As we step into a new year, we’re taking a moment to reflect on the policy developments of 2025 and share what we’re watching in 2026. Last year brought meaningful changes that are reshaping the financial landscape and opening doors for thoughtful planners. Our goal is simple: help you feel informed, prepared, and confident about the road ahead.
2025 at a Glance: A Year of Meaningful Shifts
From sweeping tax reform to evolving trade policy and strong markets, 2025 delivered a series of updates that could influence financial strategies for years to come. Here’s what stood out, and why it matters.
1) Historic Tax Reform Became Law
In July 2025, the One Big Beautiful Bill Act (OBBBA) ushered in the most significant update to federal tax policy since 2017. The law made many temporary provisions permanent and introduced several new benefits that may affect planning for families, retirees, and business owners.
Highlights include:
- Higher Standard Deduction, Locked In:
$15,750 for single filers, $23,625 for heads of household, and $31,500 for married couples filing jointly—indexed annually for inflation. - New Senior Bonus Deduction (Temporary):
Americans 65+ can claim a $6,000 deduction through 2028, with income-based phaseouts beginning at $75,000 for individuals and $150,000 for couples. - Expanded SALT Deduction (Temporary):
The long-standing $10,000 cap increased to $40,000 through 2029, with phaseouts for higher earners and a scheduled reversion to $10,000 in 2030 unless extended. - Auto Loan Interest Deduction (First-of-its-kind):
Interest on qualifying U.S.-assembled vehicle loans is deductible up to $10,000 annually through 2028, subject to income limits. - Permanent QBI Deduction:
The 20% qualified business income deduction for pass-through entities is now permanent, welcome clarity for business owners. - Enhanced Business Expensing:
Small businesses can expense up to $2.5 million in qualifying property, and 100% bonus depreciation has been reinstated for immediate equipment write-offs.
A friendly reminder: These changes can create opportunities, and complexity. Please consult your tax, legal, or accounting professionals before making strategy shifts based on tax law changes.
2) Estate & Gift Exemptions Reached Historic Levels
OBBBA raised the federal estate and gift tax exemptions to $15 million per person ($30 million per couple), indexed for inflation beginning in 2026. That’s a substantial increase compared to the roughly $7 million per person we would have faced had prior law expired on schedule. While these elevated thresholds are labeled “permanent,” future legislation can always adjust the rules—creating a valuable planning window today.
For families with significant estates, strategies such as Grantor Retained Annuity Trusts (GRATs), Spousal Lifetime Access Trusts (SLATs), and dynasty trusts may help you make the most of this moment. Trust planning is nuanced, so it’s wise to work with an experienced professional.
3) Trade Policy Created Volatility—Then Opportunity
“Liberation Day” on April 2, 2025, marked the implementation of broad new tariffs designed to spur domestic manufacturing. Markets reacted sharply at first—the S\&P 500 fell roughly 12% over several days—but recovered within a month and continued to climb into year-end. Past performance, of course, doesn’t guarantee future results.
The bigger picture: these policies have encouraged companies to commit to U.S.-based projects, including factories, data centers, and energy infrastructure. While most initiatives will take years to complete, the trend suggests a meaningful shift toward domestic production. Ongoing trade negotiations with major partners—and a Supreme Court case in 2026 that could reshape tariff authority—remain key variables to watch for their potential impact on inflation, interest rates, and sector performance.
4) Markets Delivered Strong Returns Despite Uncertainty
Technology and AI-related companies led the way in 2025, with gains concentrated in the “Magnificent Seven” mega-cap names. That concentration contributed to strong index performance but also raises valuation considerations we’re actively managing in portfolios. Diversification and disciplined risk management remain important.
5) The Economy Stayed Resilient
After a modest first-quarter contraction, the U.S. economy rebounded with 3.8% annualized GDP growth in Q2 2025—the strongest since late 2023. Consumer spending remained healthy, and inflation ticked up to 2.9% in August, reflecting some tariff-related cost pressures while staying relatively contained. These are encouraging signs in a year with plenty of moving parts.
What We’re Watching in 2026
This year brings opportunities, deadlines, and a few important dates:
- Near-Term Expirations:
Several OBBBA provisions—including the expanded SALT deduction and the senior bonus deduction, are temporary. Preparing early may help you capture these benefits while they last. - Midterm Elections—November 3, 2026:
All 435 House seats and roughly one-third of Senate seats are contested. Elections can create short-term volatility, but long-term market performance has historically shown minimal correlation with which party holds power. (As always, past performance is not a guarantee of future results.) - Estate Planning Window:
Elevated exemptions are attractive, but political winds can shift. For families considering lifetime gifts, it may be prudent to explore opportunities sooner rather than later. - Housing Market Reset:
Analysts project an 8% average decline in home prices in 2026, a correction that some believe could set the stage for renewed growth in 2027. - Economic Outlook:
The National Association for Business Economics currently forecasts 1.7% GDP growth for 2026 and places recession odds at 20–40%. Trade dynamics, particularly with China, remain a key factor for inflation and employment.
How We’re Actively Managing
Given this landscape, we’re focusing on strategies that help protect and position your plan:
Estate & Gift Strategies:
Evaluating opportunities to accelerate lifetime gifts of appreciated assets while elevated exemptions are in place.
- Document Alignment:
Reviewing estate documents, trusts, wills, beneficiary designations, and powers of attorney to ensure they reflect current law and your intentions. - Tax Efficiency:
Assessing strategic trust structures (GRATs, SLATs, grantor-trust sales) and coordinating capital-gain timing and tax-loss harvesting opportunities throughout the year. - Charitable Giving:
Considering Qualified Charitable Distributions and contribution bunching strategies to maximize impact and potential tax benefits. - Collaborative Planning:
We coordinate closely with your tax, legal, and accounting professionals before recommending changes based on new provisions.
Why This Matters Now
2026 isn’t just another calendar year, it’s a period of transition. The reforms introduced in 2025 are taking effect, and for many families, these changes create time-sensitive opportunities. Acting early, with a plan tailored to your goals and life stage, can help you make the most of what’s available.
Our focus is on proactive, informed decisions at moments just like this—aligning new tax provisions, estate thresholds, and market trends with your personal priorities.
Let’s Connect
If you’d like to talk through any of these developments, or explore how they relate to your specific circumstances, we’d love to continue the conversation. Reach out anytime. We’re here to help you plan with clarity and confidence.
Sources
- Journal of Accountancy, July 7, 2025https://www.journalofaccountancy.com/news/2025/jun/tax-changes-in-senate-budget-reconciliation-bill/
Website screenshot: Tax provisions in the One Big Beautiful Bill Act - CNBC, July 4, 2025https://www.cnbc.com/guide/what-trumps-one-big-beautiful-bill-means-for-your-money/#trumps-2017-tax-cut-extensions
- Fortune, July 2025https://www.msn.com/en-us/money/smallbusiness/how-the-big-beautiful-bill-is-rewriting-the-rules-for-small-business-success/ar-AA1IcHJM?ocid=BingNewsVerp
- USA Today, July 1, 2025https://www.usatoday.com/story/graphics/2025/07/01/winners-losers-trump-big-tax-bill-senate/84391469007/
- Sherwood & Roberts, July 14, 2025https://www.smr-law.com/insights/the-one-big-beautiful-bill-act-obbb-has-major-benefit-for-estate-and-gift-taxes-here-s-what-you
- Power Magazine, March 3, 2025https://www.powermag.com/trump-energy-policy-changes-signal-major-industry-shifts-in-2025-and-beyond/
- Yahoo Finance, May 12, 2025https://finance.yahoo.com/news/official-us-stocks-now-recovered-221453494.html
- Wall Street Journal, October 2025https://www.wsj.com/economy/trade/trump-tariffs-countries-trade-explained-7f826419?mod=trade_news_article_pos5
Website screenshot: What to Know About Trump’s Latest Tariffs
- Wall Street Journal, August 6, 2025https://www.wsj.com/economy/trump-pledged-to-bring-back-manufacturing-the-sector-is-sputtering-c6344630?mod=article_inline
Website screenshot: Trump Pledged to Bring Back Manufacturing. The Sector Is Sputtering.
- Investopedia, August 29, 2025https://www.investopedia.com/magnificent-seven-stocks-8402262
- Trading Economics, October 2025https://tradingeconomics.com/united-states/gdp-growth
- CPI Inflation Calculator, October 2025https://cpiinflationcalculator.com/2025-cpi-and-inflation-data-for-the-united-states/
- Federal Reserve of St. Louis, October 16, 2025https://www.stlouisfed.org/on-the-economy/2025/oct/how-tariffs-are-affecting-prices-2025
- CBS News, October 13, 2025https://www.cbsnews.com/news/economists-nabe-forecasts-2025-gdp-growth/
- Investopedia, January 28, 2025https://www.investopedia.com/us-election-and-stock-market-6822056
- The Next Presidential Election, October 2025https://www.nextpresidentialelection.us/events/2026-united-states-mid-term-elections
- Manatt, July 18, 2025https://www.manatt.com/insights/newsletters/key-estate-planning-implications-following-passage-of-the-one-big-beautiful-bill-act
- National Association of Home Builders, July 31, 2025https://eyeonhousing.org/2025/07/housing-share-of-gdp-second-quarter-2025/
- Housing.info, October 2025https://www.housing.info/blog/why-the-housing-market-will-reset-in-2026-and-begin-a-new-recovery-in-2027