The Consolidated Appropriations Act, 2026, released January 20 represents the bipartisan, bicameral conferenced legislation for the Defense, Homeland Security, Labor-Health and Human Services-Education, and Transportation-Housing and Urban Development appropriations bills. The package, which is the final component for Congress to complete the 12-bill annual appropriations process, includes health extenders and extension of two expired trade programs, the African Growth and Opportunity Act and the Haiti Economic Lift Program, through 2026. Health provisions address oversight of pharmacy benefit management services and other issues.

The additions of the trade and PBM provisions were described in press articles as remarkable achievements because of the difficulty of members agreeing to the underlying spending bills. Punchbowl News reported that the House Ways and Means and Senate Finance committees tried to add US-Taiwan tax relief legislation but were rebuffed by congressional leaders, possibly because of the fragility of the final spending deal.

The omission marks another chapter in the widely supported US-Taiwan tax legislation that was embedded in the 2024 House-passed tax bill (H.R. 7024) that wasn't passed by the Senate. The US-Taiwan bill was approved by the House (H.R. 33) at the start of 2025 but couldn't be included in the budget reconciliation bill because the process requires proposals to have a measurable revenue impact, which the Taiwan package does not have. Standalone Senate passage of the US-Taiwan bill likely can't happen without devoting significant floor time because of objections of Senator Rand Paul (R-KY) to tax treaties generally.

The House is likely to vote on the Consolidated Appropriations package on Thursday prior to a recess next week. The Senate will return to session on Monday with five days to consider the spending bills before the January 30 deadline for government funding reflecting the remaining appropriations bills. The House has approved the other eight appropriations bills. The Senate must additionally approve the Financial Services and General Government and National Security-State Department bill, with a House rule expected to facilitate Senate consideration of that bill combined with the new four-bill package.

The Consolidated Appropriations Act will be at the Rules Committee today and conservative members say they are reviewing the 1,059-page bill for areas of concern, especially regarding earmarks. ("Earmark" refers to congressionally directed spending items, a practice that was once the subject of a moratorium in Congress but reembraced in recent years.)

Health care — Tomorrow (Thursday, January 22) there are two House hearings featuring CEOs of several health insurance companies:

• House Energy and Commerce Health Subcommittee hearing on "Lowering Health Care Costs for All Americans: An Examination of Health Insurance Affordability" at 9:45 a.m. ET
• House Ways and Means Committee hearing "with Health Insurance CEOs." at 2:30 p.m. ET

Elections — Press stories continue to check in on the factors that could decide which party controls the House and the Senate following the midterm elections.

A Washington Post story from the weekend, "Democrats see narrow path to retaking the Senate. Watch these states," said of the prospect that the party could go from the minority in the current 53-47 chamber to the party in power, "While it remains a steep climb, a string of recruiting wins, persistent voter concerns about the cost of living and a backlash to much of the Trump administration's agenda have moved Democrats closer to what would be a seismic upset … "

It has been widely observed that putting Democrats in control would likely require them to:

• hold toss-up rated seats in Michigan, where Gary Peters (D-MI) is retiring, and Georgia, where Jon Ossoff (D-GA) is running for reelection
• flip the seats held by long-time incumbent Susan Collins (R-ME) and being vacated by Thom Tillis (R-NC)
• win at least two more states that President Trump won in 2024, such as Alaska, Iowa, Ohio, and Texas

The Post story noted that, "All but two of the Republican-held seats they are targeting are in states that voted for Trump in 2024 by double-digit margins," referencing Maine, which is the only 2024 Harris-won with a Republican senator up for re-election, and North Carolina, where President Trump won by three percentage points.

A January 19 New York Times story, "Who Will Win the House? Three Maps Tell a Tale of the 2026 Midterms," noted that "36 districts are the most competitive in the battle for House control" and half of those are true toss-ups, with the other half leaning to either party (14 leaning Democrat, 4 leaning Republican). "The magic number for a House majority is 218 seats," the story said. "To get there, Democrats would need to hold all of their solid and likely seats, sweep the 13 seats that lean toward their party and win at least seven of the 18 tossups, according to The Cook Political Report."

Several states are pursuing redistricting efforts outside of the decennial US census-based effort to adjust maps for member districts. On January 20, the Maryland redistricting commission recommended a map that would redraw the district of Rep. Andy Harris (R-MD). Governor Wes Moore (D) said in an MS NOW interview January 20 that if Republican leaders are "picking and choosing which states go through this process, we in the State of Maryland said, 'Well, if Texas and if North Carolina and if Florida and Ohio, if they're going to do this, then you know what? The State of Maryland should have a process to determine whether or not we have maps that represent our people as well.'"

Global tax — EY's detailed review of the OECD's Side-by-Side Package on Pillar Two Global Minimum Tax is now available here.

Friday, January 23 at 12:00 p.m. ET is the EY Center for Tax Policy monthly update (formerly known as Tax in a time of transition). Register.