Election Edition: How the Election Shapes Iowa Business

Election-year conversations often involve candidates, campaigns, and polls. For Iowa business leaders, the focus is on what the 2026 midterm elections may mean for tax policy.

The elections will determine control of Congress for the final two years of President Trump’s term. If Republicans retain both chambers, they could have a path to advance additional tax priorities through budget reconciliation, a process that only requires a simple majority to pass. Proposals not included in the One Big Beautiful Bill Act (OBBBA) of 2025, such as a 15% corporate rate for domestic manufacturers and an increased 23% §199A deduction, could receive renewed attention.

If Democrats gain either chamber, major tax legislation would require bipartisan support, making broad changes more difficult. Any near-term legislation would likely be narrower, focusing on technical corrections, expiring provisions, and targeted priorities capable of attracting support from both parties.

One potential bipartisan priority is the proposed Taxpayer Assistance and Service (TAS) Act introduced by Senate Finance Committee Chairman Mike Crapo (R-Idaho) and Ranking Member Ron Wyden (D-Oregon). The bill focuses on practical tax administration reforms, including expanded electronic access to IRS records, improved refund-status and callback tools, stronger paid-preparer standards, and greater independence for the National Taxpayer Advocate and IRS Independent Office of Appeals.

Whatever tax changes emerge from Washington, Iowa businesses must also account for differences between federal and state law. Iowa generally follows federal tax changes through rolling conformity, but important exceptions remain. For example, the OBBBA made a number of changes to the business interest expense limitation of §163(j), but Iowa does not currently conform to the limitation for taxable years beginning on or after January 1, 2020.

Election outcomes tend to shape the direction and pace of future tax legislation, but businesses should not wait for certainty. Iowa businesses can prepare by modeling potential changes, monitoring proposals, and identifying provisions that may affect investment, financing, and cash flow. The political landscape may change, but disciplined tax planning remains valuable under any outcome. ABI