Does Virginia follow the federal no-tax-on-tips and overtime deductions?
DOES NOT CONFORM
Virginia does not follow the federal deductions for state income tax. You can still claim the tips and overtime deductions on your federal return (Schedule 1-A) — they simply do not reduce your Virginia state tax. Do not assume your state return treats this income the way your federal return does.
Verified against the official state source below — last verified October 26, 2026
| Deduction | Virginia position |
|---|---|
| Federal tips deduction (IRC §224) | Does not conform |
| Federal overtime deduction (IRC §225) | Does not conform |
What the state itself says
"to the extent that they affect the computation of: Federal adjusted gross income or federal itemized deductions for individuals"
- Official source
- Virginia Department of Taxation, Tax Bulletin 26-1 (Feb. 20, 2026)
- Tax years covered
- 2025.
HB 29 (Ch. 7, 2026 Acts) replaced Virginia's rolling conformity with a fixed date of December 31, 2025. Bulletin 26-1 conforms to P.L. 119-21 only "to the extent" its provisions affect FAGI or federal itemized deductions for individuals; the §§224/225 deductions are §63(b) deductions from AGI — neither FAGI nor itemized deductions — so they fall outside Virginia conformity by the bulletin's own limiting language. This is a scope-based exclusion rather than a sentence naming tips/overtime; the bulletin is nonetheless the Department's official OBBBA guidance.
Your federal deduction is separate
Whatever your state does, the federal deductions run on their own rules: check your W-2 codes with the W-2 Code Checker, estimate with the Tips Calculator and Overtime Calculator, and see the glossary for any term. All state positions: the state-by-state index.
State position verified October 26, 2026 from the official source above. State guidance changes; confirm on the source before filing. This page is general information, not tax advice.