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2026 Tax Policy Outlook — What’s on the horizon
Since the enactment of the One Big Beautiful Bill Act (OBBBA) in 2025, the focus has shifted to the law’s implementation and its effects for businesses and individuals amid ongoing tariff uncertainty, fiscal challenges, and political divisions ahead of the critical 2026 midterm elections.
Did you miss our 2026 Tax Policy Outlook webcast? Watch the replay today.
Looking ahead to 2026 midterm elections
All 435 seats in the House are up for election every two years. Democrats would need to achieve a net gain of three seats in the 2026 elections to regain control of the House, assuming seats vacated due to death or resignation will be filled by members of the same party in the upcoming special elections.
Taking stock of the One Big Beautiful Bill Act
Since many significant individual OBBBA tax provisions took effect during the 2025 tax year, the impact of the law will be reflected in the 2026 tax filing season. While public opinion surveys generally have reflected lukewarm support for the law, President Trump and Republicans in Congress are predicting that many individual taxpayers will notice positive effects from the OBBBA when they file their 2025 tax returns in advance of the 2026 midterm elections.
Pillar Two dominates global tax policy debate
Business tax leaders will need to manage increased global tax compliance challenges even as a Pillar Two side-by-side agreement is implemented this year. Meanwhile, the United Nations and the European Union are focal points for discussions by countries considering new tax enforcement measures that could increase compliance costs for business.
Ongoing trade policy volatility
Tariffs, both proposed and implemented, are central to the administration’s economic, industrial, and geopolitical objectives, creating a level of policy volatility that few global companies have navigated before. These measures have become part of the policy architecture along with tax policy and the general business regulatory climate that companies must incorporate into their planning.
Federal tax conformity and the state income tax policy outlook
As states consider their conformity to the federal changes, it is important for taxpayers both to track legislative and administrative action and to analyze the mechanisms by which states decouple from the federal provisions. Some states, for example, may require an addition or subtraction modification to federal taxable income, whereas in other states taxpayers may need to recalculate federal taxable income for state tax purposes. The distinction could create opportunities or pitfalls depending on the taxpayer’s filing method and tax attributes in the specific state.
Tax policy and technical areas to keep an eye on
A key challenge for business leaders this year is to engage with policymakers and build public support for tax and trade policies that promote economic growth, business investment and job creation. Explore our dynamic list of priority areas below.
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