Key Takeaways
- Election results can trigger significant market volatility, but short-term reactions don’t necessarily indicate long-term trends.
- Election outcomes do not automatically change tax laws. New legislation is required before federal tax rules change.
- The tax rules currently in effect remain the starting point for 2026 planning, although Congress could still enact changes.
- Individuals and business owners should continue year-end tax planning rather than waiting for political uncertainty to settle.
- Staying informed and working with your CPA and financial advisor can help you make decisions based on your circumstances rather than headlines.
Election season is over, and whether you’re pleased with the results, disappointed, or somewhere in between, you may be wondering how your finances may be impacted.
It’s a reasonable question. Elections bring discussions about taxes, economic policy, business regulations, and government spending, often accompanied by predictions about what those changes could mean for individuals and businesses. But while elections can create uncertainty, they don’t necessarily require immediate changes to your financial plans. In fact, one of the most useful things you can do right now is separate what has actually changed from what might change in the future.
Election Results Move Markets, but the First Reaction Rarely Tells the Whole Story
Financial markets don’t like uncertainty, and elections create plenty of it. Investors react not only to election results but also to expectations about future policies, interest rates, economic growth, and business conditions.
The days immediately following the November 3 midterm elections offered a striking example. After an initial decline in stock futures, major U.S. stock indexes rallied on November 4, with the S&P 500 gaining 1.6%, the Dow Jones Industrial Average rising 3%, and the Nasdaq climbing 1.4%. Just one day later, markets reversed direction sharply, led by a selloff in technology and AI-related stocks as investors reconsidered the potential implications of the election results. And given how quickly markets can shift, the picture may look entirely different by the time you’re reading this.
While the size of these swings may be unsettling, market fluctuations around elections are nothing new. Research from Fidelity found that the S&P 500 gained value in the 12 months following 95% of midterm elections since 1938. That doesn’t mean markets always recover quickly or that future performance is guaranteed. Economic conditions, corporate earnings, inflation, and other factors continue to influence results regardless of which party controls Congress.
The lesson isn’t to ignore market movements. It’s to recognize that the market’s immediate reaction to an election may change dramatically within days, and short-term fluctuations don’t necessarily warrant changes to long-term financial plans. If market volatility has you concerned about your investments, talk with your financial advisor about your individual circumstances and goals.
What About Taxes? Will Anything Change for 2026?
This is another question we’re hearing, and the distinction is important: Election results do not automatically change tax laws. Changes to federal tax law generally require legislation, and any new law must specify when its provisions take effect.
For individuals and businesses preparing their 2026 tax returns, the tax rules already in effect remain the starting point. The election itself hasn’t changed your tax brackets, deductions, credits, or filing requirements.
That doesn’t mean tax legislation is impossible before the end of the year. Congress can enact changes with different effective dates, and some tax legislation has applied retroactively. But potential future legislation shouldn’t be confused with rules that have already become law. It’s also worth remembering that several tax provisions affecting 2026 were established before this election, including changes enacted in 2025 and annual inflation adjustments.
Rather than speculating about what Congress might do next, now is a good time to review the rules that currently apply to your situation.
Year-End Planning Shouldn’t Wait for Political Certainty
Regardless of the election results, the calendar is moving toward December 31, and many important financial and tax-planning decisions still need attention.
For business owners, that may mean reviewing projected income, evaluating planned equipment purchases, considering the timing of deductible expenses, or discussing retirement plan contributions.
Individuals may want to review charitable giving, retirement contributions, estimated tax payments, and any significant changes in income or financial circumstances.
The right decisions will depend on your situation, but the important point is that these conversations shouldn’t be postponed simply because the political landscape is changing. In some cases, uncertainty makes planning even more valuable. Understanding where you stand today gives you a stronger foundation for evaluating future changes if and when they become law.
Change Is Constant. Good Planning Accounts for It.
Elections are significant events, and government policies can have real financial consequences. But they’re only one of many factors influencing the economy and your financial future.
Interest rates change. Businesses grow and contract. Tax laws evolve. Personal circumstances shift. None of those developments can be predicted with complete certainty. That’s why financial and tax planning should be an ongoing process rather than a reaction to the latest headline.
At Bailey Scarano, we encourage clients to stay informed, ask questions, and focus on the decisions within their control. If you’re concerned about how potential tax changes could affect you or your business, we’re happy to discuss your situation and help you prepare.
The election may be over, but thoughtful planning is always in season.