we’re keeping up with provisions in your state. But as an informed constituent, you should also watch the actions of your state’s legislature to determine their actions regarding IRC conformity.