Drake Tax - North Carolina Nonconformity to Federal Tax Law Changes After January 1, 2023

Article #: 18941

Last Updated: February 12, 2026

 

Tags: Drake TaxNC North Carolina

Drake Tax logo

North Carolina conforms to the federal tax law as it existed on January 1, 2023. The federal tax law changes passed July 4, 2025, do not apply when calculating North Carolina income tax. As a result, you may need to add back or adjust the AGI amount that is carried from the federal return to the NC return. See the NC DOR Notice for details.

In Drake Tax, adjust the AGI that is used for NC purposes by following these steps.

  1. Go to the NC NON screen and use the box Federal adjusted gross income to adjust the amount that should be used for the NC return.

  2. Complete the NC PDF screen to indicate that you will be attaching a PDF for the NC return.

    • The DOR recommends naming the PDF attachment TY25NCFAGICALC.

  3. In View/Print mode, attach a PDF that explains the adjustment. See Drake Tax - States Generally - Attachments for e-Filing for details.

Note  An adjustment is not needed for the following deductions as they do not impact the Federal AGI calculation (Form 1040, line 11a):

  • “No Tax on Tips”

  • “No Tax on Overtime”

  • “No Tax on Car Loan Interest”

  • Enhanced Deduction for Seniors

Note  This new tax bill, was signed into law on July 4, 2025. The One Big Beautiful Bill Act (OBBB or OB3) is now also being referred to by lawmakers as the Working Families Tax Cut Act. You may see one or both names used, but they refer to the same set of tax changes.