NCACPA has received an advance copy of an Important Notice that will soon be issued by the NC Department of Revenue addressing how recent federal tax law changes affect North Carolina individual and corporate income tax returns for tax year 2025.
Here are the key points NCACPA members should know:
1. North Carolina has not updated its federal conformity date.
North Carolina income tax law currently references the Internal Revenue Code as of January 1, 2023. As of the date of the Notice, the General Assembly has not enacted legislation to adopt federal changes enacted after that date.
2. Certain recent federal tax changes do not apply for NC purposes—yet.
For tax year 2025, taxpayers must exclude federal changes enacted after January 1, 2023 when computing North Carolina taxable income. This includes provisions in:
– The Federal Disaster Tax Relief Act of 2023, and
– The One Big Beautiful Bill Act, such as changes affecting R&E capitalization and bonus depreciation.
This limitation also applies to pass-through entities, estates, and trusts.
3. The General Assembly may act after the filing deadline.
Lawmakers are not scheduled to convene until after April 15, 2026, meaning conformity legislation—if enacted—could come after returns are due. Even then, the legislature may choose to decouple from specific federal provisions.
4. Taxpayers impacted by these federal changes have two options by April 15, 2026:
– File an extension, preserving flexibility while waiting for legislative action (note: extensions do not extend time to pay), or
– File the return excluding the federal changes, with a required reconciliation schedule comparing federal law in effect for 2025 to the IRC as of January 1, 2023. Amended returns may be required later.
5. Expect additional guidance.
NCDOR indicates that updates will be posted on its website and distributed through e-alerts as the situation evolves.
NCACPA’s Advocacy team will continue to monitor legislative activity closely, engage with policymakers as appropriate, and keep members informed as we move deeper into the filing season. If conformity legislation advances, you will be the first to know.
If you have questions about this issue or other policy matters, please contact NCACPA Coordinator of Advocacy & Outreach Will Edmondson.