MILWAUKEE – November 07, 2026 -- Democrats' recapture of both chambers of Congress in the midterm elections will hand them control of the tax-writing committees in the new year, but Wipfli advisers expect the President's veto to confine enacted change to areas of bipartisan agreement.
Those areas include improved IRS services, housing, healthcare affordability, digital assets, retirement and domestic investment, according to Brian Coddington, senior manager at Wipfli. He advised businesses to track tax, AI, financial services, tariffs and healthcare together, because a change in one can carry operational and financial consequences beyond the tax function.
Lame-duck Congress has four scheduled work weeks to address 12 unpassed spending bills
The current Congress returns on November 9. None of the 12 regular 2027 appropriation bills has been enacted, and the 2027 National Defense Authorization Act is also pending. Republicans may revive a budget reconciliation bill ("Reconciliation 3.0"), which needs only 51 Senate votes instead of 60.
Only the House has passed a budget resolution this year. Reconciliation bills have passed in as few as 28 days but usually take closer to 150.
Five tax items could surface before the new Congress is seated
Tax issues have not featured prominently in recent lame-duck discussions. If they do come up, Wipfli expects the focus to fall on five items:
- Expired tax extenders, including the Work Opportunity Tax Credit.
- The Taxpayer Assistance and Service Act, which the Senate approved unanimously in September. The House has yet to act.
- The bipartisan Digital Asset Tax Certainty Act, which cleared the House Ways and Means Committee by a large margin but has not passed the full House.
- A U.S.-Taiwan tax relief bill to reduce double taxation, which remains stuck in the Senate.
- The enhanced ACA premium tax credits, which expired at the end of 2025. The House approved a three-year extension in January, but the Senate has not.
Tax-writing committees lose experience as 35% of Republican members exit
At least 35% of Republican tax writers lost reelection or retired, against 22% of Democrats. Wipfli says the election costs both parties substantial tax-writing experience.
Democratic priorities such as clean energy and higher taxes on high earners face a veto-proof-majority hurdle. Voters have also rejected or capped tax increases in several states, including California's failed wealth tax and Florida's property tax reduction.
Thirteen states put data center measures on 2026 ballots as AI oversight tightens
Under Republican leadership, Congress largely deferred to the executive branch and industry self-governance on AI. Wipfli expects Democrats to push federal legislation on bias in automated decision-making, data privacy and liability for AI-generated harm. The Senate Commerce Committee and the House Energy and Commerce Committee are likely to hold high-profile hearings.
Hyperscale data centers face scrutiny over energy consumption, water usage and environmental impact. Wipfli sees targeted action on permitting, energy sourcing disclosures and emissions reporting as increasingly likely. In many of the 13 states with data center ballot measures, voters chose to limit or prohibit facilities locally or regionally.
Financial institutions face investigations into bank mergers and fair lending
Deregulatory momentum under the Trump administration could face resistance or reversal. That includes rollbacks to bank capital requirements, looser consumer protection enforcement and a permissive stance toward fintech and non-bank lenders. The House Financial Services Committee and the Senate Banking Committee are expected to probe bank merger approvals, fair lending compliance and large institutions' conduct during economic stress.
Democrats have signaled interest in restoring Dodd-Frank elements on stress-testing thresholds and in expanding the CFPB's authority and funding stability. Crypto firms may face rules comparable to those for traditional institutions, including mandatory disclosures and stronger anti-money laundering compliance. Coddington urged institutions to "get ready for a more active examination cycle."
Democrats target presidential tariff authority but a full rollback faces obstacles
Democrats may advance legislation requiring congressional approval for executive tariffs above a set threshold. They may also attach restrictions or reporting requirements on tariff-related funds to appropriations. Committees could move quickly on investigations into the economic impact of specific tariffs.
The President retains broad executive authority over trade policy, and not all Democrats oppose tariffs that protect domestic manufacturing jobs. Wipfli expects the fight to center on oversight and process reforms rather than elimination of the existing tariff structure.