With the midterms behind us, businesses can get back to planning with a little more clarity. Democrats have won majorities in both the House and Senate, which changes the political conversation, but does not change the tax law on the books today. The rules you need for year-end planning are already in place.
A new majority can set the agenda, but actually changing federal tax law will always be a bit of an uphill battle. Looking ahead to a Democratic Congress and a Republican White House, negotiations between congressional leaders and the administration will be important to which tax proposals move forward.
What the Midterm Election Could Mean for Tax Policy
For those of us in tax projecting longer-term policy shifts based on the midterm results, an important item to watch is who chairs the House Ways and Means Committee and Senate Finance Committees. Those chairs have considerable influence over which tax proposals get a hearing and which stay on the sidelines, so Committee Leadership decisions will give us a sense of tax priorities for 2027.
Focus Year-End Tax Planning on Current Law
For now, year-end federal tax planning should be built on enacted law, and with the changes made by 2025’s One Big Beautiful Bill Act (OBBBA), and there’s a lot to work with. For example, the law restored 100% bonus depreciation, without a scheduled phase-down, for qualifying property generally acquired and placed in service after January 19, 2025. It also restored current deductions for qualifying domestic research and experimental costs paid or incurred in tax years beginning after December 31, 2024. For businesses planning equipment purchases or investing in innovation, that’s a real opportunity.
Explore OBBBA Tax Planning Opportunities
These are just two examples of the changes covered in our OBBBA Resource Hub, but they offer a useful starting point for year-end planning. Review planned equipment purchases and domestic research spending with your tax adviser, including how the timing of those investments fits your cash flow and business goals. The goal is making the most of available tax benefits while supporting decisions that make sense for your business.
Plan Now While Watching for Tax Changes
The incoming Congress will bring new priorities and proposals worth watching, but businesses should not put plans on hold. There are opportunities under current law to explore now, and taking time before year-end to review them can help you move forward with greater confidence and leave room to adjust if the law changes.
If you’d like to talk through your year-end planning or what these results could mean for your business, reach out to our team.
