Partial Government Shutdown to Ends, But Another Looms for Feb. 13

The second federal government shutdown in less than two and a half months has ended with the president signing the appropriation bills passed by the U.S. House on Tuesday, Feb. 3. This partial shutdown lasted only a few days and most likely had minimum impact, as compared with the record 43-day full shutdown from October 1 to Nov. 12, 2025.

In this go-round, five appropriation bills (six of the 12 had previously passed and been signed into law) and a two-week continuing resolution to fund Homeland Security were passed. However, Congress has only until Feb. 13 to negotiate a long-term deal that will fund Homeland Security for the entire fiscal year. If that deadline is not met, a partial shutdown will be implemented that impacts all non-essential operations of the DHS, while critical operations will continue to be funded under the One Big Beautiful Bill Act. The close vote of 217-214 in the House reflected concerns with Immigration and Customs Enforcement (ICE) that some lawmakers want addressed.

Here are the appropriation bills that have been signed into law, including three from November 2025 that helped end that history-making shutdown: Military Construction and Veterans Affairs, Legislative Branch, and Agriculture, which includes the FDA and the oversight of SNAP benefits.

On Jan. 23, 2026, the president signed into law bills to fund Commerce, Justice, and Science; Interior and Environment; and Energy and Water. The ones involved in the minibus passed Feb. 3 are Financial Services/General Government, National Security/State, Defense, Labor/Health and Human Services/Education, Transportation/HUD.

This current partial shutdown marks the 15th such occurrence since 1981, including five in the past decade — three during President Trump's two administrations. A shutdown is costly. The nonpartisan Congressional Budget Office estimates that between $7 billion and $14 billion will be permanently lost as a result of the 2025 shutdown.¹ Long shutdowns also hurt private-sector investment because, among other impacts, access to federal loans is disrupted.

Businesses and their employees should understand more about what a government shutdown is, how it might impact them, and then plan accordingly.

What Is a Government Shutdown?

A government shutdown means the government can’t spend money that requires annual appropriations, which affects its ability to pay its employees and keep facilities and buildings open where those employees work. Some employees are considered essential such as air traffic controllers and would have to work without pay during the shutdown. The 2025 shutdown furloughed nearly three-quarters of a million federal employees.

Federal employees are entitled to backpay for as long as appropriations are lapsed under the Government Employee Fair Treatment Act of 2019. It should be noted that employees of federal contractors are not guaranteed backpay under the 2019 law, but a company can decide if they want to provide backpay to these employees.

What Agencies and Services Would Be Affected by a Shutdown?

Here are some closures or partial closures that could impact your business based on previous shutdowns:

• Small Business Administration (SBA): Most of the SBA’s loan approval and processing (e.g., microloans, working capital loans, etc.) would be unavailable during a shutdown.
• Internal Revenue Service (IRS): All tax payments and filed returns will continue to be accepted as the IRS hits the peak of tax filing season, but refunds might arrive after a shutdown ends. The exception to that is e-filed, error-free returns with direct deposit refunds.
  • Expect delays in correspondence from the IRS.
  • All IRS toll-free hotlines will be closed, impacting the ability to get a client EIN Verification via this method.
• E-Verify: The federal internet-based employment verification system will be unavailable for employers to complete the process, but businesses are still required to complete the Form I-9 for new hires. If your business is in a state that mandates the use of E-Verify, you should check with your state’s website for information, including on alternative methods for employee verification.
  • Delays should be expected with onboarding new employees.

On-site audits and food/environmental inspections might be put on hold by agencies such as OSHA, the Department of Labor, the National Labor Relations Board, and others.

Medicare and Medicaid are federal programs that are not subject to annual appropriations, but a shutdown could cause a disruption for participants. For example, there might be a delay in getting Medicare replacement cards. Access to call centers and federal healthcare marketplace resources could be lost, as well.

How Could Businesses Be Impacted by a Shutdown?

There are tangential impacts to consider such as the closing of national parks and national museums (e.g., Adirondack and Yellowstone, the Smithsonian) during a shutdown that could affect businesses that rely on the patronage of federal employees or the tourism industry that helps support the hospitality industry.

States might have to suspend their unemployment programs and possibly find alternative sources of funding because federal unemployment funding to states will cease during a shutdown.

Although most shutdowns in U.S. history have not influenced the stock market because their durations were brief, a shutdown of significant length could shift the stock market. This would impact employee retirement plans (401k), as well as delay federal reports on job growth, housing starts, and other indicators that investors rely on to make decisions..

What Won’t Be Impacted by a Government Shutdown?

Based on previous shutdowns, the list is small of federal agencies and processes that continue to function through a shutdown.

• Social Security checks will go out to recipients. However,
  • Social Security Administration will not issue Social Security cards.
  • The Employee Services toll-free hotline will not be available.
• Medicare open enrollment should not be impacted.
• Medicaid enrollment is handled through individual states.
• The U.S. Postal Service may continue to deliver the mail.
• Members of Congress still get paid.

What’s Next?

Accounting professionals and financial advisors should have conversations with their impacted clients to gain a better understanding of each client’s financial situation and be prepared to offer any resources that might help.

Paychex monitors the developments in Congress and provides updates accordingly. We understand the challenges facing employers and offer educational resources and a variety of funding options to consider that might fit your business needs.

¹ Analysis of the Effects of the Government Shutdown on the Economy, Congressional Budget Office, Oct. 29, 2025