North Carolina has not enacted legislation conforming its corporate and individual income tax laws to recent federal changes under the “OBBB” provisions. The North Carolina General Assembly is not scheduled to reconvene until April 15, 2026, at which time it is expected to address these matters. As a result, differences may exist between federal and North Carolina tax treatment, particularly for business owners.
Impact on Your 2025 Filing
Many taxpayers are expected to be able to file their 2025 returns without extension despite these nonconformity issues. However, taxpayers that are affected by the federal changes may need to either file an extension, or file their returns based on current North Carolina law, which could require an amended return once legislative guidance is finalized.
Key Areas Potentially Affected
Depreciation Adjustments: If North Carolina does not conform to federal changes affecting bonus depreciation and enhanced Section 179 expensing, state depreciation adjustments may be required. In general, North Carolina would apply federal depreciation rules in effect as of January 1, 2023.
Business Interest Limitation (IRC §163(j)): If North Carolina does not conform to federal changes related to the business interest limitation, taxpayers filing federal Form 8990 may experience differences in allowable interest deductions. A North Carolinaspecific recalculation may be required.
Research and Experimental Expenditures (IRC §174): If North Carolina does not conform to federal changes allowing the immediate expensing of domestic research and experimental expenditures, taxpayers filing federal Form 6765 may need to make statelevel adjustments. This could impact taxable income for business with R&E activities.
Our Approach for 2025 Returns
To ensure accuracy while avoiding unnecessary delays, we will identify impacted clients during the preparation process and reach out individually with recommendations.
Next Steps
We will continue to monitor legislative developments throughout the filing season. If North Carolina adopts conforming legislation, we will promptly advise you of the effect on your return.
