Dane Ware is a CPA and manager at Ryan, a global tax services firm. The views are the author’s own.
November's midterm elections could materially influence corporate tax policy. For most companies planning capital spending, the real question is which provisions of the One Big Beautiful Bill Act are at risk and which ones will be effectively permanent. Legislative history and party priorities are the best guides for that analysis. Examining respective legislative focus in the Tax Cuts and Jobs Act and the Inflation Reduction Act can help companies set post-election expectations.
What's built to last
Four provisions in the tax code won’t likely change: 100% bonus depreciation, the EBITDA-based Section 163(j) interest deduction, the international tax provisions and immediate deductibility of domestic research and experimentation (R&E) expenses. These provisions are likely to endure for two reasons. First, the bulk of those benefits under OBBBA have already been and will continue to be realized by most taxpaying corporations and individuals, making it hard to build public support for reversing them.
Second, a slim majority in Congress has historically made it difficult to undo permanent provisions with no expiration date. An effectively gridlocked Congress after November, along with a static executive branch that initially drove the OBBBA initiatives, works in favor of these provisions continuing unaffected.
What's exposed
Two categories carry real election risk: The Section 168(n) manufacturing building deduction and the accelerated sunsets on renewable energy tax credits. A gridlocked Congress works against these because extension packages typically turn into negotiation between the parties. Again, legislative history is a good indicator of what each party will prioritize going forward. Democrats will look to restore the IRA’s original timeline for sunsetting renewable credits, and Republicans will look to keep the OBBBA status quo. If Democrats take meaningful control after November, expect a closer look at OBBBA provisions to fund renewable credit extensions.
A ‘no-regrets’ checklist for capital spending
Regardless of who wins in November, OBBBA provisions are likely to stay intact in the short term. Reversing any permanent or temporary provision would require a healthy Democratic majority in both chambers of Congress and broad public support. It's also worth noting that tax law changes stripping benefits are usually prospective, while retroactive changes are almost exclusively related to newly enacted tax benefits. Even so, companies should plan to mitigate unforeseen or unfavorable changes before committing to a major capital investment.
To assist in mitigation, businesses should model various OBBBA repeal scenarios against their internal tax projections. The act’s provisions can accelerate or defer taxable income, allowing taxpayers to further reduce their tax liabilities. For example, companies might consider purchasing discounted renewable energy tax credits to offset liability for the current or previous three tax years. Lastly, state tax implications should be monitored, as those are a factor in any investment timing decision.
A corporate tax rate change still looms
The base corporate income tax rate and specific IRC corporate tax provisions balance two pillars of fiscal policy: managing federal revenue and the underlying budget deficit as well as incentivizing activity to promote policy goals.
Democrats have recently floated measures such as higher stock repurchase tax rates, tightened executive compensation rules and, during the 2024 election cycle, proposed a 28% corporate income tax rate. Their approach shifts the tax burden to large, profitable corporations to help supplement the costs of their top priorities: Renewable energy infrastructure, healthcare and other social programs.
Republicans take the position that fiscal policy goals and economic growth are best achieved by incentivizing targeted activity through tax breaks. Their model emphasizes domestic activity to support some of the same policy objectives through increased profits and free market activity. OBBBA's expansion of TCJA principles is the clearest evidence that a continued Republican majority would maintain that framework.
Each approach carries trade-offs. Raising the corporate rate supports broader fiscal and social goals, but can slow economic activity and hand competing countries an advantage. Meanwhile, unmitigated tax breaks can drive up the federal deficit, and increased economic activity doesn't guarantee success on other policy goals.
OBBBA era, for now
Planning for a divided Congress isn't much different from planning for a gridlocked or tight-majority one, and all three are very likely outcomes after November. If Democrats win only the House or the Senate, any tax bill must still pass the other chamber and get signed by President Trump. A majority in one chamber gives Democrats more leverage to negotiate their top priorities, but a lame-duck presidential period combined with defending the party’s own tax policy makes any reversal of OBBBA difficult. Democrats would face the same problem even with slim majorities in both chambers.
Given these political dynamics, companies should plan for a short-term period in which OBBBA tax provisions prevail through 2026 and reevaluate the political landscape before making major planning decisions in 2027.
