An overview
Voters showed up to the polls yesterday to make their voices heard, and the results are unlike anything we have seen in decades. Based on current projections, Democrats will gain majority in both the U.S. House and Senate, flipping seven seats in the Senate, 28 seats in the House, and five state governor seats, including Georgia and Texas.
Will the 2026 midterm elections change 2026 tax law?
With newly elected officials taking office in January, the first question individuals and business owners may ask is will 2026 tax laws change. The answer is that we do not anticipate any changes to 2026 tax law. Any potential tax changes from the Democrat-controlled Congress would come in 2027 or later. Taxpayers should continue to follow existing laws and guidance, including Aprio’s year-end tax planning guide, when making year-end decisions for 2026.
What happens before the new Congress takes office?
While these are historic results, the winners of the 2026 midterm elections will not officially take office until the start of the new Congress term on January 3, 2027. Republicans will remain in control of Congress until then, and have just under two months, less than 25 scheduled legislative days, to enact any legislation or policy changes before control shifts to Democrats.
Key priorities for Republicans during this window include:
- Passing a federal budget: The current federal budget is set to expire on December 11, 2026. Congress will need to work quickly to pass a new budget and avoid a shutdown, which could reduce the already limited number of working days Republicans have left as majority.
- Addressing the debt ceiling issue: While many Republicans prefer not to increase the debt limit, federal borrowing may reach the debt ceiling next year. Republicans may look to raise it now rather than leave it to a Democrat-controlled Congress.
- Authorizing defense spending: The annual National Defense Authorization Act (NDAA) must be passed before the end of 2026 to appropriate any funds necessary to the U.S. Armed Forces. This bill authorizes military spending for housing, healthcare, compensation, equipment and weapons purchases, and any other activities related to defense.
What could the election mean for 2027 tax policy?
Tax policy for 2027 remains uncertain. Republicans could try to expand or make permanent any of the provisions in the One Big Beautiful Bill Act (OBBBA) before January. With government funding, the debt limit, and defense legislation competing for limited time, the Republicans are unlikely to have the time or votes to pass significant tax legislation before the new Congress is seated. Tax law changes are likely once the new Congress convenes, though their scope and timing are unknown.
What should taxpayers do now?
Focus on making the most of 2026 planning opportunities under current law while remaining flexible for changes in 2027 and beyond. Finalize year-end decisions now, while there is still time to adjust if needed. Aprio will continue to monitor the impact of these historic elections and provide further insights.
Have questions about how the midterm elections could affect your tax planning? Connect with your Aprio tax advisor to talk through your year-end decisions.