The 2026 midterm elections will determine whether Congress moves tax legislation in the lame-duck session or the next Congress, and whose priorities prevail, attorneys said at a Holland & Knight webinar October 13.
What could move a tax bill
Joshua Odintz, a partner in Holland & Knight’s Washington, D.C., office, said near-term appetite for a tax bill turns on what has expired. He listed the Work Opportunity Tax Credit, which has partly lapsed; the enhanced premium tax credit for marketplace health insurance, which expired at the end of 2025; federal empowerment zones; and oil spill liability trust fund financing.
The CHIPS Act credit for semiconductor facilities, which Odintz put at 35%, expires at the end of 2026. Compared with past extender packages that drew heavy lobbying over the research credit and international provisions, this list “is kind of anemic,” he said, though he called the premium tax credit the difference between obtaining insurance and going without for many enrollees.
Nicole Elliott, a partner in the firm’s Washington, D.C., office, said bipartisan measures could instead supply the motivation. She pointed to the Taxpayer Assistance and Service Act, which would modernize the IRS, guarantee an independent Appeals office, and set requirements for tax preparers, saying there is “a lot to love in this bill, and not a lot to dislike.” She also cited digital asset legislation to put cryptocurrency on par with other financial assets and a proposed 20% federal film and television credit that, unlike state credits, would be transferable and could be sold.
Andrew Siracuse, a partner in the firm’s Washington, D.C., office, said the U.S.-Taiwan tax agreement has cleared both tax-writing committees but is difficult to pass alone, making it a magnet for other bipartisan measures.
Party control scenarios
If Republicans hold both chambers, Siracuse said, pressure for a lame-duck reconciliation bill would ease, with another attempt likely next year carrying priorities such as a proposed $5,000 check and film and television incentives. If Democrats take the House while Republicans keep the Senate, Odintz said, a bipartisan spending bill could carry a modest tax title, with Democrats pressing for affordability measures such as the enhanced premium tax credit, an expanded Earned Income Tax Credit, or a larger Child Tax Credit.
Under unified Democratic control, the party would seek to claw back benefits that flowed to high earners and multinationals, he said, though he doubted the efforts would advance far in the short term. Reconciliation “disenfranchises the minority party,” Odintz said, making it the likely path for whichever side controls Washington.
Some forces will operate regardless of the result. Lawmakers could revisit the 2025 budget reconciliation law, Siracuse said, citing a wagering-loss limitation fix approved by the House Ways and Means Committee and energy credit phase-outs still in play, much like the technical corrections that followed the Tax Cuts and Jobs Act, P.L. 115-97. Treasury and IRS action will also shape policy without Congress, Odintz said, noting the fiscal 2027 priority guidance plan includes deregulatory items such as notices scaling back the corporate alternative minimum tax and the long-pending funding regulations under IRC § 385.
He cautioned that the debt limit, raised to $41.1 trillion, is expected to be reached in 2027, and that the Social Security trust fund is projected to be insolvent in 2032 and the Medicare Part A trust fund depleted in 2033, calling the shortfall “a slow-moving disaster.”
The midterm outlook
As Siracuse explained, Democrats need a net of four seats in each chamber, and most analysts expect them to retake the House, with the Cook Political Report projecting a gain of nine to 19 seats. He called the Senate the more intriguing contest, with Alaska, Iowa, Kansas, Maine, Michigan, Ohio, and Texas the most competitive races, and said forecasters now give Democrats a narrow edge there as well, though Republicans hope to make inroads in Minnesota, Michigan, and Georgia and to hold New Hampshire and North Carolina.
Affordability and the economy, immigration, and foreign policy top voters’ concerns, he said, with early voting underway and roughly 600,000 ballots already cast.
The tax-writing committees will see turnover regardless of the outcome, Siracuse added. Departing Senate Finance Committee members include Republican Senators Bill Cassidy (LA), John Cornyn (TX), Steve Daines (MT), and Thom Tillis (NC), while Senators Mike Crapo (R-ID) and Ron Wyden (D-OR) are expected to keep leading their parties on the panel. If the House flips, Ways and Means would add many new members as well, he said, who take time to get up to speed given the committee’s broad jurisdiction over tax, health care, and trade.
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