The last big-ticket item approved by the 118^th Congress was enactment of a continuing resolution (CR), HR 10545, that keeps the government funded through March 14, 2025. The House and Senate approved the measure by wide margins. The House vote was 366 to 34, with one member voting “present.” The 366 aye votes included 170 Republicans and all Democrats except the one (Rep. Jasmine Crockett of Texas) who voted present. The Senate vote, coming just minutes after midnight December 20 deadline, was 85 to 11. President Biden signed it into law on December 21. Thus, the threatened partial government shutdown was averted, despite a few hours on a Saturday during which funding for the government technically ran out.

The 119^th Congress convened January 3. The GOP controls the House and the Senate, and Republican President-Elect Trump will be in the White House as of January 20. Republicans are still squabbling a bit about which priority issue to tackle first, but whatever the order, a massive tax bill, Fiscal Year (FY) 2025 government funding, FY 2026 appropriations to fund the government, the statutory debt limit, and nomination confirmations will dominate early in 2025. On the regulatory front, once cabinet secretaries (and other key agency leaders) are confirmed, expect action to roll back Democratic rulemaking in many issue areas.

With only a little bit of drama, on January 3, House Republicans chose Rep. Michael Johnson (R-LA) to be Speaker of the House for the 119^th Congress. Virtually all Speaker votes are purely partisan, and this one was no exception. So, with a 219 to 215 GOP-to-Democrat edge, Rep. Johnson needed 218 votes to become Speaker. The final vote was 218 to 215—one Republican (Kentucky’s Rep. Thomas Massie) voted for someone else.

The hard-right wing of the Republican party in the House has written a letter to Speaker Johnson (R-LA) listing their demands for their support of early legislative initiatives this year. They include legislation to expand health savings accounts (HSAs), and “real” spending cuts “in place” ahead of approving a debt limit increase.

Both Republicans and Democrats have named the members joining the House Ways & Means and Senate Finance Committees for the 119^th Congress. These lawmakers will have particular influence over what goes in and what stays out of the massive tax bill Congress intends to enact this year.

The outgoing 118^th Congress must fund U.S. discretionary spending by December 20. Issues in play in that effort include extension of authority and funding for the National Flood Insurance Program (NFIP), delay of the Corporate Transparency Act’s (ACT’s) Beneficial Ownership Information (BOI) rule, and possibly technical corrections to SECURE retirement savings law.

In 2025-2026, Republicans will control the White House (Trump/President), the Senate (53 to 47), and the House (220 to 215). But despite winning the trifecta, GOP lawmakers will confront significant challenges next year. They include a spiraling deficit that will make enactment of GOP priorities difficult, and deep divisions between ultra-conservative and more centrist Republicans.

Donald Trump’s victory was declared when, at just about 5:30 a.m. on Wednesday, November 6, the media projected he had won swing state Wisconsin, taking him over the 270-vote electoral college count needed to win the presidency. 

Republicans will control the Senate in the incoming 119th Congress (2025-2026). The GOP’s undisputed win of 53 of the Senate’s 100 seats means Democrats have lost control of the upper chamber in the 119th Congress.

Republicans won the 218 seats needed to control the House; it will give the GOP the “trifecta”—a clean sweep of all three levers of legislative power in Washington.

A number of key issues remain to be addressed by the outgoing 118^th Congress. They include the need to fund the government past the December 20 dates on which current funding authority expires. The government funding issues include extension of National Flood Insurance Program (NFIP) authority and funding.

If, as expected, the GOP controls both the House and Senate next year, the risks and challenges of the 2025 tax bill have become a bit clearer. Here is a run-down.

Four Democratic Senators have introduced legislation that would subject pass-through (non-corporate) business income to payroll (Social Security/Medicare) taxes. Currently, many pass-through businesses (S corporations, partnerships, sole proprietorships) characterize some of their business income as dividends or other non-wage income and thus avoid having to include it in the payroll tax base.

On September 26 President Biden signed into law the three-month funding bill that avoided a government shutdown on October 1. The continuing resolution (CR) extended fiscal year (FY) 2024 funding levels until December 20 and made few (none of them controversial) policy changes. So, the tough issues—e.g., FY 2025 funding levels, whether to block certain regulations (including the fiduciary rule)—were left to be resolved during the November-December lame duck session of the 118^th Congress.

On September 12, the Senate Finance Committee held a hearing to lay the groundwork for the 2025 tax bill effort to cut down on “tax avoidance.” The hearing highlighted proposals to improve tax equity in current law. It also focused considerable discussion on section 199A, the deduction for qualifying noncorporate business income.

The premium tax subsidies that allow lower-income individuals to get Affordable Care Act (ACA) health insurance free or at reduced cost are scheduled to expire at the end of 2025. If the current subsidies do expire, millions of low-income individuals will face significant health insurance cost increases. Extension of the subsidies will be a key issue in the 2025 tax bill and/or during the November-December lame-duck session of the 118^th Congress.

The ENABLE Act, a bill that makes permanent three provisions of the ABLE account law, passed the Senate under a unanimous consent agreement on September 19. The bill, the ENABLE Act, was introduced in the Senate by Sen. Bob Casey (D-PA), the author of the original ABLE Act, and Sen. Eric Schmitt (R-MO) and in the House by Rep. Lloyd Smucker (R-PA) and Rep. Don Beyer (D-VA).

Private sector economists, including the respected Committee for a Responsible Federal Budget (CRFB), are sounding the alarm over the cost of both presidential candidates’ tax proposals. This suggests the 2025 tax bill will be as much about revenue as tax policy.

On October 3, the Internal Revenue Service (IRS) and Treasury issued new guidance, Notice 2024-73, on coverage requirements for long-term part-time employees (LTPTE), beginning in 2025. SECURE 2.0, enacted late in 2022, includes a provision requiring employer-sponsored retirement plans to allow long-term (those with service of two years or more) part-time (those who work at least 500 hours/year) to participate in the employer-sponsored retirement savings plan.

A bipartisan bill to cut off employee retention tax credit (ERTC) claims has been introduced in the Senate. The bill pulls the ERTC provisions from the House-passed HR 7024, a bill that has been long-stalled in the Senate.