2026 Midterm Outlook and Legislative Briefing: What's Happening on Capitol Hill and What It Means for You

This should be taken as a snapshot in time. The discussion is really only current as of today or really July 17th when we finalize these slides. So this should not be in any way construed to guarantee any kind of outcome in the US midterms. This is in certain ways mostly speculative in a discussion that's going on. As we have seen, things can change very, very quickly on Capitol Hill. This is obviously not an evergreen presentation. Primaries are still going on. Special elections could happen. All different types of things can happen that could change the trajectory of any kind of election right now. So just that little caveat there. So we are going to be covering a lot of information today. We're going to be starting off talking about the midterm outlook. So we're going to be looking at the current Senate and House composition as well as competitive races and critical races, particularly in the Senate.

We'll move on to the important players that make up tax policy and just policy in general. That'll include committees, leadership, influential voices, including different caucuses within the certain parties. And then we're going to move on to the legislative movement in terms of what bills have been introduced, what bills could move, what different outcomes could happen from the midterms and different things that we're watching as well. And hopefully we'll have time. That a lot of information to get through. If we do have enough time, we will very briefly talk about some of the state trends as well in terms of what we're seeing happening on the state level.

So like I said, we're going to start off with the midterm outlook. So right now in the Senate, we have the breakdown of 45 Democrats, 53 Republicans, and then we have two Independents who caucus with the Democrats. Right now, Senator Mitch McConnell is not participating in the Senate. He fell on June 14th, I believe, and he has not been able to be back. So really in terms of actual votes that could be happening, there are only 52 Republicans right now. In terms of the midterms, there's some very critical Senate seats that half races going on. So generally speaking, in order for the Democrats to take control of the Senate, which generally speaking, the math is not on their side, they need to hold these five seats and then pick up at least three more, really four or five in order to have a true majority in terms of being able to override any vote from Vice President Bance.

So we are looking at Michigan. This is right now considered a toss-up seat. My opinion on this one is that once the primary is done in Michigan and the actual candidate is picked, likely the Democratic Party is going to coalesce around that candidate and it will probably move into a lean Democrat. Just from a historical perspective, Michigan tends to elect Democratic senators. And with the mood of the country right now, the tailwinds that the Democratic Party have been seeing, it is most likely I think going to end up being probably a Democratic hold. Georgia was a toss-up for a really long time. Part of that was we didn't know who the candidate was going to be on the Republican side. John Ossoff has been the senator there for several years now. At this point, he has been able to campaign against a messy primary with the Republicans.

He's fundraising just obscene amounts of money. This is really, I would almost put this more into a likely Democrat seat at this point. I don't see the Republicans picking this seat up anymore. New Hampshire, both Papas and Sununu are really good candidates. I think this is probably at this point more competitive than Georgia. But again, with the mood in the country and the Democratic tailwind, I do believe that it's probably going to be a Democratic hold. Minnesota and Illinois are not going to really discuss that much because these are almost certainly going to be Democratic holds. In terms of Republican-held seats that could be picked up by Democrats or conversely must be held by Republicans. We have North Carolina that is an open seat. Senator Tillis announces retirement very far in advance.

Honestly, I would also put that as almost a likely Democratic at this point as opposed to kind of a lean D. And that would mean that the polling has shown it very consistently in favor of the Democrat. Roy Cooper is a very, very popular candidate. He's won that state on a statewide level for gubernatorial race twice. He was so popular that his lieutenant governor, also Democrat obviously, also won a statewide race in a state that ultimately went red on most other things. So he's a great candidate. I truly see that as almost a certain pickup by Democrats. Maine is a very interesting one right now. Obviously we had had two candidates.

Planner had to drop out. Troy Jackson is now the candidate. That is going to be a really interesting one to watch. Most places have put it as a toss-up. I had actually, my personal feeling had been that Collins probably would squeak out a win on that. With the change in the candidate that she's up against, I'm not so sure. In some ways Troy Jackson is possibly a stronger candidate than Graham Plattner was. He has really strong Maine bonafides. He was in the main Senate and I believe the Maine House of Representatives. He has a lot of statewide recognition. Obviously he has a previous conservative past that could possibly go against him in terms of Democrats voting for him. But overall, I think he's a stronger candidate in several ways. That is going to be a really interesting one to see. I'm really looking forward to the first polls coming out of there.

Alaska is also a really interesting one. Alaska can be very hard to determine because it has ranked choice voting. And there's two Dan Sullivans on the ballot. We'll see if that confuses anybody or if it plays into it at all. Mary Perotola, I always mispronounce her name and I always feel really bad about it. She's a very, very good candidate. And this is one of the ones where it's truly a toss up in the polls that I've seen where they're up on one or two points depending on the poll. It's either Sullivan or Mary Protola. Ohio also toss up. I do think that Sherrod Brown is a fantastic candidate to have gotten. He's raising tons of money. John Houston's not well known. There's an unpopular gubernatorial candidate. This could be a pickup for Democrats. Iowa's also been talked about a lot as a lean R, Josh Turk is a great candidate.

I am skeptical though of Democrats being able to pick that seat up just from Iowa's kind of shift to the right. I would be surprised if Democrats do pick it up, but it is a possibility. And then finally Texas, everybody's written about Texas. There's kind of a joke in politics that Texas is always 10 years away from going blue. There's been obviously so much ink spilled about whether or not with Cornin losing his primary, Paxton, his scandals, Talrico and just his ability to appeal to more conservative voters potentially, and just the sheer amount of money that he has raised. He raised $30 million in the second quarter. That is just a huge amount of money for a candidate to raise in one quarter. Obviously all of those factors do lean in favor of Talrico, but I don't see taxes going blue. I just don't. I feel kind of the same way as I do in Iowa.

But again, very interesting to watch the polls. I've been very close.

So the House of Representatives, kind of a similar story. There's a slim majority of Republicans there. Currently, there's actually four vacancies. So the breakdown is actually 212 Democrats and 219 Republicans. With the four vacancies, three of them would be Democratic holds almost certainly. They have not... I'm trying to remember. The California 14th special election is I believe August 18th, so that will be filled by a Democrat. The Georgia 13th that was vacated by Scott when he died I believe will be on July 28th, so very soon. The breakdown would be 213 to 219. Florida 20th election to be determined that none has been put. There may not be a special election. And then the Texas 23rd is one where also there should potentially be a special election. We haven't seen one set yet. That one is one that people are really kind of interested in seeing a special election happen because that is a Republican seat and it would be expected to be held Republican.

And people are very interested to see if that special election happens, how Democrats perform in that as kind of a bellwether for the midterm elections. But there has not been a special election scheduled so we may not get it. And all of us political junkies will be very sad.

In terms of the competitive House seats, so I've actually broken this up into two different sections in terms of House seats that could flip. I have the actual truly competitive House seats, and these are the ones we're going to talk about. And then after this, I'll have the impact of redistricting. So if you don't see a candidate who you're like, wait, I though that person could be, that's why they're probably on the next slide. So we have Democratic favored ones. For the most part, the assumption is that these are going to be Democratic holds, but unexpected things always happen in every election. You're going to probably end up having at least one or two races where somebody who you think was an R plus 12 or something is won by a Democrat. Something like that always sort of happens. There's a lot of toss-ups. At last count, I believe it had 18 toss-ups.

These are, as you can see, mostly Republican-held seats. So Democrats would need to pick up most of these seats. One interesting thing to note is generally speaking, the toss-up seats will break one way or another. So if the toss-ups are going to break towards Republicans, they're going to hold onto almost all of these seats and probably pick up those two in Ohio and Washington. If they break towards Democrats, they're going to probably pick up almost all of these seats.

One very interesting thing to note is just in terms of fundraising again, most of the Republican incumbents are being vastly out fundraised by their Democratic challengers. So that's something that always goes into the calculation in terms of the enthusiasm of voters for a particular party. A lot of people are giving a lot of money to candidates of one particular party. That's usually a good sign for that particular party. That's all I had to say on this slide. So obviously we saw these redistricting wars come out in this past year. Republicans ended up winning that battle. We'll see if they won the war.

In terms of Democrats being able to pick up Republican seats from redistricting, there's really only three seats from the California redistricting that are likely going to turn into Democratic seats. And from Republican redistricting, three seats were turned into from either solid or likely Democrat to toss up seats. And then several seats were turned from either solid or likely or even lean Democrat to solid or likely or lean Republican. One thing that is very interesting to know with these redistricting things, I think it's very interesting to know, they used the data from 2024 for these redistricting for making these districts. And you can look up how those new districts would have voted in previous other different elections. So I've noted here with these asterisks, there's five different seats here, mostly in Florida, a couple in Texas, where in 2020 Biden still would have won those seats.

So in this particular climate, those might not be as solid for Republicans as they think in this cycle. Now going forward when we have more data, we know what all those shifts and everything are, they could be more Republican favored.

So in terms of likely outcomes, we've got from most to least likely, the outcome is going to be that Democrats take control of the House and Senate keeps control of the Senate. And the second most likely outcome would be Democrats take control of both the House and the Senate. And then less likely would be Republicans keeping a unified government. And then least likely wildcard would be the Republicans keep the House and somehow the Democrats take the Senate. That's pretty unlikely just with the math, but there's always a statistical possibility. One thing to note, which is very interesting is while yes, the conventional wisdom is that Democrats take the House and Republicans keep the Senate. Some statistical analysis says that it's actually more likely that one of the unified government ones would work. I don't know if I buy that or not, but that's what statistics say.

I have one interesting question. Do you see any third party candidate who could win something? I am guessing this person is either asking about Dan Osborne or Seth Bodner in Montana.

I get this question every single time I do this presentation. So in terms of Montana and Nebraska, with Nebraska, Dan Osborne, I have not seen him poll above 48%. And I think he got about 47, 48% of the vote in 2024. I think 47 or 48% of the vote is his ceiling. If I see something that changes that, if there's suddenly a slew of polls that come out where it's consistently polling at 50, 52%, then I would change my mind. I would say yes, that independent candidate has a chance there. So Boeder I think did have a good chance. I don't think he has a chance anymore in terms of the Montana Senate seat with Bankhead refusing to drop out of the race. I think it's going to end up with a split ticket, which is a bummer for Bodner. I know he was really I think banking on intended, but on her dropping out of the race.

All right. So we have our second polling question. How much do you think the midterms will impact your organization? Not much, significantly, or it depends. So while everyone is answering their second polling question, we're going to move on to some of the key players in this. This is really mostly background. I will be talking about a lot of different names. I've already been saying a lot of different names talking about a lot of different candidates. So I just think it's helpful for people to have that background, who the big players are. So in terms of Republicans, obviously we have Representative Mike Johnson, he's the speaker of the House. We also have Representative Emmer. He's the majority whip. We have Jason Smith, who is the Ways and Means Chair, and we'll talk about the Ways and Means Committee in just a second. We have Senator John Thune, he's the Senate Majority Leader, and he's also on Senate Finance as well.

We have Senator Mike Crapo, he's the Senate Finance Chair. Scott Bessent is the Treasury Secretary. He does have some say in some of these things. And then Kevin Salinger, who got a promotion. And so this slide is now wrong. He was the Deputy Assistant Secretary of Tax Policy. He's now the Acting Secretary of Tax Policy with the departure of Ken Keys. That happened late last week. I believe Ken Zellinger was appointed to the acting secretary, may have been just yesterday. And then for Democratic players, we have Hakeem Jeffries, he's the House Minority Leader. Representative Richard Neal, he's the Ways and Means ranking member, which means he's kind of the main member of the minority party on that particular committee. We have Chuck Schumer, he's the Senate minority leader. And then we have Senator Ron Wyden, he's the Senate finance ranking member. Not put here, but also just in terms of background and key players, influencers and things like that.

There are also certain caucuses that do have particular sway, particularly when it comes to the House with the majority in the House being so slim as it is. So in terms of on the Republican side, we have the House Freedom Caucus, those conservative hardliners. We also have members who are not necessarily a part of a caucus, but who are very considered very fiscal hawks. They want offsets for spending. So those two groups within the Republican Party are tending to have a little bit more of a voice right now. And then on the Democratic side, we also have the further left progressive wing of the party. They are also having a bit of a larger voice. They've had a lot of success in some of these primaries. They've managed to pick off incumbents, which is fairly impressive in some ways. So they are growing in terms of their influence and their voice.

So I have one question. What specific polls are you relying on for most of your projections? Are there specific polls you trust the most? So I rely fairly heavily and I put on the slides a lot of the sources. I am a very big fan of Cook Political Report. I think they do a very good job of putting everything together. I also look at real clear polling. They have just an aggregate of all of the polling data. I find that to be a very good trustworthy source in terms of finding other sources in terms of polls. So those two are the resources that I really use the most, but I read a lot of different things. Those two are the ones that I would say I would use the data from. There's also Dave's redistricting. If there's anybody here who's a real policy nerd, you can build your own redistricting map and see how it would vote.

I like using that as well.

All right. How do you see the death of Lindsey Graham affecting things? So we'll talk about that a little bit more, but I can talk about it now. Ultimately, not a huge impact on anything like tax legislation. I think his death is a huge blow to the institutional knowledge of Congress just generally. He was a very loud voice. He was able to work with the president very well. So in terms of those, I think it's a pretty big loss for the Republican Party. But in terms of actual policy, there may be a few things that will get more attention, maybe some votes on the Ukraine war aid. It's possible clarity gets more pushed through because he was a big proponent of the Clarity Act. Those are really the only things where I would see in terms of legislative moving a lot of change.

So a good question. Steve Scalise is the Republican majority leader. So he's not the Republican whip. Emmer is the whip. Good question. All right. One other question. If Fetterman switches while on the surface adds to the Rs, but in substance could still be. I think Fetterman is more likely to switches to an independent than a Republican. He's very much kind of marching to the beat of his own drum in a lot of ways. He does vote with Republicans a fair amount of the time, but he also votes with Democrats on a lot of key points with them. So I think it would be interesting if he switched to the Republican side. If he did, I think it would be because of money.

All right. So moving forward, in terms of the actual committees that do tax legislation, you may or may not know this, this is one of my favorite facts. All tax legislation must start in the House that is in the Constitution. There are ways around it. If you have a bill that technically started in the House and you pass it and add the tax things in it in the Senate, it kind of qualifies. But generally speaking, the House is more influential when it comes to making tax legislation. So right now Republicans are in the majority and they have more representatives in the Ways and Means Tax Subcommittee. The chairman is Mike Kelly. He's in Pennsylvania. One thing that I really want to highlight on here is the number of names that are italicized. Those are members of the tax subcommittee who are either retiring or I think they're all retiring or ran for a different office and lost.

Well, in Kevin Hearn's case, he's I believe won his. So we have Schweikhart, Jodi Arrington, Brandy Feaster. Actually, David Schwikhart also just lost his primary in Arizona. I take that back. So two people have lost their primaries. So we're going to see a fair amount of turnover on this subcommittee in terms of losing, again, institutional knowledge. Jodi Arrington and David Schweikhart have a lot of, particularly Jodi Arrington. It's kind of a blow again to institutional knowledge here.

On the Democratic side, we have less members because they are not in the majority. I would also just like to point out that we have no retirements on the Democratic side here. On the Senate Finance Committee side, we've got Mikrapo as the chairman here. Again, we have four Republicans who are either retiring or who lost their primaries. Again, loss of institutional knowledge, particularly with John Cornin. That was I think a pretty big blow really to the Senate Republicans in a lot of ways from an institutional knowledge perspective. Steve Dames' retirement was kind of a surprise. And Tom Tullis, like I said, he's been retired for two years. He is very much a wild card right now in the Senate. He will vote how he feels like he wants to vote.

And then Senate Finance Committee for Democrats, we have Ron Widen as the ranking member. Again, we only have one retirement here and that is in a very safe Democratic seat. So there's a lot more Republicans retiring than there are Democrats. That's not unheard of in terms of this type of a cycle. I will say that I believe that this is now tied for the number of retirements from a Congress, I think since 1974, but I could be wrong on that. Don't quote me. All right. So then we have polling question number three. Does your organization have somebody who is following legislative changes exclusively? Yes, we have dedicated employees for legislative affairs or lobbying. Just surface level, no in - depth monitoring, analysis or tracking or...

All right. So we have one interesting question here. If the Senate broke the filibuster and passed the SAVE Act, how would the election outlook change? That is a really interesting question and one I don't have the answer to. There's a lot of different ways that it could work out. My suspicion would be if somehow the SAVE Act managed to get through Congress, if it either somehow got attached to a bill and somehow made it through the bird bath of the reconciliation process, it would still be tied up in course before the elections. That's my read. That's what I think would happen. I don't think that Thune is going to be willing to break the filibuster. He's an institutionalist and he is showing a growing...

I don't know how to put this. He's more willing to break with Mike Johnson on a lot of these things. It's a little unusual actually to see that kind of level of break between the majority leaders like that. I don't think we would get to the point where the SAVE Act was passed. I just don't. I think Thun has made it very, very clear that he does not have the votes to break the filibuster. He won't bring a vote to break the filibuster and he doesn't think the SAVE Act could pass a reconciliation. All right. So actual legislative movement in terms of what we're seeing, what we could see is going to be obviously focused more on tax because we're an accounting firm. I'm doing tax policy.

One of the first things though that I want to highlight before anybody gets excited about bills passing is Congres does not actually have that many days left. We think of it as being half the year, but in terms of the actual time that Congress will be in session, and I'm talking about full legislative days where both the House and the Senate are in session, we're looking at about 35 days. That's not a lot of time in terms of having votes, passing rules, all of those different things that need to happen. In terms of before the August recess, we have two days. We are in the middle of one of those days. So I don't really see anything happening before the August recess.

I could be wrong. The Republican House majority has managed to pull things together very quickly in the past. It's always possible that something changes, but I don't foresee that necessarily happening, particularly with some of the comments that they made yesterday in terms of he would like to plot his own course on certain things. As a reminder, the government will run out of money on September 30th. I know it seems like they just got funded and they kind of did about six months ago, but technically their appropriations will run out on September 30th and the government will need funding. So those trying to do 11 days in September where there's full legislative days will probably be spent completely focused on either appropriations, which is what Thun has said that he wants to do. He wants to follow a regular order with appropriations or a continuing resolution that would probably go through the election.

I think potentially November 4th. Because it is an election year, Congress has a recess in October to go and campaign. So that is why there's so little time left. Congress always takes the month of August off. That's the August recess. I live in the DC area having lived here now for 14 years. I understand why everybody wants to get out of here during August is gross. I love Maryland, but it is gross.

So there's not a lot of time is the main takeaway here. And there are still a lot of bills that are what are called must pass bills. These are bills that they are needed to be passed. They have to be passed in order for the federal government to function or for important programs to continue functioning like social security. These can be both a blessing and a curse depending on how you might view them. You can sometimes use them as a vehicle to attach other legislation too. So receiving that potentially with the attempts with the SAVE Act, the Watered Down SAVE Act, where it would be just kind of block grants to the states for election security type things or voter ID laws. So on the other hand, it can create a bottleneck both for other legislation or for that must pass bill like we're seeing with the potential on that third reconciliation bill.

The attachment of the SAVE Act onto that is a true potential block on the funding for the Pentagon being passed in that reconciliation bill. I think it can also just be used for negotiations. And we saw that with the FISA bill, which is still not passed. The FISA support was withheld by even Republicans in order to pressure the president to nominate a new director of national intelligence director because they did not like the acting director. So this includes bills like FISO, the appropriations which may or may not pass by a regular order. The National Defense Authorization Act, that's a big one that has been working its way through. Transportation reauthorization bill and then continuing resolutions. If things fail to be authorized, they will likely have to negotiate a continuing resolution that would keep funding at a certain level to avoid a government shutdown. Continuing resolutions can also be tricky, but they're typically very clean bills.

Continuing resolutions would not usually be a bill where you would see other legislation attached to it. Not saying it doesn't happen, but usually you want to keep continuing resolutions fairly clean and we've seen that in the past.

So in terms of legislative priorities year, but really possibly going forward, Republicans are focused on Reconciliation 3.0, which is to fund the Pentagon and would include potentially sort of parts of the SAFE Act. House Republicans in particular are very focused on the Save America Act and perceived election integrity issues. The FISA Section 702 authorization and the National Defense Authorization Act, 2027 government funding, border security and immigration enforcement are still high up there for certain House Republicans and some Senate Republicans as well. And then energy permitting reform and deregulation, which is not a very sexy topic for people, but it is up there in terms of legislative priorities for them. On the Democrat side, we have Restoring the Affordable Care Act expanded premium tax credits. Those expired at the beginning of the year. You may remember that they shut the government down over this and there is actually some bipartisan support to have some type of the enhanced tax credit extended.

Protecting Medicaid and lowering drug costs. They've been campaigning fairly heavily on that, particularly with the cuts to Medicaid from the one big, beautiful bill act. Housing affordability, there was a bit of a win there for both parties when Road to Housing Act passed by the skin of its teeth, lowering food, grocery and energy costs, making the wealthy pay their "fair share." And then childcare and caregiving costs. So the way that I'm kind of thinking about this is right now, Republicans' priorities are very focused on what they can do potentially while they are still in power whereas Democrats are looking more to both how they can get back into power and what they would do if they did get back into power.

Sorry, having a little bit of a... So in terms of the midterm impacts on legislation before the actual midterms, pre-November, there's kind of an inherent tension here. So both parties are really, really sensitive to appealing to their base because particularly in midterms, your base is who's going to show up and vote for you. You need an enthused base to go out, knock doors, go vote, volunteer at election sites. But there's this inherent tension there between you really want to secure these legislative wins to campaign on, but you really want to make sure that the other party doesn't have legislative wins to campaign on. And when we have a government that is so closely divided like this, really hard for either party to have a legislative win without the help of the other party. So it ends up kind of being just a holding pattern in some ways.

In terms of Republicans, most Republicans are likely to just keep toeing the party line. Just realized I misspelled that. Expect though some pushback from some of the Senate Republicans who no longer have to worry about reelecting. So I'm thinking about Tom Tillis, John Hornan, Bill Cassidy in particular. They may feel empowered to vote their conscience or vote however the way they want to do. The number of members who are retiring, those individuals may also feel empowered to vote in a different way than you might expect from the party. And then those running in blue states or in very close elections, they're going to want to very much be a little bit of offensive potentially.

What we've seen is in a lot of cases, they'll still end up with enough pressure. They'll end up on the party line. Democrats, they're likely to continue their current streak of introducing these bills that are really focused on taxing wealth, reducing costs and addressing affordability issues. They are going to be very laser-focused on their messaging for the midterms. They're going to be very unlikely to want to make deals right now with Republicans unless it is very beneficial to them. So in terms of the actual legislation that we're going to see before the midterms, it's going to be focused on appropriations, NDA, reconciliation, noth really tax related. Like I said, we could see you shut down in October. You need 60 votes in the Senate to pass apropriations bills.

The House introduced a continuing resolution to keep the government open until December 4th, 2026. They came out and said that he did not like that bill. So what continuing resolution we end up with, how long the government might stay open, that remains to be seen. I will say it is possible for the Senate to have enough essentially to pass a rule that allows for 50 votes to pass a continuum resolution or something like that. Something to give Democrats cover if they don't want to actually vote for it. But again, those negotiations are going to be going until probably down to the wire until September 30th.

So we're going back to the slide. You guys might remember this from earlier. We've got from most likely to least likely. So this is now midterm impacts post-November. And I realized that I couldn't just talk about, oh, what are the impacts going to be post-November? Because we don't know what the outcome is going to be. So I need to talk about what the outcome will be for each one of these situations. So if Democrats take control and the Republicans keep control of the Senate, sorry, I'm having a little bit of a technical difficulty right here. I apologize.

So like we said, this is the most likely scenario. In this situation, expect really only must pass bills, appropriations, bipartisan legislation, expect potential shutdown fights or posturing. There will not get much done probably, but what will get done will be bipartisan, which is what you ultimately do want in any government is you do want bipartisan changes made. In terms of the Democrats taking control of both the House and the Senate, this is honestly the situation where I'm like, I'm not as sure about what exactly this looks like. There's a lot of different factors that we don't know what this is necessarily going to look like.

Some of it's going to depend on who wins some of the primaries in some of these Democratic races as well still. We're going to end up essentially having a lean duck Congress from post-November until the next 120th Congress forms in January of 2027. Democrats are probably going to be less likely to negotiate. They may look at also exploiting reconciliation of the way the Republicans have in the past two years. The wild card is also going to be what they can get past with President Trump if he's willing to work with them, if he's not willing to work with them. So there's a lot of different factors with this one. I think this is kind of the hardest one to game out, but I love to do so. So if anybody wants to talk to me further on that one, I would love to do that.

Number three, Republicans keep control of everything. This would be both more of the same, but we would see, I would think, a renewed enthusiasm within the Republican Party. I think within this political climate, if they manage to keep control of both the House and the Senate, they're going to take up legislative priorities that they didn't get through the OB-3. They'll pick up some of the tax legislation that they had to take out of OB3. And it would depend on the measure as well by what margin they've picked up any seats. But this one, I think we kind of know what that looks like. It's kind of two years of what we've had. Whether the relationship between Thun and Johnson would get better or worse, that would be a question. That would be my biggest question.

And then this one is kind of so far outside their own possibility that I haven't really gamed it out that much, but I think it would look very similar to what it would look like if the Republicans keep control, because if Democrats take control of the Senate, it's going to be by a very, very, very slim margin. And as we already had a bit of a discussion about, Senator Fetterman does tend to, he's willing to vote with Republicans, he's willing to work with Republicans. So a lot of that would probably come down to really to how Senator Fetterman would vote. So that would be a very interesting scenario, quite frankly.

So in terms of possible tax legislation for this year or even for the 120th Congress, but really mostly some of these are for this year. The biggest one that I think we could see past, we've had a lot of administrative bills going through markup in the House. They've passed through markups. Some of them have been passed by the House. They're very focused on taxpayer assistance, taxpayer services, modernization of the IRS. There's also the Taxpayer Assistance and Service Act that is a bipartisan package between Crapo and Widen. It was introduced first in 2025. They've made some tweaks to it in terms after they got feedback from accountants from everyone. So that's probably the one that I think has the biggest chance of passing. It's bipartisan. The one hiccup I see with it is the issue of IRS funding in order to do some of these things.

I could see that being a fight in the markup that happened on July 1st. There was what I would describe as a very lively debate over one of the bills that they were marking up over the funding of the IRS. So that would be the main hiccup I se on that one. We also have the Digital Asset Parity Act, which I think has one of the best acronyms that I've seen come out of Congress in years. I love the acronym on this. This is a cryptocurrency digital asset tax bill.

There's a lot of different pieces in this. One thing is that everyone had been thinking, well, you can't tackle tax on digital assets until you deal with the Clarity Act, which is the Digital Asset Market Structure Clarity Act, which has been kind of languishing in the Senate for over a year now. The House has just decided to push forward on the crypto tax bill. So I could see this being something that could be attached to something either maybe the end of this year or in next year. Again, it has bipartisan support. The biggest issue with this bill that I've heard of is education, just educating members on why it's needed, what it's doing, what it's about, getting people on board to see that this is a bill that needs to be taken up. So definitely one to watch. We also have a couple of general bipartisan provisions that I could see and they are not...

Well, the Taiwan treaty is an interesting one, but the other one that I've heard is film expensing is going to expire at the end of this year. It was not extended in the OB-3, so that is a bipartisan one that could be picked up. The Taiwan treaty obviously is not a treaty. We can't have a treaty with Taiwan. It is I think one of the more interesting legislative things that I've ever seen in that they are kind of creating a treaty via the tax code. So that's one to watch as well. That's one that both Crepo and Widen have repeatedly said they think is a bipartisan thing and they wanted to get through.

The work opportunity tax credit, that expired at the end of this year. It's still awaiting renewal. There is a fair amount of lobbying that is going on in this particular credit. So I could see that being slipped into something as well. The Affordable Care Act extenders, we talked about this earlier. There is definitely bipartisan appetite to bring back some of these enhanced credits. I don't think it will be quite as enhanced and expanded as it was during COVID. During COVID, there was really no cap on who could qualify for the credit as long as the cost of your health insurance premiums were over a certain percentage of your income. So that's been the sticking point for a lot of them is trying to figure out where the sweet spot is in terms of somebody qualifying for the ACA credits, how much you expand it, that there has been bipartisan legislation introduced.

I do think that we could see that happen, particularly given the focus on affordability, cost of healthcare, things like that. I definitely see that one either if not in this Congress and probably in the next it being taken up. And then this one was kind of a surprise to me. I was at an event where Senator Wyden was asked what bipartisan things he sees as having a potential in the next Congress and he brought up the Section 899 revenge tax. And for those of you who may have forgotten or don't know, this was a section in the One Big Beautiful Bill Act, and it would've led the US impose retaliatory taxes and they were very draconian, quite frankly, on persons from countries with taxes that the US deemed discriminatory. It was a very broad power. There were concerns about it being overused or the fact that it would've potentially overwrite treaties.

There were constitutional issues on this. Ultimately, it ended up being used as a negotiating tool with all of the tariff negotiations that were going on in 2025 and it was dropped. There were also some concerns about whether it could make it through the bird bath during reconciliation. Some provisions almost certainly would've been stripped out.

I find it very interesting. I suspect that we would see some changes in how it would be imposed and on who could impose it, what you would have to go through. I suspect that it would be kind of similar more to how some of the tariffs work where there has to be an investigation, a determination made, things like that. But that is a very interesting one that I'm watching that could be kind of a dark horse tax legislation that could happen in the next few years with no matter what the outcome is. I probably should have said this at the first part. These are ones that I can see happening no matter what the outcome of the midterm election is.

So we've also had some very attention grabbing legislation, seen things in the media or gotten media requests for comment, or I've had colleagues ask me about it. I've had friends ask me about it, I've had family ask me about it. Most of these I do not see happening no matter what the outcome is. The Small Business Tax Cut Act, the only reason that I have this on here, I got a lot of questions about it. This as a bill on its own, I don't see passing. It's so small and that's the problem. It could pass attached to something else probably, but it's just such a small, small bill. Tax bills do not tend to pass by themselves like this.

So that is why I have not paid too much attention on that one. We also have the AutoFill Act of 2026. This was one that I think a lot of accountants were like, oh God, no. This would require the Treasury Secretary to have the IRS create pre-populated tax forms that the taxpayer could just download. It would have all of the information that had been reported to the IRS, all of their W-2, any 1099s, 1099 divs, all of that information that's required to be reported to the IRS. The IRS would then just port it over into a tax form. The taxpayer would be able to essentially download a filled out tax return, verify the information, add any additional information to it, and then file it. The reason I don't see this happening is because for the same reason that direct file failed or free file failed.

And that is the lobbying of Intuit, H&R Block, all of those, I don't see this happening. There's so much lobbying that goes into having the tax system the way that it is. So I don't see this happening, but I understand why people had a lot of questions about it. The Keep Your Pay Act, this was introduced by Senator Booker. This would've more than doubled the standard deduction for most people and then raised the top tax rates to 41 and 43%.

There are several reasons that I don't think that this is going anywhere, even if Democrats take control. One is for one thing, it's a Senate bill. Bills have to start in the House. Another thing, it's introduced by Corey Booker. This is a messaging bill by somebody who is determining whether or not they're going to run for president again. And more importantly, it will cost something like $4 trillion over 10 years. It is not a feasible bill to pass. It is a messaging bill. Now I could see something that just raises the top tax rates to 41 to 43% being introduced, but not something that also more than doubles the standard deduction.

Ending the Carried Interest Loophole Act. So this one's very interesting. There is some interest from the White House in this. So if Democrats take the House and the Senate, this is one that could gain a potential path to passage. But right now I do not see that happening. The Millionaire Surtax Act that imposes an additional 10% tax on anybody with AGI above either one million if you're single or married filing separately or $2 million if married filing jointly. This is again a messaging bill. Chris Van Hollen also I believe is probably exploring a run for president. He's introduced a lot of different bills, a lot of them with a rather populous message like this one. So I don't see this also getting much traction either. And then on the Republican side, Reconciliation 4.0, because we are now on Reconciliation 3.0. I had to update this one because it had been Reconciliation 3.0.

This would be another reconciliation package kind of similar to the One Big Beautiful Bill Act potentially in terms of having tax priorities left out of the One Big Beautiful Bill Act. And some of those could include things like no capital gains at all on the sale of a primary residence or changes to the capital gains rates, potentially lowering of corporate tax rates, 899. There's some appetite to essentially try and tax foreign investors who own property as well. There's a lot of different priorities that could be put in there. Again, reconciliation is a really, really tough tightrope to walk. So I don't know if they would be able to pass something like that if Republicans kept full control, but definitely something that is on their list of priorities. I think we only have a couple minutes left. So want to make sure we got to polling question number four.

Would you be interested in learning more about this topic in a small in - person setting? Yes, I have more questions. No, I don't need any more information than this. Or maybe it depends on legislative changes and the midterm outcome.

I think of a question here. So I think I answered this question. What tax legislation, if any, has a chance of becoming along the divided government situation post-election? But if you have additional questions, please feel free to reach out. So very quickly, like I said, this was if we had time. We are going to talk about state trends very, very quickly. And fortunately there's really only two trends I was going to talk about and that is wealth tax trends that we are seeing. A lot of states are introducing very different ways of doing this. Some are taxing second homes or some are introducing property value tax or vacant property taxes. Sorry.

Some are introducing higher rates on the ultra wealthy. But overall, this trend is increasing tax burdens on individuals who have more property, more wealth, and particularly who may not be residents of that state. And then on the flip side, we have tax cut trends. We have a lot of states that are exploring or who have cut corporate tax rates, are cutting individual income tax rates, are looking at different ways to use their sales tax or to cut their sales tax. We have some states that are looking to either reduce or entirely get rid of property taxes. So there's a real divide here between the trends in the states and just something that we are continuing to monitor. The states are also continuing to respond to OB-3. So I just really wanted to give a little bit of a plug for the fact that we do do state and local tax as well and we do follow these trends and keep people up to date on them as well.

So I think we are just about of time. I Let's see if we have any more questions.

Oh, I love this. Do we think daylight savings will pass? Oh, okay. So I mean, look, this passed the Senate two or three years ago when it was the Sunshine Act of 2023 and now it's past the House as the Sunshine Act of 2026. I don't know. I think everyone's going to fight over whether it should be daylight savings, making daylight savings permanent, making standard time permanent. There's been some lobbying from religious groups that don't like the idea of having the time not change, I guess. It's interesting. I don't think it is. I think it's a really easy thing for them to complain about and feel like they're in touch with the voters, but I could be wrong. Some of them would've taken too long to answer, so I apologize if I did not answer your question.

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