The Lame-Duck Session: What Could Still Pass Before January

The election is over, but the current Congress is not. Members who lost on November 3, 2026, and members who are retiring, still vote until the new Congress is seated on January 3, 2027. That stretch is called the lame-duck session, and it often produces year-end deals, including tax provisions.

With Democrats projected to take control of both chambers in January, the current Republican majorities have a short window to finish work on their own terms. Democrats, knowing they gain power in a few weeks, may prefer to wait. That tension shapes what can pass. Here is what is on the table and what it could mean for you.

Deadline one: government funding on December 11

Congress passed a continuing resolution in September that funds the federal government through December 11, 2026. According to the Committee for a Responsible Federal Budget, the House has passed 3 of the 12 regular spending bills for fiscal year 2027, and the Senate has passed none.

Something has to happen by December 11. The options are full-year spending bills, another short-term extension, or a lapse in funding. Budget analysts at Federal Budget IQ describe a further extension into February or March 2027 as the most likely result. That would hand the final decisions to the new Congress.

Why it matters for taxes: The IRS budget comes through this process. Funding levels affect phone staffing, processing, and enforcement during filing season. A shutdown would not cancel tax deadlines, but it can slow IRS services that rely on annual funding.

Deadline two: a possible year-end tax package

Several outside analysts, including Holland & Knight and the Committee for a Responsible Federal Budget, list items that could ride in a year-end tax bill. These are possibilities, not commitments:

• Work Opportunity Tax Credit. This employer credit for hiring people from certain groups, such as veterans and long-term unemployment recipients, expired at the end of 2025. An extension could be retroactive.
• Enhanced Affordable Care Act premium tax credits. The larger marketplace subsidies have been a major point of debate. Whether anything changes, and for which year, is uncertain.
• Gambling loss deduction. The 2025 law limited how much of gambling losses can be deducted. Some lawmakers want to revisit that.
• Digital asset (crypto) tax rules.
• A film and television production credit.
• Affordable housing incentives and child and family provisions.
• Technical corrections to the 2025 law, which fix drafting issues and are usually low drama.

Fewer temporary provisions are left to extend than in past years, because the 2025 law made many of them permanent or reset their end dates. Analysts quoted in Tax Notes expect any 2026 package to be smaller than past extender bills.

Disaster tax relief: already done

If you are in Western North Carolina, you may have heard about federal disaster tax relief. One major bill already passed. The Doug LaMalfa Federal Disaster Tax Relief Certainty Act was signed in September 2026 after passing the House by voice vote and the Senate by unanimous consent. Among other things, it excludes qualified wildfire relief payments from income for federally declared wildfire disasters from 2015 through 2026, and it extends favorable treatment for certain disaster losses.

Further disaster aid could come as supplemental spending if storms or fires create new needs. Supplemental bills often draw support from both parties, and they sometimes carry unrelated provisions.

Separately, North Carolina's Hurricane Helene interest relief is state law and is not part of anything Congress is considering.

Could there be another big party-line bill?

Republican leaders had discussed a follow-up budget reconciliation bill. Reconciliation needs only a simple majority in the Senate, so it is possible in a lame duck. It would require nearly every Republican vote in both chambers, including members who just lost their seats. That is a high bar in a short window. Treat any reports about it as proposals until a bill passes.

How the lame duck could affect your planning

Illustrative: A small manufacturer in Jackson County hires two veterans in 2026. The Work Opportunity Tax Credit lapsed at the end of 2025, so under current law there is no credit for those hires. If Congress passes a retroactive extension in December, the credit could come back for 2026 hires. The owner should keep the hiring paperwork and be ready to act, but should not count the credit in the budget until it is law. Note that the credit has historically required a certification form filed within a short window after the hire, so ask your tax professional how a retroactive extension would handle that.

Illustrative: A retired couple buys health insurance on the marketplace. Their 2027 premiums depend partly on the size of the premium tax credit. If the lame duck changes the credit, their costs could change. They should watch the marketplace notices and update their income estimate if anything passes.

What to watch, week by week

1. Before Thanksgiving: Leadership announcements on a funding plan. Look for whether the plan is a short extension or full-year bills.
2. Early December: Whether a tax package is attached to the funding bill or the defense bill.
3. December 11: The funding deadline.
4. Late December: Any signed bill, and IRS guidance on how it applies to 2026 returns.
5. January 3, 2027: The new Congress is sworn in, and any unfinished bills start over.

That last point matters. Bills that do not pass by the end of this Congress die. The new Congress has to start from scratch.

What you should do now

• Do not change your 2026 plans based on bills that have not passed.
• If you are a business that hires from groups covered by the Work Opportunity Tax Credit, keep documentation for 2026 hires.
• If you buy marketplace health coverage, watch for changes before you pick a 2027 plan.
• If you have a question about how a new law affects a return you already filed, wait for IRS guidance before amending.

We will update this post if a year-end tax package passes.

Sources: Committee for a Responsible Federal Budget, November 3, 2026; Federal Budget IQ, November 2026; Holland & Knight, October 2026; Baker Tilly, August 2026; NBC News, CBS News, and NPR/Associated Press election coverage.

This post is for educational purposes only and is not tax, legal, or investment advice. Tax law changes, and your facts matter. Before acting, consult your own CPA, EA, or attorney.