As the dust settles from the 2020 elections, the narrow margins in Congress mean that it is unlikely major policy changes will occur. From a tax policy perspective, this likely means that the major provisions of the Tax Cuts and Jobs Act (TCJA) will remain in place. Keep in mind that certain items of the TCJA, such as the increased estate and gifting thresholds, are set to expire regardless, beginning January 1, 2026, unless extended, however, we will know for certain after two more Senate races.
So, where do things stand as of today?
The current composition of the 435 member House of Representatives is 221 Democrats (-8 seats) and 209 Republicans (+9 seats) with five races yet to be called.
The Senate stands at 48 Democrats (+1 seat) and 50 Republicans (-1 seat) with two special elections in Georgia in January. If the Democrat contenders were to win both of those special elections, and with the vice-president as tiebreaker, then the likelihood of tax changes would increase. Even assuming the Democrats sweep the Georgia Senate races, with the House and Senate being so close, any legislation would have to be crafted so as to avoid any defections.
As of today, it doesn’t appear likely that the tax rules will change significantly, but we will know for certain come January after the dust clears from the Georgia Senate results.