The House makes a brief four-day appearance this week for its last legislative session before the November midterms. The Senate is also in session this week, with plans to head home on October 2, if not sooner.
 
Few expect any House-Senate breakthroughs on major legislation, in part because both chambers acted early to temporarily extend government funding into the new fiscal year (FY). The president signed the funding extension into law on September 2. Congress now has until December 11 to wrap work on FY 2027 funding or enact another funding patch.
 
The next best chance for legislative action on tax policy remains the post-election lame-duck session, set to begin on November 9. Senate action on the House-passed budget resolution could launch a partisan "Reconciliation 3.0" effort. Although the House-passed budget resolution did not include a tax title, tax could come into the picture if there is a demand for revenue offsets if the Senate increases the level of spending in a reconciliation bill.

There is also the potential for a bipartisan tax bill, the cornerstone of which would be an extension of expired or expiring tax provisions, such as the section 48D credit for semiconductor manufacturing and the lapsed Work Opportunity Tax Credit. Other potential tax items include tax administration reforms, reinstating the full deduction for gambling losses, treaty-like tax treatment for U.S.-Taiwan commerce, taxation of digital assets, technical corrections, and retirement savings.
 
The pressure for action on taxes will compete for attention among a number of pressing policy needs in the lame-duck session, including reauthorizing the Foreign Intelligence Surveillance Act (FISA), advancing the 2027 National Defense Authorization Act (NDAA), and perhaps some legislative work on safeguarding artificial intelligence (AI) against catastrophic threats. Above all else, Congress must find agreement on a long- or short-term term funding extension for FY 2027 by December 11.
 
Action on tax policy and virtually any other major issue in the lame-duck session will obviously be affected by the outcome of the midterms. Voters on November 3 will determine not just the fate of the next Congress but the final weeks of this one as well. #TaxTake

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