The battle for control of Congress has topped $10 billion as the two parties vie for outsized influence over taxes, spending and the implementation of the next president’s agenda.
It’s a staggering and potentially historic sum, based on OpenSecrets data, considering that only about a 10th of congressional races are actually competitive. Yet, it outpaces spending on the hard-fought presidential election.
The whopping figure reflects the colossal stakes. Control of Congress is pivotal to economic policy. The expiration next year of the 2017 tax law puts trillions of dollars in tax provisions in play. The Senate can block the appointment of key financial-industry regulators. Legislative battles are shaping up over prescription drug prices and regulation of the crypto industry, energy, artificial intelligence and social media.
Republicans are currently favored to gain the Senate majority based on a favorable map, while minority Democrats have at least an even chance to take control of the House, potentially reversing both chambers and continuing a divided government. Many races remain tight and the outcome may not be known for days after the Nov. 5 election.
Here are some key races to watch:
The Senate: Montana
Democrats’ hopes in the Senate largely hinge on Montana, where three-term incumbent Jon Tester has trailed Republican Tim Sheehy, a political newcomer, businessman and former Navy Seal. That race is set to break records with about $250 expected to be spent per resident of the sparsely populated state on advertising alone, according to AdImpact data.
Tester, a third-generation farmer, has long relied on his folksy charm and a reputation for delivering resources to his state to overcome its Republican tilt. This year, Democrats hope Tester’s support for abortion rights will help him and other vulnerable candidates hold on.
But former President Donald Trump is expected to win in Montana by double digits, so Tester will need many Montanans to split their ticket between the parties, a practice that has become less common as the electorate has become more polarized.
Ohio
Even if Tester pulls out a win, Democrats would likely need to win every other tossup race, including Ohio, where Sherrod Brown is trying to defend his seat against car dealer Bernie Moreno. Advertising alone has cost more than $530 million in that race, according to AdImpact.
As in Montana, Trump is expected to win Ohio easily, which could give Moreno a boost despite Brown’s popularity with many White working-class voters who form the former president’s base.
Democrats also need to keep seats in the presidential “Blue Wall” battlegrounds of Pennsylvania, Wisconsin and Michigan — all states where races have tightened — as well as in Arizona and Nevada, where the party’s Senate candidates have held larger leads in polls.
Wild cards
If Tester loses, Democrats would need an upset win somewhere else. That would likely require Colin Allred to defeat Senator Ted Cruz in Texas or Debbie Mucarsel-Powell to beat Senator Rick Scott in Florida. A wild card race in Nebraska, where independent union leader Dan Osborn has been running neck-and-neck with incumbent Republican Deb Fischer, could also scramble the outcome on election night.
Democrats’ best-case scenario is likely a 50-50 Senate, with control of the chamber depending on the outcome of the presidential race, because the vice president breaks ties.
Republicans, however, could win as many as 55 seats if they sweep the tossup races. A larger majority would widen the aperture for GOP tax cuts and other legislation if they control both chambers of Congress and the White House. In 2017, the party’s thin majority led to the defeat of efforts to repeal the Affordable Care Act via a thumb down from then-Senator John McCain.
The GOP has hoped that popular former Governor Larry Hogan would pull off an against-the-grain win in heavily Democratic Maryland, but Prince George’s County Executive Angela Alsobrooks has had double-digit leads in recent polls despite significant super political action committee spending on Hogan’s behalf, including $10 million from billionaire Ken Griffin.
The House: New York and California
Democrats’ chances are significantly better in the House, where Republicans now hold only a slim majority and must defend many areas won by President Joe Biden in 2020, including in heavily Democratic states like New York and California. The party needs a net gain of just four seats to hand the speaker’s gavel to Hakeem Jeffries of New York, and with it the power over the federal purse and House investigative subpoenas.
In addition to 10 New York and California seats in play, Democrats have targeted Heartland districts in Nebraska and Iowa now held by Republicans, as well as battlegrounds in New Jersey and Arizona.A Des Moines Register poll published Sunday showed Democratic challengers in Iowa leading incumbent Republican Representative Mariannette Miller-Meeks by 16 percentage points and incumbent Republican Representative Zach Nunn by 7 points among likely voters. The poll showed a surge for Democrats among women and disproportionate enthusiasm among them for voting in a state that imposed a ban on abortions after about six weeks with limited exceptions.In Louisiana, a newly reconfigured, majority-Black district favors a Democrat succeeding GOP Representative Garret Graves, who decided not to seek reelection. In Alabama, another redrawn district, similarly designed to give Black voters more voting representation, could bring another seat shift toward Democrats.
Meanwhile, Speaker Mike Johnson of Louisiana — who unexpectedly ascended to the job late last year after the tumultuous ouster of his predecessor — is scrambling to save his gavel. He has aggressively stumped and raised money nationwide, including a string of events in key New York districts that helped the GOP flip the House two years ago.
Republicans have sought to capitalize on voter discontent on issues like inflation and immigration, targeting open-race seats of retiring Democrats in Michigan, and incumbents in states including New Mexico and Pennsylvania as well as those in districts won by Trump in 2020, like Jared Golden in Maine and Mary Peltola in Alaska.
The first results on election night could come from Virginia, where polls close at 7 p.m. New York time, with each party having a pickup opportunity. Republicans hope to take the central Virginia seat being vacated by Democrat Abigail Spanberger, who is running for governor next year, while Democrats try to defeat incumbent Republican Jen Kiggans in a coastal district.
The nonpartisan Cook Political Report rates 208 seats as leaning, likely or solidly Republican compared to 205 for the Democrats, with 22 tossup seats; 218 are needed to ensure a majority.
The Internal Revenue Service may be facing steep cuts in its budget with the win on Tuesday night of President-elect Donald Trump.
Funding for the IRS has become a political issue, with Republicans successfully pushing to cut the extra $80 billion funding from the Inflation Reduction Act of 2022 already during battles over the debt limit.
“I think IRS funding is at significant risk right now, both the annual appropriation funding as well as the remaining IRA funding,” said Washington National Tax Office principal Rochelle Hodes at the Top 25 Firm Crowe LLP.
So far, Republicans have mainly called for cuts in the IRS’s enforcement budget. The increase in enforcement is supposed to be used to pay for the cost of the IRA, but the funding increase is also supposed to be used for taxpayer service and technology improvements.
“The only question for me on funding is, will any portion of the funding remain available for taxpayer service-related improvements at the IRS?” said Hodes.
“I don’t think that will be in the sight line, but the IRA money is part of what’s being used for that,” said Hodes. “As we’ve seen in appropriations bills, there could be language directed at that, that no money can be spent on that initiative.”
A more important priority will be the extension of the expiring provisions of the Tax Cuts and Jobs Act of 2017. “Getting TCJA resolved is going to be the first priority,” said Hodes. “The second question is, how will the cost of that endeavor be determined. If the view that is held by several Senate Republicans wins the day, then the cost of extending the expiring provisions will not be counted under those particular budget rules that are created dealing with extending current policy. If, however, that view is not adopted, then there is a high cost just to TCJA, and so any other provisions with cost will sort of stretch the boundaries of what many in Congress would be comfortable with. I think it will be necessary to see how the scoring goes for extending TCJA provisions.”
Trump has also called for exempting various forms of income, such as tip income, Social Security income and overtime from taxes.
“I also am not sure which of the ideas that were put forward on the campaign trail, other than extending TCJA, are provisions that have true champions who will want to pursue those,” said Hodes.
That may depend on who ends up in Congress, with several important races in the House yet to be decided.
“Although the House remains undecided, the Republicans’ control of the Senate makes it much more likely that Republicans will be able to implement many of Trump’s proposed tax policies, such as making parts of the expiring 2017 TCJA provisions permanent,” said John Gimigliano, principal in charge of the Federal Legislative & Regulatory Services group within KPMG’s Washington National Tax practice, in a statement. “The pressing question now is how the Administration and Congress will fund such an ambitious agenda and what additional measures they might introduce, such as eliminating taxes on tips and overtime. These items will only add to the hefty $4+ trillion price tag they face. Until then, taxpayers should continue to stay apprised of developments and scenario plan for the different outcomes to get ahead.”
Over half of accounting and tax firms plan to increase fees across all services in 2025, according to a new survey.
The survey, released Wednesday by practice management technology company Ignition, found that the majority (around 58%) cited rising business costs as the main motivator for their fee increases, while only 5% are raising prices to increase revenue. Most of the nearly 350 firms surveyed intend to increase fees across services by 5% or 10%.
Some 57% of the respondents plan to increase fees across all services. With regard to tax preparation specifically, 90% of the survey respondents plan to increase fees for individual tax returns, and 87% plan to increase fees for business tax returns. In addition, 70% plan to increase fees for tax planning and advisory services;. 85% plan to increase fees for bookkeeping and accounting services; and 76% plan to increase fees for CFO and controller services.
“While accounting firm owners are embracing price increases in 2025, the report shows that the majority (around 58%) cite rising business costs as the main motivator,” said Ignition global president Greg Strickland in a statement. “Only 5% are raising prices to increase revenue, which indicates an opportunity for firms to leverage pricing as a strategic tool to unlock revenue growth.”
The report found a shift from hourly billing to fixed-fee and value-based pricing, with 79% of the survey respondents indicating they use fixed-fee or value-based pricing for bookkeeping and accounting services. Over half (54%) use fixed-fee or value-based pricing for tax preparation services, 67% use fixed-fee or value-based pricing for tax planning and advisory services, and 75% use fixed-fee or value-based pricing for CFO and controller services.
The report benchmarked current fees for tax, accounting and advisory services, which varied based on firms’ annual revenue range. The biggest variation in pricing was for tax planning and advisory services in particular. For firms with revenue of as much as $250,000, approximately 23% said they charge less than $500 for these services, while a nearly equal number (around 21%) indicated they charge more than $2000.
Illinois voters approved a nonbinding proposal to add an extra 3% levy on annual incomes of more than $1 million, which could fuel a new effort to raise taxes on the state’s highest earners.
The ballot measure – which was an advisory question – won 60% of support, according to the Associated Press. About 90% of the votes have been counted.
“The vote is a gigantic step in the right direction,” said former Governor Pat Quinn, a supporter of the measure.
While the proposal has no legal effect, the vote opens the door to a new debate over ramping up taxes on the rich even as Illinois and Chicago, its biggest city, contend with population declines and a string of departures by major companies and wealthy residents. In 2020, voters rejected a separate measure backed by Governor JB Pritzker to replace the state’s flat tax on incomes with a graduated system that would raise rates on higher-earners.
The Pritzker plan drew staunch opposition from billionaire financier Ken Griffin, who donated about $50 million to help torpedo the initiative. Griffin then left Chicago for Miami in 2022, moving the headquarters of his Citadel empire there as well. Companies from Caterpillar Inc. to Boeing Co. have also departed amid rising concerns over public safety, regulation and taxes.
This year’s referendum asked voters if the Illinois Constitution should be amended to create the additional tax on income over $1 million. It called for using the proceeds to ease the state’s notoriously high property levies.