2025 is in the books, folks. Over the past year, the financial landscape has had its fair share of volatility, largely driven by aggressive shifts in U.S. trade policy and a tug-of-war between sticky inflation and easing monetary policy. The year began with a new administration and significant market turbulence following the introduction of sweeping tariffs in April, an event dubbed “Liberation Day,” which triggered the largest two-day loss in market history and sent indices like the Russell 2000 into a bear market. However, the economy proved remarkably resilient, proving the pundits wrong and reversing what many thought would be an extended correction in the market.
By late summer, markets rebounded into an “everything rally” fueled by continued investment in artificial intelligence and a resumption of interest rate cuts by the Federal Reserve, which lowered the federal funds rate by a total of 0.75% over the year. However, while the S&P 500 and Nasdaq posted solid double-digit gains by year-end, the cryptocurrency market experienced a stark divergence, hitting an all-time high of $126,000 for Bitcoin in October before a historic $19 billion liquidation event triggered a broader sell-off that wiped out $1 trillion in total digital asset value. What a year!
Of course, now that 2025 is in the rear-view mirror, many of us have turned our attention to 2026 and wonder what it will bring. Will we continue to see the outperformance we experienced over the past year? Will market volatility return with a vengeance, reversing hard-won gains? While we don’t have a crystal ball with all the answers, there are plenty of changes coming our way in the new year that we should all be aware of:
New Tax Rules & Brackets
The One Big Beautiful Bill (OBBB) Act has made the 2017 tax structure permanent, meaning we won’t see the “tax cliff” many feared. However, the IRS has adjusted brackets for 2026 to account for inflation (roughly a 2.8% to 4% shift).
- Standard Deduction: This is jumping to $16,100 for single filers and $32,200 for married couples filing jointly.
- Senior Deduction: A major win for those 65 and older—you can still claim an additional $6,000 deduction ($12,000 for couples), through 2028. This phases out if your income exceeds $75k/$150k and is eliminated completely at $175k/$250k.
- Child Tax Credit: The max credit remains at $2,200 per child, with a refundable portion of up to $1,700.
Retirement & Savings Boosts
The IRS is giving you more room to save in 2026! This is great news for both those looking to build their nest egg and those looking to catch up.
- 401(k) Limits: The annual employee contribution limit is rising to $24,500.
- IRA/Roth IRA Limits: You can now put away up to $7,500 per year.
- Super Catch-Up: If you are aged 60–63, you can now contribute a massive $11,250 in extra catch-up contributions to your 401(k).
- 401(k) Catch-Up for High Earners: Under the SECURE 2.0 Act, if you earned more than $145,000 in 2025 (FICA wages), your 401(k) “catch-up” contributions in 2026 must now be made on a Roth (after-tax) basis.
- HSA Limits: Self-only coverage limits are rising to $4,400, while family limits hit $8,750.
Social Security & Lifestyle
- COLA Increase: Social Security beneficiaries will see a 2.8% cost-of-living adjustment starting in January.
- Interest Rates: As the Fed continues its cutting cycle, the high-yield savings account (HYSA) rates of 4–5% are likely a thing of the past. Look into locking in CD ladders now before rates drop further toward the projected 3% range by year-end.
- Car Loan Deduction: A new provision allows you to deduct interest on loans for “qualified vehicles” (up to $10,000), a nice perk if you’re planning a 2026 upgrade.
No one knows what 2026 will bring, but we’re all in this together. By focusing on what you can control and sticking to your financial plan, you can navigate any market volatility and stay on track to meet your financial goals – now and into retirement.
