< back to insights gallery

Congressional midterm election results anxiously awaited

TAX ALERT | November 12, 2022 | Authored by RSM US LLP

Executive summary: Midterm elections results remain too close to call; control of House and Senate may not be known before mid-next week

Although US congressional midterm elections took place several days ago, the potential implications for tax legislation both for the remainder of this calendar year, and over the next several years, remains uncertain.  

As things currently stand, there has been no official determination as to majority leadership in either the House or the Senate, with several key races still undecided. Republicans are inching toward control of the House, while leadership in the Senate remains undetermined. 

Should expectations of a Republican victory in the House bear out, the likelihood of a year-end tax bill would seemingly be increased, as Republicans may be inclined to clear the decks of unresolved issues such as restoring immediate expensing of R&E costs under section 174, modifying the interest deduction limitation calculation under section 163(j), and reversing the scheduled phase-down of 100% bonus depreciation, to allow them more time to organize in the new Congress. 

More broadly, the legislative landscape over the next several years will likely be devoid of significant tax legislative activity, although there remains a possibility for bipartisan agreement on certain issues, such as enhanced retirement savings proposals, to the extent they carry over into the new Congress.

Midterm elections results remain too close to call; control of House and Senate may not be known before mid-next week

Although US congressional midterm elections took place several days ago, the potential implications on tax legislation for the remainder of this calendar year, and over the next several years, remains uncertain. 

As things currently stand, Republicans are inching towards taking control of the House, with just a handful of seats remaining to reach the 218-vote majority. In the Senate, there are now just two open seats, with results pending in Nevada, and a second seat in Georgia headed to a run-off election early next month. Should the Republicans take the House, as is widely expected, Senate results arguably become somewhat mitigated, as the specter of divided government would already be upon us.1

Irrespective of final election results, a priority of the 117th Congress in its final months of legislating will be a year-end Omnibus measure that would include several ‘must pass’ legislative provisions, such as government funding for the remainder of FY23. 

An open question, however, both before and after the election, is whether certain tax provisions currently enacted into law will be part of such measure. This would include the requirement to capitalize and amortize R&E costs under section 174, and the requirement to use EBIT (as opposed to EBITA) in the calculation of the interest expense deduction limitation under section 163(j). Similar questions arise as to provisions that are scheduled to take effect next year such as the commencement of a phase down in the percentage allowance for bonus depreciation. Interest in these provisions remains strong; however, the political calculus has shifted.

Should expectations of a Republican victory in the House bear out, the likelihood of a year-end tax bill would seemingly be increased, as Republicans may be inclined to clear the decks of such issues to allow them more time to organize in the new Congress. As part of this process, lawmakers must decide if they are willing to negotiate and seek compromise on these (and other) matters before a new Congress convenes next January. In this regard, the political will of either party remains uncertain. 

More broadly, the political landscape that could unfold over the next several years will likely be one of political gridlock and discourse, with very limited tax legislative milestones. Bipartisanship agreement will be required before any bills can be enacted into law. As Dave Kautter, former Assistant Secretary of the US Treasury for Tax Policy and RSM’s Senior Tax Policy advisor succinctly puts it: “[I]n a divided government, there’s not much chance of any significant tax legislation happening at all.”

Should the Senate remain evenly split (with Vice President Harris able to cast the tiebreaking vote for Democrats), securing the agreement of the entire Democrat caucus, including Sens. Manchin and Sinema, would continue to be necessary to move any bill out of the chamber. In the House, a change in leadership could see intra-party fractures emerge across the Republican caucus. The one constant would be the ability of Republicans to thwart President Biden’s economic agenda. 

There are also numerous implications for state and local tax policy heading into 2023 state legislative sessions. As of this writing, Democratic governors have fared well, flipping executives in both Maryland and Massachusetts, and securing trifectas in both states. However, an office could still be lost in Nevada and potentially gained in Arizona. Regardless, governors in split-controlled state governments will have to compromise to be successful. Taxpayers should also be aware of tightening fiscal conditions in the second half of fiscal year 2023, potentially impacting both parties as they consider fiscal year 2024 state budgets. While the last two years have been flush with personal and corporate income tax cuts, inflation rebates, refunds and gas tax suspensions, tax collections in a number of states are running below projections and are likely to weigh heavily on state legislatures. RSM will release a comprehensive post-midterm analysis of state and local elections soon. 

RSM’s tax policy team will host an hour-long webcast in the coming days to explain these implications in greater detail. Keep an eye on RSM’s events page for scheduling details.


1With the just-announced victory of Sen. Mark Kelly (D-AZ), Democrats are one step closer to retaining the Senate.  

Let’s Talk!

Call us at (541) 773-6633 (Oregon), (208) 373-7890 (Idaho) or fill out the form below and we’ll contact you to discuss your specific situation.





  • Topic Name:
  • Should be Empty:

This article was written by Fred Gordon, Dan Ginsburg, Ryan Corcoran, Mo Bell-Jacobs and originally appeared on 2022-11-12.
2022 RSM US LLP. All rights reserved.
https://rsmus.com/insights/tax-alerts/2022/congressional-midterm-election-results-anviously-awaited.html

The information contained herein is general in nature and based on authorities that are subject to change. RSM US LLP guarantees neither the accuracy nor completeness of any information and is not responsible for any errors or omissions, or for results obtained by others as a result of reliance upon such information. RSM US LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect information contained herein. This publication does not, and is not intended to, provide legal, tax or accounting advice, and readers should consult their tax advisors concerning the application of tax laws to their particular situations. This analysis is not tax advice and is not intended or written to be used, and cannot be used, for purposes of avoiding tax penalties that may be imposed on any taxpayer.

RSM US Alliance provides its members with access to resources of RSM US LLP. RSM US Alliance member firms are separate and independent businesses and legal entities that are responsible for their own acts and omissions, and each are separate and independent from RSM US LLP. RSM US LLP is the U.S. member firm of RSM International, a global network of independent audit, tax, and consulting firms. Members of RSM US Alliance have access to RSM International resources through RSM US LLP but are not member firms of RSM International. Visit rsmus.com/aboutus for more information regarding RSM US LLP and RSM International. The RSM(tm) brandmark is used under license by RSM US LLP. RSM US Alliance products and services are proprietary to RSM US LLP.

KDP Certified Public Accountants, LLP is a proud member of RSM US Alliance, a premier affiliation of independent accounting and consulting firms in the United States. RSM US Alliance provides our firm with access to resources of RSM US LLP, the leading provider of audit, tax and consulting services focused on the middle market. RSM US LLP is a licensed CPA firm and the U.S. member of RSM International, a global network of independent audit, tax and consulting firms with more than 43,000 people in over 120 countries.

Our membership in RSM US Alliance has elevated our capabilities in the marketplace, helping to differentiate our firm from the competition while allowing us to maintain our independence and entrepreneurial culture. We have access to a valuable peer network of like-sized firms as well as a broad range of tools, expertise, and technical resources.

For more information on how KDP LLP can assist you, please call us at:

Oregon Office:
(541) 773-6633

Idaho Office:
(208) 373-7890