Congress Changed Hands. What Changes For Your Business?

We rarely see a shift as dramatic as the one on Nov. 3. Democrats took the House by flipping more than two dozen Republican seats, and they will hold at least 54 Senate seats. President Trump remains in office until January 2029, and he will be working with a Congress his party does not control.

So what does that mean for your business? Less than the headlines want it to mean, I think, at least for the next year or so. The decisions that matter most—what you buy, how you pay yourself, when you sell—are locked in.

Nothing that touches business taxes and costs changes on Jan. 3.

The new Congress isn't sworn in until Jan. 3, which leaves current lawmakers in place through the holidays, and I don't expect much from a lame duck. Nothing changes before then. 

From that day until January 2029, we have a divided government, one party in Congress and the other in the White House, and a new law needs both. A bill has to clear the House, clear the Senate, and get the President’s signature.

Gridlock protects the current rules that have directed your planning and strategy.

Don’t assume the House and Senate will agree on everything because one party holds both. Bills will pass the House and stall in the Senate, as they always have, and the President can veto whatever reaches his desk. Overriding a veto takes two-thirds of both chambers. The new majorities are nowhere near that.

First, let’s take a look at where your tax bill, import costs, and financing stand today.

Five areas touch most of the owners we work with: business taxes, the temporary provisions, tariffs, federal funding, and oversight.

Area	Where things stand now	What could change	What to watch for
Business Tax Rules	The 20% QBI deduction and the $2.5 million Section 179 limit are permanent; 100% bonus depreciation is back for good	Any change needs a new law the President signs, or a two-thirds override	Proposals in the House, and whether any of them pick up Senate votes
Expiring Provisions	Several temporary deductions from the 2025 tax law run through the 2028 tax year	They become bargaining chips in any tax deal before they lapse	Whether a tax package surfaces before the 2028 election
Tariffs	Section 301 duties of 10% or 12.5% on imports from 60 economies took effect July 24, 2026	Congress can hold hearings and pass bills; a veto is likely on any reversal	The exemption lists in USTR’s annexes, and any new Section 301 or 232 actions
Federal Funding	Spending bills need Congress and the President	Shutdown risk rises when the two disagree	SBA loan processing during any funding lapse
Oversight	Majorities control committees, subpoenas, and hearings	More scrutiny of agencies, including Treasury and the IRS	Changes in agency guidance or enforcement priorities

Fact: 2026 and 2027 business deductions are locked in.

Three deductions that cut your tax bill are now permanent.

The One Big Beautiful Bill Act (OBBBA)tax law settled the big questions: 

• A 20% qualified business income (QBI) deduction remains with no expiration date. 
• Section 179 expensing limits were raised to $2.5 million, with the phase-out starting at $4 million, and both figures now rise with inflation.
• 100% bonus depreciation is available for property acquired after Jan. 19, 2025, with no sunset this time.

The only 2027 tax law changes to these deductions raise your limits.

For these three deductions, the only changes in 2027 are inflation adjustments. The IRS has set the 2027 Section 179 limit at $2,640,000, up from $2,560,000 for 2026. If you’re planning equipment purchases for next year, use the higher number.

So, what would it take to raise your business taxes?

Permanent means no expiration date. It does not mean untouchable. 

Congress could rewrite any of it, but tax law changes need both chambers and the President’s signature, or a veto override, and nobody in Washington expects that combination to form around business tax cuts. 

Treat your business taxes as stable for the life of this Congress.

Waiting on a rule change only delays your deduction.

So model 2027 on the rules in the book today. Equipment purchases, owner compensation, retirement contributions, the timing of income and expenses, all of it. Owners who hold off on a purchase because a rule might change usually end up with the same rule and a later deduction.

Expect some turbulence in personal filing at the end of 2028.

Deductions for tips, overtime, car loan interest, and the extra deduction for taxpayers 65 and older expire in 2028. 

I expect those will come up in any tax negotiation before the presidential election; they are individual items, and none of them changes the math on your business return. If you want help planning around them, call our office.

Budget for import costs of 10% or 12.5%, because that’s where they’re likely to stay.

Most people describe the tariffs wrong, so a correction first. Congress did not pass them. Not one vote. 

Congress never voted on these duties, so Congress cannot lower them.

Instead, the U.S. Trade Representative put them in place on July 24 under Section 301 of the Trade Act of 1974, an old law that lets the trade office act on its own once it finishes an investigation. Here are the findings:

• 60 countries, U.S. trading partners, had not banned imports made with forced labor. 
• Partners that promised to ban them pay 10%. 
• Partners that made no promise pay 12.5%. 

That is the whole mechanism, and Congress plays no role. Moreover, those 60 economies cover more than 99% of what the country imports. The duties replaced the temporary 10% surcharge that followed the Supreme Court’s February ruling against the earlier tariffs. None of that ran through Congress, so a new Congress cannot simply vote it away.

Expect hearings on prices, not a rate cut.

The politics will be interesting to watch. The economy was the top issue for voters, and the cost of living was a major factor for roughly nine in ten of them, in both parties. That’s from the CBS News exit poll. Tariffs feed into prices, and Democrats campaigned on that, so expect trade hearings in the new Congress.

The savings, if there are any, are in the product-by-product math.

Hearings are not law. A bill rolling back tariffs would go to the President; he would veto it, and the votes to override him are not there, not on party lines, not in this Congress. 

So if you import, plan on the rates in effect and stop waiting for relief. Run a cost analysis on each product line, one at a time, and see where domestic or lower-tariff sourcing beats what you pay now. Sometimes it does. Often it does not, and knowing which is the whole point of the exercise.

A funding lapse can stall your acquisition loan. Build in the margin.

Funding lapses happen when Congress and the President cannot agree on spending, and a divided government gives them more to disagree about. 

What the 43-day shutdown did to $5.3 billion in SBA loans.

The 43-day shutdown in the fall of 2025 came with one party holding the House, the Senate, and the White House. During those 43 days, approvals in the SBA’s 7(a) and 504 programs stopped. The agency estimates it could not deliver $5.3 billion in loans to about 10,000 small businesses.

The QoE rule plus a shutdown adds weeks to a closing.

Add the SBA’s new quality-of-earnings requirement for acquisitions priced at $3 million or more, which we covered in September, and the deal timeline gets tighter. Leave margin in it. The goal is a shutdown that delays a closing by a few weeks instead of one that kills the deal. Circle Oct. 1 on the calendar, every year. That is when the federal fiscal year starts, and when spending bills aren't done by then, approvals stop.

Selling in a hurry is the one move that costs you at the closing table.

Every election, a few owners call us wanting to sell before the other side changes the rules. I understand the impulse. I still advise against acting on it, for two reasons. The business tax rules are set for the life of this Congress, so there is nothing to outrun. And nobody knows what 2029 brings, which cuts both ways. 

What I do know is what a rushed sale looks like: books half ready, questions half answered, a buyer who shaves the price for every number he cannot tie out. That money is real, and it comes off the top.

What a transaction-ready business gets you: a buyer, a lender, or a successor who trusts the numbers.

What you can do now is make the business transaction-ready: clean books, documented processes, and a management team that can run the company without you. 

Transaction-ready doesn't just mean ready to sell; it means the business can stand up to anyone who needs to rely on its numbers: a buyer, a lender, a partner, or the family member who takes over. 

We would set the same priorities if the election had gone the other way.

Five moves that protect your cash before Dec. 31.

• Run year-end tax projections on current law. Don’t wait for a law that may never pass. The rules for your 2026 and 2027 business returns are the rules in effect today. Our year-end tactics still apply.
• Check your import exposure. Pull the duties you are paying, line by line, and put them next to the exemption lists USTR published with the July action. Some products are on those lists. Then price domestic sourcing where it exists, which is not everywhere.
• Pad financing timelines. When funding lapses, the SBA stops approving 7(a) and 504 loans, and it does not start again until it is funded. If a deal depends on one of those loans, leave margin for that, more than feels necessary.
• Keep your financials current. Contact our office to help you clean up your records and ensure all your filings are accurate and on time.
• Pencil in a 2028 review. The temporary provisions in the 2025 law expire after the 2028 tax year. Sit down before then to see what changes and adjust your tax strategy.

For the next two years, exposure should be limited to import costs and SBA funding.

You will hear a lot about what the new Congress might do. Most of it is conjecture, and none of it changes your 2026 return. 

The business tax rules are stable. The tariffs are staying put for now. A shutdown only affects you if a deal depends on SBA money, and even then it is a delay, not a loss, if you planned for it. 

If you have any specific concerns about the impact of politics on your business, contact our office.

Jeremy A. Johnson, CPA, CEPA®
Founder & CEO
The Novyx Group

Sources

1. Hubbard, Kaia. “2026 Senate Midterm Election Results as Democrats Win Control, Schumer Vows ‘Legislative Razor Wire’ against Trump.” CBS News, November 5, 2026. https://www.cbsnews.com/live-updates/senate-election-results-2026/#:~:text=enough%20wins%20to%20control%20at%20least%2054%20seats
2. CBS News. “2026 House Midterm Election Results as Democrats Capture Majority with Major Wins.” CBS News, November 5, 2026. https://www.cbsnews.com/live-updates/house-election-results-2026/#:~:text=Democrats%20won%20control%20of%20the%20House%20in%20the%202026%20midterm%20elections
3. CBS News. “See CBS News Exit Poll Results for the 2026 Midterm Elections.” CBS News, November 4, 2026. https://www.cbsnews.com/news/cbs-news-exit-polls-midterm-elections-2026/#:~:text=the%20cost%20of%20living%20being%20a%20major%20factor%20for%20voters%20across%20parties
4. Office of the United States Trade Representative. “Fact Sheet: USTR Section 301 Action in Response to the Failure of 60 Economies to Ban Imports Produced with Forced Labor.” July 2026. https://ustr.gov/about/policy-offices/press-office/fact-sheets/2026/july/fact-sheet-ustr-section-301-action-response-failure-60-economies-ban-imports-produced-forced-labor#:~:text=imposing%20a%2010%25%20or%2012.5%25%20tariff%20on%2060%20trading%20partners
5. Office of the United States Trade Representative. “Notice of Actions in Section 301 Investigations of Acts, Policies, and Practices of Various Economies.” Federal Register notice, July 23, 2026. https://ustr.gov/sites/default/files/files/Press/Releases/2026/FLIP%20301%20Investigation%20Final%20Action%20FRN%207-23-26%20FINAL.pdf#page=1
6. Dorsey & Whitney LLP. “Trump Administration Implements Replacement Tariffs Covering Most U.S. Imports.” Client alert, July 24, 2026. https://www.dorsey.com/newsresources/publications/client-alerts/2026/7/announced-section-301-tariffs#:~:text=The%20Section%20122%20tariffs%20were%20imposed%20almost%20immediately%20after%20the%20U.S.%20Supreme%20Court%27s%20February%202026%20decision
7. U.S. Small Business Administration. “Shutdown Blocks SBA from Delivering $5 Billion to Small Businesses amid Trump Economic Comeback.” News release 26-06, November 13, 2025. https://legacy.sba.gov/article/2025/11/13/shutdown-blocks-sba-delivering-5-billion-small-businesses-amid-trump-economic-comeback#:~:text=unable%20to%20deliver%20%245.3%20billion%20to%2010%2C000%20small%20businesses
8. One Big Beautiful Bill Act, Pub. L. No. 119-21, § 70105, 139 Stat. 72 (2025) (qualified business income deduction). https://www.govinfo.gov/content/pkg/PLAW-119publ21/html/PLAW-119publ21.htm#:~:text=EXTENSION%20AND%20ENHANCEMENT%20OF%20DEDUCTION%20FOR%20QUALIFIED%20BUSINESS%20INCOME
9. One Big Beautiful Bill Act, Pub. L. No. 119-21, §§ 70301 and 70306, 139 Stat. 72 (2025) (full expensing and Section 179 limits). https://www.govinfo.gov/content/pkg/PLAW-119publ21/html/PLAW-119publ21.htm#:~:text=INCREASED%20DOLLAR%20LIMITATIONS%20FOR%20EXPENSING%20OF%20CERTAIN%20DEPRECIABLE%20BUSINESS%20ASSETS
10. Internal Revenue Service. “Working Families Tax Cuts: Businesses.” Accessed November 6, 2026. https://www.irs.gov/newsroom/working-families-tax-cuts-businesses#:~:text=Depreciation%20(Sections%2070301%2C%2070306%2C%2070434)
11. Internal Revenue Service. “Working Families Tax Cuts: Individuals and Workers.” Accessed November 6, 2026. https://www.irs.gov/newsroom/working-families-tax-cuts-individuals-and-workers#:~:text=Deduction%20for%20seniors%20(Section%2070103)
12. Internal Revenue Service. “IRS Releases Tax Inflation Adjustments for Tax Year 2027; Taxpayers Continue to Benefit from the Working Families Tax Cuts.” News release IR-2026-133, November 5, 2026. https://www.irs.gov/newsroom/irs-releases-tax-inflation-adjustments-for-tax-year-2027-taxpayers-continue-to-benefit-from-the-working-families-tax-cuts#:~:text=For%20tax%20year%202027%20taxpayers%20can%20expense%20up%20to%20%242%2C640%2C000%20of%20section%20179%20property