What Are Midterm Elections, and How Do Elections Affect Small Businesses? (Nonpartisan Guide)

Updated October 2026

Our original version of this page explained what midterm elections are. This updated version keeps that explanation, then looks at a question many business owners ask: how do elections and policy changes affect small businesses, and how can you prepare without taking sides? This guide is nonpartisan; it doesn’t favor any party or candidate.

What are midterm elections?

Midterm elections take place in the middle of a president’s four-year term, two years after a presidential election. They’re held on the Tuesday after the first Monday in November in even-numbered years. The 2026 midterm elections are on Tuesday, November 3, 2026.

What’s on the ballot

• All 435 seats in the US House of Representatives, which have two-year terms.
• About one-third of the 100 US Senate seats, since senators serve staggered six-year terms.
• Many governors’ races, as most states elect governors in midterm years.
• State legislatures, which make laws on taxes, licensing, minimum wages and regulations.
• Local offices: mayors, county officials, city councils and school boards.
• Ballot measures in many states and cities, where voters decide policies directly.

Midterm results can change which party controls Congress and many state governments, which affects what laws are likely to pass in the following years.

A little history

Midterm elections have been part of the US system since the Constitution set two-year terms for House members and staggered six-year terms for senators. Historically, turnout in midterms has usually been lower than in presidential election years, even though midterms decide control of Congress, many state governments and countless local offices. For business owners, that means local and state outcomes, which often affect day-to-day business rules most directly, can be decided by relatively small numbers of voters.

Why state and local races matter most for many businesses

Federal policy gets the headlines, but many rules small businesses deal with every day are set closer to home:

• State legislatures decide state income and sales taxes, minimum wages, licensing requirements and employment rules.
• Governors sign or veto laws and oversee state agencies that issue permits and enforce regulations.
• Counties and cities set property taxes, local sales taxes, zoning, business license fees and permit processes.
• School boards influence the local workforce and community quality that affect hiring.

Paying attention to these races and measures can help you anticipate changes that matter to your business.

An election-season checklist for business owners

Staying informed without the noise

Election coverage can be overwhelming and polarizing. To stay informed efficiently:

• Use nonpartisan sources such as official state election websites, voter guides from election offices and industry associations.
• Focus on specific policies, not campaign rhetoric.
• Read effective dates: many new laws take effect months after passage.
• Ask your advisors: accountants and attorneys often summarize changes relevant to clients.

How elections can affect small businesses

Election outcomes can influence the policies businesses operate under. Areas often affected include:

Ballot measures can have especially direct effects; for example, voters in various states have decided on minimum wage increases and paid sick leave requirements.

Planning for policy uncertainty

You can’t control election outcomes, but you can prepare:

1. Follow issues that affect your industry, through trade associations and nonpartisan news sources.
2. Know what’s on your local ballot, including measures affecting taxes, wages or licensing.
3. Run scenarios: how would a higher minimum wage, new tax or tariff affect your costs and prices?
4. Keep a cash reserve to handle changes or slow periods. See our break-even calculator.
5. Talk to your accountant about tax changes, especially near year-end.
6. Avoid overreacting: many proposals take time to become law, and implementation dates are often announced in advance.

Consumer behavior around elections

Some businesses notice customers become more cautious during uncertain periods, while others see little change. Advertising costs can also rise during election season, especially for local TV and some digital channels, as campaigns compete for the same audiences. If you advertise heavily, consider adjusting timing or channels around election weeks.

Employer rules: voting and politics at work

Time off to vote

Many states require employers to give employees time off to vote, and some require it to be paid. Rules differ on how much time, whether notice is required and whether it applies if polls are open long enough outside working hours. Check your state’s rules before Election Day.

Politics in the workplace

• Don’t pressure employees about how to vote; coercing or threatening employees over their votes can violate federal and state laws.
• Know state protections: some states protect employees’ political activities or affiliations.
• Federal labor law protects employees’ rights to discuss working conditions, which can include some political topics related to work.
• Set respectful conduct policies that apply consistently, without singling out particular views.

Encouraging civic participation

Many businesses encourage employees to vote without endorsing candidates: sharing nonpartisan voter information, offering flexible schedules on Election Day, and reminding staff of registration deadlines.

Elections and hiring

Election seasons can also affect hiring and staffing. Some employees serve as poll workers, which many states protect with leave rules; campaign seasons create temporary jobs in printing, events, sign-making and catering; and policy changes after elections, such as new wage or leave laws, may require updating job postings, handbooks and payroll settings. Build a short post-election review into your calendar so changes don’t catch you by surprise.

Businesses that benefit from election season

Some small businesses see increased demand during campaigns, including printers, sign makers, caterers, event venues, photographers, video producers and digital marketing agencies. If you serve campaigns, set clear payment terms, follow any disclosure rules for political advertising, and stay professional with clients across the political spectrum.

Should your business take political positions?

That’s a personal decision for each owner. Consider:

• Your customers and employees may hold a wide range of views.
• Taking public positions can strengthen loyalty with some customers and alienate others.
• Issues directly affecting your business, such as local zoning or licensing, are areas where many owners choose to speak up through trade groups or public comment.
• Business political contributions have legal limits and rules; check federal and state campaign finance laws before giving.

Getting involved locally

Local decisions often affect small businesses most directly. Ways to participate without partisanship:

• Attend city council or planning meetings on issues affecting your business.
• Join your chamber of commerce or industry association, which often track legislation.
• Submit public comments on proposed rules.
• Meet your local representatives to explain how policies affect your business.

Example: a café prepares for a wage ballot measure

A café owner learns a local ballot measure would raise the minimum wage over three years. Rather than waiting, she models the cost under different scenarios, reviews her menu pricing, identifies efficiencies in scheduling, and talks with her accountant. Whatever the outcome, she’s ready with a plan.

This example is illustrative.

Frequently asked questions

When are the 2026 midterm elections? Tuesday, November 3, 2026. Many states also offer early voting and mail ballots before Election Day; check your state election office for details.

Do midterm elections affect the stock market or the economy? Markets sometimes react to uncertainty around elections, but long-term business conditions depend on many factors beyond any single election.

Do employers have to give time off to vote? Many states require it, and some require paid time; rules vary, so check your state’s law.

Can I talk about politics with my employees? You can share nonpartisan information, but avoid pressuring employees on how to vote, and follow state laws protecting political activity.

Next steps

Read our guides to small business taxes and bookkeeping, hiring your first employee and how to finance business growth.

This nonpartisan guide is general information, not legal advice. Election rules and employer obligations vary by state.

Sources

1. USA.gov, Voting and elections
2. Federal Election Commission
3. US Department of Labor, State laws on voting leave

Last reviewed October 20, 2026. Startup costs are estimates; check local prices, licensing and tax rules before you commit money.