Capitol Insights: FY 2026 Funding Deadline Looms Amid Gridlock
Capitol Insights provides weekly coverage of the latest policy activity in Washington with direct implications for the Work Opportunity Tax Credit (WOTC). Our goal is to summarize what matters most for employers.
Last Week’s Update
In last week’s Insight, we highlighted bipartisan proposals to expand WOTC eligibility for groups including military spouses and student veterans. Read Week 2 here .
At a Glance:
- Congress faces an October 1 deadline to fund the government for FY 2026, with a shutdown still possible
- A short-term continuing resolution (CR) through late November remains the most likely outcome
- Senate negotiations stalled, with Democrats demanding repeal of Medicaid cuts and extension of ACA premium supports
- The President canceled a planned meeting with Democratic leaders, adding uncertainty
- End-of-year extenders package under discussion could include WOTC as a key component
Congress is facing an October 1 deadline to fund the government for fiscal year 2026. With lawmakers out of session this week and no agreement in place, a temporary government shutdown is actively being discussed to begin on the first day of the new fiscal year.
While a continuing resolution (CR) to extend funding through late November remains the most likely outcome, negotiations are currently stalled. The House passed a funding plan with a simple Republican majority, but the Senate requires 60 votes to advance any measure. With Republicans holding only 53 seats, Democratic support is essential.
Democratic Priorities
Democrats are calling for:
- Repeal of Medicaid cuts enacted in the Budget Reconciliation Act of 2025
- Extension of enhanced ACA premium supports
These demands have so far been met with resistance from Republicans, though they may be open to compromise later in the year.
Uncertainty in Negotiations
Adding to the uncertainty, the President agreed to meet with Democratic leaders on September 23, 2025 to discuss the CR but rescinded the meeting. The situation remains fluid and could change quickly.
Potential Year-End Extenders Package
Meanwhile, there is growing bipartisan interest in an end-of-year extenders package focused on tax and healthcare issues. Encouragingly, the Work Opportunity Tax Credit (WOTC) is being discussed as a key component of any tax initiative.
Outlook
Negotiations remain unsettled, and the risk of a shutdown cannot be ruled out. However, discussions around an end-of-year package are a positive signal for WOTC’s future. We’ll continue to monitor developments and share updates as the situation evolves.
