For U.S. individual taxpayers • Rolling vs. static conformity, state decoupling, and practical filing-season tips
Quick Take
- OBBBA highlights for individuals: expanded federal SALT cap, new above-the-line deductions for overtime and tips, and other base changes that may flow into state returns depending on conformity.
- Rolling conformity states generally adopt federal changes automatically unless they decouple. Static-date states must pass an update bill to pick up OBBBA. Selective states conform only to chosen provisions.
- Reality check: Federal itemized changes (like SALT) rarely change state tax due directly; but federal AGI-level changes (e.g., overtime/tips deductions) can flow through in rolling states that start from federal AGI.
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1) How state conformity works (rolling • static • selective)
Rolling conformity
The state references the current Internal Revenue Code (IRC). New federal laws (like OBBBA) typically flow through automatically unless lawmakers enact a targeted decoupling from specific provisions.
Static-date (fixed) conformity
The state pegs to the IRC as of a specific date (e.g., “IRC as of January 1, 2024”). To adopt OBBBA changes, legislators must update the conformity date by statute.
2) Which OBBBA items usually flow through to states
Likely to flow through (rolling states; AGI starters)
- New above-the-line deductions for overtime and tips (starting 2025), which reduce federal AGI.
- Other base changes that affect federal taxable income, for states that start from federal TI.
Usually does not change state tax directly
- Federal SALT cap expansion—state returns typically have their own itemized deduction rules and disallow a state-tax deduction.
- Federal-only credits (unless a state separately conforms or provides its own version).
3) 2025 Conformity snapshots (examples)
Status snapshot for the 2025 filing season; verify your state’s latest guidance before filing.
State | Conformity posture | OBBBA alignment (individual income) | Notes |
---|---|---|---|
Rolling states (general) | Rolling | OBBBA AGI-level items (overtime/tips deductions) typically flow through unless decoupled | Monitor for selective decoupling announcements during the year |
Fixed-date states (general) | Static | Need legislation to update IRC date before OBBBA flows into state returns | If no update passes, your 2025 state return may ignore new federal deductions |
Selective states (example posture) | Rolling or Static + selective | Adopt some OBBBA items, reject others (e.g., QBI) | Check state instructions for add-backs/subtractions |
States that start from federal TI | Varies | Greater exposure to federal base changes unless decoupled | Taxable-income starters may reflect OBBBA faster than AGI-only starters |
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4) Filing-season tips for individuals
If you’re in a rolling state
- Expect 2025 overtime/tips deductions to flow into state AGI unless your state issues a decoupling notice.
- Track year-end pay summaries and keep employer documentation for state audits.
If you’re in a static or selective state
- Check whether lawmakers updated the IRC date for 2025 returns. If not, your state may ignore new federal above-the-line deductions this year.
- Confirm your state’s treatment of the federal QBI deduction and any state-specific add-backs.
5) FAQs
What is “decoupling” from federal law?
Decoupling is when a state enacts a rule to exclude a specific federal change (like an OBBBA deduction) from its own tax base, even if the state is otherwise rolling.
How do I know whether my state starts from federal AGI or TI?
Check the first line of your state individual income tax form and the instructions. If it references federal AGI or TI, that’s your starting point.
Could my state adopt some OBBBA items and reject others?
Yes. States can conform to certain provisions, delay others, or require add-backs/subtractions on their returns.
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This advertising-friendly tracker provides general information for U.S. individual taxpayers. State conformity changes frequently—verify your state’s latest law, forms, and instructions before filing. This is not tax or legal advice.