State conformity to the §224 qualified-tips deduction.

Rolling vs static conformity — the fundamental split

Most US states with personal income taxes start their state-tax computation from federal Adjusted Gross Income (AGI) or federal taxable income. The state's conformity statute determines which version of the federal Internal Revenue Code the state imports.

Rolling-conformity states automatically import every change to the federal Internal Revenue Code as Congress enacts it. The state's conformity statute references “the Internal Revenue Code as in effect for the current tax year” or similar phrasing. WhenP.L. 119-21 §70201 added §224 to the Code, rolling-conformity states imported §224 the next day. The federal AGI reduction flows through to the state taxable income calculation automatically; no state legislative action is required.

Static-conformity states (sometimes called fixed-date or selective-conformity states) reference a specific date in their statute — for example, “the Internal Revenue Code as in effect on January 1, 2025” or “as in effect on December 31, 2024.” A change to the federal Code after the conformity-date does not automatically flow through. The state legislature has to update the conformity-date statute (or pass a decoupling provision) for the federal change to take state-tax effect. As of mid-2026, several static-conformity states have not updated to a date that captures OBBBA, so §224 is not yet honored on those state returns.

The split is not a partisan one — both rolling-conformity and static-conformity states span the political spectrum. The choice reflects each state's preference for legislative control over the state-tax base versus administrative simplicity.

Explicit conformity through legislation

A static-conformity state can update its conformity statute to a newer IRC date that captures OBBBA. A handful of states did so during the 2026 legislative session — the state's conformity statute now references January 1, 2026 (or later), bringing §224 into the state tax base on the same flow-through model as a rolling-conformity state.

Some states took a different path: they passed an explicit OBBBA-conformity bill that imports §224 specifically without updating the broader conformity-date statute. The result is the same — the federal AGI reduction flows through to state taxable income — but the legislative mechanic is narrower.

Decoupling — when a state actively declines the federal change

A rolling-conformity state can pass a decoupling statute that says “notwithstanding the rolling-conformity rule, the §224 qualified-tips deduction is added back to state taxable income.” The federal flow-through is reversed at the state level. A handful of states have decoupled from §224 specifically — usually citing revenue concerns at the state-budget level.

Some states decoupled from the §225 qualified-overtime deduction but not from the §224 qualified-tips deduction (or vice versa). The two deductions are statutorily linked at the federal level (same MAGI phase-out, same sunset date) but states are free to treat them differently. The matrix on /state-conformity flags the combinations: decoupled-both, decoupled-overtime-only, rolling-conformity, explicit-conformity, no-income-tax, and pending.

No personal income tax — the simplest case

Nine states do not have a broad-based personal income tax: Alaska, Florida, Nevada, New Hampshire (interest and dividends only — fully phased out by 2027), South Dakota, Tennessee (interest and dividends only — fully phased out by 2021, no longer applicable), Texas, Washington (capital gains tax on high earners but no broad income tax), and Wyoming. For taxpayers in these states, the conformity question doesn't apply at the state level — there's no state income tax to compute.

A handful of localities within these states have local income taxes (notably some New Hampshire towns, certain Tennessee jurisdictions, and a few Washington cities). Those are typically narrow and rarely interact with §224.

Why this matters for the §224 deduction value

Suppose your tip wages are $20,000 in tax year 2026, your MAGI is $80,000 (single), and your federal marginal bracket is 22%. Under §224, your federal AGI reduction is $20,000, which translates to roughly $4,400 in federal tax savings.

If your state has rolling conformity and the state marginal rate is 5%, the $20,000 federal AGI reduction also reduces state taxable income by $20,000, for an additional $1,000 in state tax savings. Total benefit: $5,400.

If your state has explicitly decoupled, the state adds the $20,000 back to state taxable income; you owe state tax on the $20,000 regardless of the federal reduction. Total benefit: $4,400 (federal only).

If your state has no personal income tax, there's no state-tax calculation either way. Total benefit: $4,400 (federal only, identical to the decoupled case in dollars but for a different reason).

The matrix on /state-conformity surfaces your state's position; the decoder on /decode runs the federal math against your numbers. Combine the two to see your full benefit.

Why the matrix needs constant maintenance

State conformity statutes are amendable by ordinary legislative process. A state that is rolling-conformity in mid-2026 can pass a decoupling bill in late 2026 or early 2027 and change the answer for tax year 2027 (or, sometimes, retroactively for tax year 2026). A state that is static-conformity in mid-2026 can update its conformity-date statute in 2027 and bring §224 in retroactively for tax year 2025.

Each row in the matrix carries a last-verified date. When a row shows last-verified more than 90 days old, the matrix flags it for re-verification — state tax answers go stale fast. The cadence is quarterly review at minimum, with ad-hoc updates whenever a state DOR issues a notice or the legislature passes a bill.