Capital gains: Taxed as ordinary income.
What changed: Elective pass-through entity tax (SALT cap workaround) extended through 2026 by HB1600, but the credit for PTET paid to other states expired Jan. 1, 2026.
| January 1, 2026 | Virginia extends elective pass-through entity tax (HB1600) Virginia business owners can keep using the entity-level tax to get around the federal SALT cap for 2026. However, the credit for PTET paid to other states expired, hurting multistate owners. | In effect |
The IRS said 27 states have elected into the new Section 25F credit for gifts to scholarship granting organizations, a dollar-for-dollar option that compares favorably with a normal charitable deduction.