Tax Insight

Midterm elections shift control of next Congress and outlook for tax legislation

Insight
5 minute read
November 04, 2026

What happened?

November 3 election results for the next Congress indicate that Democrats have won more than enough seats to control both the US House of Representatives and the US Senate, shifting the outlook for tax legislation during the second half of President Trump’s final term. At this writing, at 10 AM ET, House Democrats are projected to hold at least a 228-seat majority, having achieved a net gain of at least 19 seats, well above the net gain of three seats needed to gain majority control. The size of Democrats’ House majority could increase as many House races in several states have not yet been called. Senate Democrats are projected to hold at least a 54-seat majority, having gained seven seats, more than the net gain of four seats needed. Results in the Alaska and Mississippi Senate races have not yet been called, so the final composition of the Senate could change.

Why is it relevant?

Democratic control of Congress, with President Trump in the White House, will highlight differences between the two parties over tax policy and a range of other issues, including (but not limited to) tariffs, healthcare, foreign policy, and federal spending. Divided government means that significant changes to the permanent business and individual tax provisions enacted in the 2025 ‘One Big Beautiful Bill Act’ (OBBBA) are unlikely, but bipartisan agreements will need to be reached on some issues, such as government funding and an increase or suspension of the statutory federal debt limit. President Trump and a Democratic Congress could seek to advance some populist measures that might have appeal for some members of both parties in advance of the 2028 elections.

The current Congress will need to address legislation to fund government operations by December 11, when a temporary fiscal year (FY) 2027 spending bill is set to expire. Some Republicans have called for action on a party-line reconciliation bill to address defense spending, the debt limit, and other White House priorities while they retain control of Congress, but it is uncertain whether Republicans can secure the near-unanimous votes that would be required in both the House and Senate.

Actions to consider

Stakeholders will want to engage with policymakers in both parties as legislative priorities and approaches to tax policy and other issues are being formulated, even if prospects for significant legislation may be limited. Legislative proposals being developed during the coming 120th Congress may shape future law changes after the 2028 elections, when control of both the White House and Congress will be contested again.