What Congress’s 2026 Agenda Means for Your Healthcare and Taxes

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On January 1, 2026, millions of Americans opened their health insurance renewal notices to discover their monthly premiums had more than doubled. A family in Ohio paying $350 per month in 2025 now faced a $780 bill. A self-employed consultant in Arizona saw her premium jump from $287 to $615. Congress had allowed government help paying for health insurance to expire, and roughly 24 million people immediately felt the impact in their bank accounts.

This affordability crisis sits at the center of Congress’s 2026 agenda. The tax code changed substantially when President Trump signed the One Big Beautiful Bill Act on July 4, 2025. Surface transportation funding expires September 30, threatening hundreds of billions in infrastructure projects. Medicaid work requirements take effect in 2027, and states are scrambling to implement them. All of this unfolds against the backdrop of November midterm elections that could flip control of Congress and end the Republican legislative agenda entirely.

The next ten months will determine how much you pay in taxes, whether you can afford coverage, and whether your state gets federal money to fix crumbling highways. Some of these changes are already law. Others remain dependent on whether Congress can pass a second special budget bill that needs fewer votes to pass before the election calendar makes ambitious legislation impossible.

Tax Changes in 2026

The standard deduction increased to $32,200 for married couples filing jointly in 2026, up from $31,500 in 2025. Single filers get $16,100, and heads of household get $24,150. These increases are permanent, indexed for inflation going forward.

For most taxpayers who claim the standard deduction—about 90 percent—this represents the foundation of their tax calculation. Your taxable income starts after subtracting this amount from your gross income. A married couple earning $85,000 pays federal income tax on roughly $52,800 after the standard deduction.

The child tax credit increased to $2,200 per qualifying child for 2025 and 2026, up from the $2,000 that existed under prior law. Three kids qualify for up to $6,600 in credits, though the benefit phases out for higher earners—single filers making over $200,000 and married couples over $400,000 start losing the credit. The refundable portion is $1,700, meaning those with little or no tax liability can still receive up to that amount per child as a refund.

The state and local tax deduction—SALT—had been capped at $10,000 since 2017. The new law raised that cap to $40,000 through 2029, but only for taxpayers earning under $500,000. Above that threshold, the benefit phases out by thirty percent for every dollar of income. A married couple in New Jersey paying $35,000 in combined state income taxes and property taxes can now deduct all of it against federal income, saving $8,400 in federal taxes if in the twenty-four percent bracket.

This benefit disappears after 2029. The cap reverts to $10,000, which means anyone doing tax planning needs to understand they’re working with a temporary advantage. If you’re considering whether to prepay property taxes or accelerate state tax payments, the four-year window matters.

Taxpayers age 65 and older can claim a $6,000 deduction through 2028, separate from and in addition to the standard deduction. A single filer age 70 can exclude $22,100 from income—$16,100 from the standard deduction plus $6,000 from the senior deduction. For married couples where both spouses qualify, that’s $12,000 in additional deductions.

This senior deduction phases out starting at $75,000 of your total income for single filers and $150,000 for married couples. It declines by six cents for every dollar above those thresholds and disappears entirely at $175,000 (single) or $250,000 (married). A retired couple with $100,000 in income gets the full benefit. A couple with $200,000 gets nothing.

The federal estate tax exemption increased from roughly $13.99 million in 2025 to $15 million in 2026, and that increase is permanent. Married couples can transfer up to $30 million without triggering federal estate taxes. For the vast majority, this is irrelevant—fewer than 0.1 percent of estates owe federal estate tax. But for those with substantial assets, the permanent increase removes a source of planning uncertainty.

The seven income tax brackets remain unchanged: ten, twelve, twenty-two, twenty-four, thirty-two, thirty-five, and thirty-seven percent. These are permanent and indexed for inflation. A married couple has their first $24,800 taxed at ten percent, the next chunk up to $96,950 taxed at twelve percent, and so on. The progressive structure means the actual percentage of your income you pay in taxes is always lower than the tax rate on your last dollar of income.

Why Premiums Doubled

The government help paying for health insurance that made Affordable Care Act coverage affordable expired on December 31, 2025. The average premium increase was 114 percent—$1,016 per person annually. For four people, that could mean an additional $4,000 or more in annual premiums.

Coverage became unaffordable for millions of people overnight. A 55-year-old earning $45,000 who was paying $150 per month with government help now faces a $450 monthly premium. Three people earning $70,000 that were paying $280 per month now owe $650.

Democrats positioned this expiration as a political weapon. Healthcare affordability now rivals food and utility costs as an economic concern for many households, and the increases make the issue concrete in a way abstract policy debates never could.

Republicans have proposed various alternatives. Senator Rick Scott suggested replacing marketplace help with “Trump Health Freedom Accounts” that could be used for any type of coverage, including short-term plans that don’t meet ACA coverage requirements. Senator Bill Cassidy proposed converting the value into Savings Account contributions for people enrolled in bronze-level plans. Other Republicans have suggested extending the government help for limited periods—one year, two years—to buy time for a more permanent solution.

None of these proposals have passed. As of early 2026, there is no legislative fix on the horizon. The help is gone, premiums have increased, and millions of people are making difficult choices about whether they can afford to maintain coverage.

Some people will drop coverage entirely. Others will switch to cheaper bronze or catastrophic plans with higher deductibles. Still others will pay the higher premiums, cutting other expenses to make it work. The Congressional Budget Office estimates that several million people will lose coverage as a direct result of the expiration.

Health Savings Account Expansion

Congress expanded Health Savings Accounts in ways that could benefit millions if they know about the changes and understand how to use them.

HSAs offer three different ways the money saves you taxes: contributions are made with pre-tax dollars (reducing current taxable income), the money grows tax-free (like a Roth IRA), and withdrawals for qualified medical expenses are untaxed. The problem was that eligibility was restricted to people enrolled in plans with higher out-of-pocket costs before insurance kicks in.

The 2025 legislation changed that. Bronze and catastrophic plans available through exchanges are now automatically HSA-eligible, regardless of whether they meet the traditional definition. This means millions of people who couldn’t contribute to HSAs before can now do so simply by enrolling in these lower-cost plans.

The contribution limits for 2026 are $4,400 for individuals with self-only coverage and $8,750 for households. People age 55 and older can contribute an additional $1,000 as a catch-up contribution. To be eligible, you must be enrolled in an HSA-qualified plan with a minimum deductible of $1,700 (self-only) or $3,400 (household), though the maximum out-of-pocket expenses can’t exceed $8,500 (self-only) or $17,000 (household).

If you’re relatively healthy and primarily want protection against catastrophic illness or injury, enrolling in a bronze plan with a lower monthly cost and contributing the savings to an HSA could leave you financially better off than paying more each month for a silver plan with lower deductibles. Those paying $350 per month for a bronze plan versus $500 for a silver plan save $1,800 annually. Contributing that $1,800 to an HSA means you’ve built a tax-free reserve for out-of-pocket medical expenses.

Over multiple years, this adds up. There’s no requirement to spend HSA money in any particular year—unused balances roll over indefinitely. Contributing $5,000 annually for five years accumulates $25,000 (plus investment returns if the HSA is invested rather than held in cash).

The legislation also made permanent the ability to use HSAs for telehealth services before meeting a plan’s deductible. Starting in 2026, people enrolled in direct primary care arrangements—monthly-fee-based primary care without billing—can contribute to HSAs and use HSA funds tax-free to pay DPC membership fees.

If you have chronic conditions requiring frequent medical care, a bronze plan with a $6,000 deductible might cost you more in out-of-pocket expenses than you save in premiums. But for younger, healthier people, or those who use medical care infrequently, the HSA expansion represents an opportunity to reduce both current taxes and future costs.

A Second Budget Bill May Pass in 2026

House Speaker Mike Johnson has indicated he wants to pass a second special budget bill in 2026. The second bill would involve four to five committees rather than the dozen that worked on the first package. House Republicans have compiled a list of roughly forty provisions that didn’t make it into the first bill due to Senate procedural obstacles or other reasons.

Budget reconciliation is the special legislative process that allows Congress to pass tax and spending changes with only a simple majority in the Senate, avoiding the sixty-vote threshold normally required to overcome unlimited debate. To use reconciliation, Congress must first adopt a budget resolution containing instructions telling committees what to change. The Senate can then consider the resulting bill with only fifty votes (plus the Vice President as tiebreaker if needed) and limited debate.

A Senate rule prevents sneaking non-budget items into budget bills. This rule prevents senators from including provisions that are unrelated to changing federal spending or taxes. Provisions that don’t change spending or revenues, or where any fiscal impact is merely incidental to non-budgetary effects, can be removed through a point of order. This has historically limited reconciliation to tax and spending matters with direct fiscal impacts.

For a second bill, the most likely focus is on medical care. Major savings are available through reforms, and the question of what to do about expired ACA help remains unresolved. If Republicans conclude they must address affordability, they would likely use a second bill to advance HSA expansion, Medicare reforms, or modifications to ACA help.

The timeline is brutal. Congress needs to pass a new budget resolution establishing instructions, which takes several weeks even with full cooperation. Government funding bills and appropriations will consume attention in fall 2025 and spring 2026. Senate Republicans have expressed fatigue about another reconciliation effort—Senate Majority Leader John Thune and other senators are concerned about another all-consuming legislative process that dominates the calendar for months.

If Democrats gain control of the House in November 2026, any further bills become impossible without Democratic support. This reality makes 2026 a critical year for Republicans to achieve legislative goals while they still control both chambers. If a second bill hasn’t passed by late summer, it probably won’t pass at all.

Surface Transportation Funding Expires September 30

Federal surface transportation programs expire on September 30, 2026. Without passage of a new reauthorization, the legal authority for federal highway, transit, and rail funding disappears. States receive approximately $50 billion annually in highway formula funding, money that supports the vast majority of state transportation budgets and enables infrastructure maintenance and improvement projects.

The Highway Trust Fund is spending more money than it takes in, with no way to fix it. The fund is financed primarily through federal fuel taxes—18.3 cents per gallon on gasoline and 24.3 cents per gallon on diesel. These rates haven’t increased since 1993. Meanwhile, construction costs have increased substantially, vehicles have become more fuel-efficient (reducing tax revenue per mile driven), and federal spending on transportation has expanded beyond what fuel tax revenue supports.

Since 2008, Congress has transferred more than $275 billion from the general federal budget to prop up the Highway Trust Fund. Even if Congress eliminated all federal transit funding, the Highway Trust Fund would still become insolvent by 2028. The fundamental problem is that Congress is spending roughly $20 billion more annually on highway programs alone than the gas tax generates.

This leaves three options. Congress can continue deficit-spending to maintain current funding levels, admitting the Highway Trust Fund is a fiction and transportation is another general budget item. Congress can raise fuel taxes or impose other vehicle-related fees, such as a vehicle-miles-traveled tax. Or Congress can reduce spending to match available revenues, which would mean substantially less federal support for state transportation projects.

The Trump administration’s proposal to eliminate federal transit funding has encountered opposition even from Republican committee leadership. House Transportation and Infrastructure Committee Chair Sam Graves and Ranking Member Rick Larsen both rejected the proposal as “harebrained,” noting that gas tax dollars have been devoted to transit since 1982 as part of a bipartisan compromise approved by President Ronald Reagan. Eliminating transit funding would deprive millions of transit services while not solving the Highway Trust Fund’s underlying fiscal problems.

A bipartisan reauthorization is viewed as likely to emerge from negotiations, particularly because committee leadership on both sides wants to pass a bill before the midterm elections. Chair Graves is in his final term as chair, which creates motivation to complete a major transportation bill as a legacy accomplishment. Without a solution to long-term funding, the next reauthorization will simply kick the insolvency problem down the road another five years.

Medicaid Work Requirements Begin January 1, 2027

Beginning January 1, 2027, adults ages 19 through 64 covered through Medicaid expansion or special permission to try different rules must engage in work or other qualifying activities to maintain eligibility. Qualifying activities include employment of at least 80 hours per month, participation in work programs or education, community service, or having monthly income equivalent to 80 hours at federal minimum wage—currently $580 per month.

States have substantial discretion in implementing these requirements and can exempt certain populations: pregnant individuals, caregivers for dependent children, full-time students, and individuals with disabilities or serious medical conditions. The work requirements are mandatory and cannot be waived through state waivers, though states can request extensions until December 31, 2028 if they demonstrate good-faith implementation efforts.

The work requirements represent a substantial philosophical change in Medicaid. Historically, eligibility has been based primarily on income and specific groups like elderly or disabled people—without explicit work conditions. While some states have operated limited work requirement programs through waiver authority, the federal mandate beginning in 2027 is unprecedented in scope.

The practical impact depends heavily on how states implement the requirements. Red states may seek to implement the toughest possible requirements to reduce enrollment and spending. Blue states are reportedly looking for flexibility in implementation rules to minimize disruption. States must establish systems for tracking and verifying work activities, which requires administrative infrastructure that doesn’t currently exist in many states.

The risk is that people who are working but fail to properly document their activities lose coverage due to administrative issues rather than noncompliance. This happened in Arkansas when the state implemented work requirements in 2018—thousands of people lost coverage, many of whom were working but didn’t understand the reporting requirements or couldn’t use the online-only reporting system.

What Congress Faces Next

Congress returns to Washington facing government funding deadlines, the affordability crisis, transportation reauthorization, and the looming midterm elections. Government funding expires January 30, 2026, requiring either another continuing resolution or twelve separate appropriations bills. The specific debate over help, government reorganization proposals from the Trump administration, and other contentious issues will likely characterize these funding negotiations.

Democrats and Republicans have fundamentally different views on whether government help for ACA premiums should be extended, how much to raise taxes on wealthy individuals and businesses, what immigration policies should be, and numerous other issues. Bipartisan cooperation on major legislation is limited to areas where both parties see clear political benefit—surface transportation reauthorization is one such area, particularly if both parties view passing legislation as beneficial before the midterms.

The feasibility of passing major legislation depends on maintaining internal party unity. In the first bill, the Trump administration successfully negotiated with Republican senators and representatives who had concerns about specific provisions, making concessions where necessary to secure passage. In a second bill, similar negotiations would be necessary, and even modest defections could prevent passage if the margin is narrow.

The midterm elections on November 3, 2026 will determine whether Republicans maintain control of both chambers. Midterm elections are historically challenging for the party controlling the presidency. If Democrats gain control of the House, any further bills become impossible without Democratic support, fundamentally shifting the legislative dynamics for the remainder of Trump’s term.

How This Affects Your Household

A single individual earning $60,000 annually with no dependents claims the $16,100 standard deduction for 2026, reducing taxable income to roughly $43,900. They fall into the twenty-two percent tax bracket, though the actual percentage of their income they pay in taxes is far lower because only income above certain thresholds is taxed at that rate. If their employer withholds federal tax from paychecks based on outdated information, they might overpay, resulting in a refund when they file.

A married couple earning $95,000 combined with two children has a 2026 standard deduction of $32,200 and can claim a $2,200 child tax credit for each child—potentially $4,400 in credits to reduce their tax liability. If their tax liability before credits is $3,000, the credits reduce this to zero, with $1,400 potentially being refunded through the refundable child tax credit. This household benefits substantially from the child tax credit provisions.

A married couple earning $180,000 in California with a home and property taxes sees the SALT deduction change become significant. Prior to 2025, they could deduct a maximum of $10,000 in state and local taxes. Under the new law, they can deduct up to $40,000 through 2029. If they pay $35,000 in combined state income taxes and property taxes, they can deduct all of this against federal income, potentially reducing their federal tax liability by $8,400 (assuming a twenty-four percent tax bracket). This benefit ends after 2029, when the cap reverts to $10,000.

A 70-year-old married couple with $100,000 in income after certain adjustments gets meaningful relief from the senior deduction. Both spouses qualify for the $6,000 senior deduction, providing $12,000 in exclusions from income. Their standard deduction is $32,200 for married couples filing jointly. Combined with the new senior deduction of $12,000, they have $44,200 in total deductions if they don’t itemize.

Those considering coverage options face a different calculation now that HSA expansion has passed. If they can enroll in a bronze marketplace plan with a lower monthly cost ($350 per month versus $500 for a silver plan) but higher deductible ($3,000 versus $500), they can now contribute up to $8,750 to an HSA to cover the higher out-of-pocket expenses. Over several years, if they don’t use substantial medical care, the account could accumulate $25,000 or more, providing a significant safety net.

Steps to Take Now

Check your paycheck withholding. If your employer is withholding federal income tax from your paychecks, the amount withheld is based on information you provided on Form W-4. If your life circumstances have changed—marriage, children, job loss, spouse started working—your withholding may be incorrect. The IRS provides a withholding estimator tool at IRS.gov/W4App that helps calculate the correct amount to withhold. Using this tool and updating your W-4 if needed can prevent both overpayment (and the wait for a refund) and underpayment (and owing money at tax time).

Review your options during open enrollment. If currently uninsured, understand that government help for premiums has expired, meaning marketplace plans cost substantially more than they might have in prior years. But marketplace coverage may still be the most affordable option available, particularly for individuals with conditions who cannot obtain coverage through short-term plans. You may qualify for Medicaid depending on your income and state—some states have expanded Medicaid to cover adults with income up to 138 percent of the federal poverty level.

For those currently enrolled in marketplace plans, assess whether switching to a bronze or catastrophic plan combined with HSA contributions makes sense. If you’re relatively healthy and primarily want protection against catastrophic illness or injury, a bronze or catastrophic plan could substantially lower your monthly cost. The HSA contribution could then cover most out-of-pocket expenses, and unused contributions accumulate for future years. This strategy isn’t optimal for individuals with chronic conditions requiring frequent medical care, but it can be highly effective for younger, healthier individuals.

If you have significant assets or estate planning concerns, the expansion of the federal estate tax exemption to $15 million in 2026 provides a valuable planning opportunity. Individuals who expect to leave estates exceeding the exemption should consider lifetime gifting strategies and trust structures to minimize federal estate taxes. Because the exemption increase is permanent, the urgency for immediate action is less severe than under prior law, when exemptions were set to decline substantially.

Track transportation funding if you live in an area with planned transit expansion or highway improvement projects. If Congress fails to pass surface transportation reauthorization before September 30, 2026, the federal funding basis for new projects would disappear, potentially delaying infrastructure investments indefinitely.

The Legislative Year Ahead

The 2026 legislative agenda addresses real problems affecting millions. Affordability is a genuine crisis—people are making difficult choices about whether they can afford to maintain coverage. Tax policy directly impacts household budgets and determines how much disposable income people have for other expenses. Deteriorating transportation infrastructure affects everyone’s daily commute and the cost of goods transported on highways.

The political dynamics of an election year mean that much of what Congress does will be influenced by electoral considerations. Democrats see affordability as a political weapon against Republicans heading into the midterms. Republicans need legislative accomplishments to demonstrate they can govern effectively. Both parties are positioning themselves for November, and policy decisions are being made with one eye on the election calendar.

The question of whether a second bill passes depends on factors that have nothing to do with policy merits: whether Senate Republicans are willing to endure another months-long legislative process, whether House Republicans can maintain unity despite narrow margins, whether the Trump administration can negotiate compromises that satisfy both moderates and conservatives, and whether the election calendar allows sufficient time for the legislative process to play out.

For individuals working through these changes, the most important steps are understanding how specific provisions affect your situation, taking proactive steps like updating tax withholding or evaluating options, and remaining engaged with the legislative process. You can find your members of Congress and contact them directly through Congress.gov. Communicating with elected representatives—particularly during critical votes—does influence legislative outcomes, as offices track constituent communications and report them to decision-makers.

The decisions made in the next ten months will shape coverage, tax obligations, and infrastructure investment for years to come. Whether those decisions benefit everyday people or primarily serve political and institutional interests depends on who’s paying attention and who’s making their voice heard.

Our articles make government information more accessible. Please consult a qualified professional for financial, legal, or health advice specific to your circumstances.