Windsor Wealth Management LLC

Investment service in Topsfield, Massachusetts

Stock Market

Rate Cuts, Jobs, Growth: A Look at 2026

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As we wrap up 2025, we’re closing the books on a year that delivered strong markets and a few surprises along the way.

More importantly, the trends taking shape now will help guide the decisions we make together in 2026.

Today, we discuss:

  • How the markets performed in 2025.
  • Why the Fed is likely to cut rates again.
  • Where the job market is showing quiet signs of stress.
  • What GDP growth and corporate earnings suggest for 2026.

2025 Market Review: Better Than Average

It’s been another impressive year for the stock market.

Year-to-date, we’ve seen growth of about 16.5%, following a strong 24% gain in 2024.

For perspective, the market usually averages around 8% to 10% each year, so we’re well ahead of the curve.

The one major bump we faced was a steep (but short-lived) drop in April when new tariffs were announced. This created a lot of uncertainty. Companies that rely heavily on global suppliers, like Walmart, saw their stock dip instantly.

In anticipation of the tariffs first mentioned in February, Walmart’s stock had already begun its decline from a high of $105 per share. When the tariffs were officially announced in April, the stock dropped further from $89 to a low of $82 per share, but it bounced right back. It’s currently trading strong at $115 per share, driven by people looking for better deals and the company’s leadership in online shopping and delivery.1

The good news is that many companies have adapted to the new tariffs.

For example, Walmart has successfully shifted a great deal of its product sourcing from China to India and Southeast Asia, including Vietnam and Thailand.

Ultimately, the tariffs caused uncertainty, but the market bounced back strongly.

Let’s switch gears now, and talk about three financial projections and key themes for 2026…

#1—Continued Rate Cuts

The Fed has a tough job: they must balance keeping inflation near their 2% target (now about 2.8%) while also ensuring the job market stays strong.

This balance is currently fragile.

To counteract the current risks in the economy, the Fed will likely continue to cut interest rates both in December and in early 2026. These cuts aim to lower borrowing costs, give the job market a lift and restore consumer confidence.

As long as the job market doesn’t weaken too fast, these cuts should help maintain steady economic conditions throughout 2026.

Related: We took a closer look at the delicate balancing act of rate cuts in our recent post, Today’s Economy: What’s Actually Going On?

#2—Labor Market Fragility

A key risk to the economy right now is the pressure placed on jobs, with the primary labor market weakness being concentrated in job cuts at small businesses.

This development will likely continue in 2026.

Signs of this trend were apparent in the November 2025 ADP report, with Reuters reporting an unexpected decline in private payrolls. (ADP processes payroll for 1 in 6 workers in the U.S.)2

This data suggests that while big company layoffs make headlines, the real pressure is happening quietly: small businesses are cutting jobs and offering fewer openings.

Read the full Reuters article here: US private payrolls post largest drop in more than 2-1/2 years in November.3

This pressure can create a dangerous self-fulfilling prophecy, consisting of a three-part cycle:

  1. Small businesses cut jobs due to uncertainty.
  2. People who are worried about losing their jobs start spending less money.
  3. The consequent slowdown validates the initial fear, making the prophecy self-fulfilling.

Keep in mind, small businesses are the main source of new jobs.

According to the U.S. Small Business Administration Office of Advocacy, “The U.S. contains 36.2 million small businesses, which account for almost 46% of private sector employment [share of employees]. From March 2023 to March 2024, U.S. small businesses created approximately 9 out of every 10 net new jobs.”4

If this massive engine pulls back on hiring or starts laying off, the overall job market quickly loses its critical source of new growth.

Two Other Points to Consider:

  • The low 4.4% unemployment rate doesn’t yet reflect what’s happening on the ground. Small business layoffs usually take a few months to show up in data, and the recent government shutdown added an extra delay. We’ll see some clarity when the November jobs report is released in mid-December.
  • We’ve yet to see any broad, hard data (enough to say there’s a clear trend) reflecting the real labor efficiency gains that artificial intelligence (AI) is expected to create. Up until now, the evidence we do see is largely anecdotal.

#3—Moderate Economic Growth

Most analysts’ forecasts for 2026 show U.S. economic growth ranging from 1.8% to 3.2%.

Even at the low end, a growing economy generally makes things easier because there’s more “pie” to go around for everyone.

This projected growth is supported by strong corporate earnings and by the fact that the tariffs didn’t lead to the severe economic damage many feared back in April. Remember, market sentiment also drives growth.

Finally, the housing market could provide a significant lift to the economy.

If the Fed continues to cut rates in 2026, it should cause interest rates and mortgage rates to keep coming down—possibly falling into the 5% range (optimistic but plausible). This could encourage more people to buy homes.

When the housing market picks up, it creates a ripple effect across the entire economy: demand increases for repairs, furniture, appliances and other home improvement projects, which in turn boosts thousands of businesses.

Lastly, on the investment side, several major banks are forecasting a 10% to 12% return for the stock market next year. As always, these are just estimates, but they reflect a generally healthy outlook for corporate earnings and valuations as we head into 2026.

Sincerely,

–David Bunker, Financial Advisor & Licensed Fiduciary

Before You Go

Get help optimizing your retirement income. Download our FREE “Prolonging Retirement Income” checklist.

Also, receive help retiring to the life you want, schedule a complimentary financial planning consultation.

This communication was prepared with financial writer Sharron Senter’s assistance, based on interviews with David Bunker, a financial advisor and licensed fiduciary.

Sources:

1: Nasdaq.com, Walmart Inc. Common Stock (WMT), nasdaq.com/market-activity/stocks/wmt/historical

2: adp.com

3: Reuters, US private payrolls post largest drop in more than 2-1/2 years in November, reuters.com/business/us-private-payrolls-unexpectedly-decrease-november-adp-says-2025-12-03

4: U.S. Small Business Administration Office of Advocacy, New Advocacy Report Shows the Number of Small Businesses in the U.S. Exceeds 36 million, advocacy.sba.gov/2025/06/30/new-advocacy-report-shows-the-number-of-small-businesses-in-the-u-s-exceeds-36-million

September 2025 Market Update & Key Trends

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It’s been an interesting year in the markets, and with just a few months left in 2025, now’s a good time to pause and take stock of where things stand.

In today’s update, we cover key market trends:

Year-to-Date Performance: Markets are up about 11%, led by tech and industrials.

Corporate Earnings: Strong results are driving markets to new all-time highs.

Inflation & Jobs: Inflation rose slightly last month and jobs have slowed.

AI Spending: Tech giants are in a race for market share.

Interest Rates: A future Fed rate cut looks likely.

Global Markets: International stocks are outpacing the U.S.

Your Portfolio: We’ll discuss why rebalancing remains critical.

A Strong Year for the Market

Year-to-date, the market is up about 11%—a solid number for just over eight months.

Much of the strength comes from a few sectors, including technology (Microsoft, Nvidia) and communication services (Google, Netflix). Also, industrials are performing well, up around 15% (Raytheon, Boeing, Caterpillar).

However, healthcare has barely moved, gaining about 1%. It’s hampered by political and regulatory uncertainty. Specifically, concerns are over potential changes to drug pricing and Medicare policies.

Other market activity included a brief hiccup back in April due to tariffs, when uncertainty pulled the market lower. However, markets have recovered and are now hitting new all-time highs.

Remember, tariffs only effect about 15% of U.S. GDP. We discussed the “real” impact of tariffs earlier this year in our post: The Economy, Tariffs & Consumer Sentiment. Suffice it to say, the media often leaves out vital information.

Earnings Drive the Story

At the end of the day, daily headlines create noise, but company earnings give us the real signal.

Overall, corporate profits are strong. In fact, much stronger than analysts expected coming into the year. Early-year forecasts predicted about 5% growth, but companies are on track for closer to 10%.

This strength has helped push markets higher despite ongoing worries about jobs and tariffs.

In fact, Morgan Stanley’s top equity analyst details three reasons for continued market growth in the coming months. (Note: the article allows one free view before a paywall.)1

Inflation & Jobs

Inflation is at 2.9% (up from 2.7% in July). The Fed’s long-term target is 2%. The rise is primarily being driven by increases in housing, food and energy costs. For a deep dive, read the August Consumer Price Index report.2

The job market has continued to soften. Government jobs are shrinking (includes early retirement packages), and many companies are trimming staff while raising prices to keep profits steady.

The August jobs report showed the U.S. added just 22,000 jobs, June was revised to a –13,000 job loss, and the unemployment rate rose to 4.3% (July was 4.2%), signaling a clear slowdown in the labor market.3

This Reuters article provides some simplified charts showing monthly changes in U.S. jobs, government jobs, and job gains and losses by sector.4

A key question in the months ahead is whether slowing job growth will become a bigger drag or if the economy can grow through it.

The AI Market Share Race

AI spending continues to be a major driver of economic growth.

Big tech companies, e.g., Microsoft, Nvidia, Google, etc., are pouring hundreds of billions into AI infrastructure.

It’s expensive, but unlike the dot-com bubble of the early 2000s, these are well-established, profitable companies with the resources to sustain the investment. This is a major contrast to the dot-com era, when many companies were newly formed and had no profitability history.

Overall, it’s a market share race; specifically, a competition to become leaders in a transformative technology.

Interest Rates & Global Markets

Markets are currently pricing in a 95% chance the Fed will cut rates soon, likely by 25 basis points. Overall, we’re anticipating a 1% cut by year-end.

Lower rates will help ease pressure on mortgages, boost housing activity and support continued growth.

Finally, international stocks are up about 20% this year, outpacing U.S. markets (for a change). Our decision to increase your exposure earlier this year is helping your portfolio take advantage of this momentum.

Portfolios

Tech’s fantastic run has been great for portfolios, but it can also make the sector a little too big.

This is why we’re constantly rebalancing, taking some of those profits and reinvesting them to keep portfolios diversified.

It’s an especially smart move in non-taxable accounts, since we can do it without a tax hit. We’re always watching your portfolio’s sector weightings to help keep it balanced and strong.

Please reach out with any questions.

–David Bunker, Financial Advisor & Licensed Fiduciary

Before You Go

Get help optimizing your retirement income. Download our FREE “Prolonging Retirement Income” checklist.

Also, receive help retiring to the life you want, schedule a complimentary financial planning consultation.

This communication was prepared with financial writer Sharron Senter’s assistance, based on interviews with David Bunker, a financial advisor and licensed fiduciary.

Sources:

1: MarketWatch, The stock market is hitting records — three reasons why top Morgan Stanley strategist sees more room to run, https://www.marketwatch.com/story/the-stock-market-is-hitting-records-three-reasons-why-top-morgan-stanley-strategist-sees-more-room-to-run-33892ee8

2: Bureau of Labor Statistics, Consumer Price Index – August 2025, https://www.bls.gov/news.release/pdf/cpi.pdf

3 & 4: Reuters.com, US unemployment rate near 4-year high as labor market hits stall speed, https://www.reuters.com/business/us-unemployment-rate-near-4-year-high-labor-market-hits-stall-speed-2025-09-05/

AI Is Booming, Diversification Matters

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For a while now, we’ve been hearing how artificial intelligence (AI) is reshaping the investment landscape.

Much of the growth has come from a small group of stocks; specifically, the Mag 7: Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia and Tesla.

Their recent performance has been remarkable, driving an outsized share of the S&P 500’s gains.

Here’s a look at the Mag 7’s performance since the 2025 market low in early April:

Alphabet (Google): 23.43, Amazon: 27.51, Apple: 17.54, Meta Platforms (Facebook, etc.): 37.60, Microsoft: 32.82, Nvidia: 49.49, Tesla: 46.98 — (Source: Morningstar, reported on 6/16/251)

Still, with so much riding on so few companies, market concentration is a real concern.

While AI presents exciting growth opportunities, it’s important to diversify within the AI sector itself, beyond just the largest players. This helps capture a broader range of innovation and mitigate risk.

For Example:

Diversification could include niche players and startups focused on AI in healthcare, finance, robotics and cybersecurity, or hardware manufacturers supporting data center expansion for AI workloads.

What’s more, you can diversify based on customer adoption cycles, e.g., AI in logistics or biotech may ramp up at different times than AI in social media or e-commerce.

Your Portfolio & Diversification

One of our key roles is to help ensure your portfolio isn’t overly reliant on any one company or sector. We stay diversified by spreading across industries, incorporating global opportunities and maintaining a mix of stocks, bonds and alternatives (e.g., real estate funds) to manage risk and support long-term growth.

Also, we review 20-to-30 accounts daily, adjusting holdings to maintain target asset allocations. This helps ensure your portfolio is aligned with your investment goals and market conditions.

To learn more, read our investment philosophy statement: A Disciplined, Research-Driven Approach to Investment Success.

Related: We discussed the Mag 7 earlier this year in our post: S&P 500 Shifts From Home Runs to Singles and Doubles.

–David Bunker, Financial Advisor & Licensed Fiduciary

Before You Go

Get help optimizing your retirement income. Download our FREE “Prolonging Retirement Income” checklist.

Also, receive help retiring to the life you want, schedule a complimentary financial planning consultation.

This communication was prepared with financial writer Sharron Senter’s assistance, based on interviews with David Bunker, a financial advisor and licensed fiduciary.

Source:

1: Morningstar, These Are the Best Mag Seven Stocks to Consider for AI Investing, https://www.morningstar.co.uk/uk/news/266066/these-are-the-best-mag-seven-stocks-to-consider-for-ai-investing.aspx

Is market news scaring you? Here’s the bigger picture.

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Could the financial news headlines be more daunting?

Trade uncertainty and its economic ripple effects are behind most of these headlines. (Read our post for the “real” impact of tariffs.)

However, a crucial point often absent in media coverage is the historical link between market volatility and long-term portfolio growth.

For Example:

The below chart depicts the growth of one dollar from 1926 till 2024. The red lines highlight 20%+ market drops.

As you’ll see, time after time the market bounces back—even higher.

Your Financial Plan

We’ve built your financial plan to navigate market volatility.

Candidly, if you want long-term portfolio growth, then the price you pay is short-term volatility.

Unsurprisingly, we’ve seen this recent volatility before, i.e., during Covid. And, we bounced back from that—even higher!

Uncertainty drives volatility.

No one knows when the volatility will end. Nevertheless, we’re confidently buying valuable companies on sale.

I encourage you to stay the course and maintain your financial plan.

Reach out with any concerns or questions.

–David Bunker, Financial Advisor & Licensed Fiduciary

P.S. Thank you to everyone who requested a copy of Bill Perkins’ “Die With Zero.” I was thrilled by the response following last month’s email, How To Spend Confidently & Without Regret in Retirement, where we discussed the book. I still have a few copies available, so please let me know if you’d like one.

Before You Go

Get help optimizing your retirement income. Download our FREE “Prolonging Retirement Income” checklist.

Also, receive help retiring to the life you want, schedule a complimentary financial planning consultation.

This communication was prepared with financial writer Sharron Senter’s assistance, based on interviews with David Bunker, a financial advisor and licensed fiduciary.

Our Response to Recent Market Volatility

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The stock market’s recent volatility can feel unsettling, but we remain confident in our strategy.

That said, it’s natural to feel rattled—or even tempted to move to cash—when markets drop, especially with the media constantly promoting this approach during market swings.

However, history shows that some of the best market days happen right after the worst ones.

As an example, see the chart below highlighting: Staying invested yields a 10.4% gain, while missing the 60 best days results in a -3.7% loss.

When Visibility Is Low, Strategy Matters More Than Ever

Background

The stock market has been volatile the past few days, down about 8.2% from a recent high in early February.

For perspective, the market dropped 8.5% between July 16 and its low on August 5, 2024, but rebounded by August 30, surpassing its July 16 level.

In general, market recoveries tend to be quick. The average time to recovery is three months from a 5%-10% downturn and eight months from a 10%-20% correction, according to Invesco research.

Let’s take a look at two key factors causing the current fluctuations:

#1—Tariffs

President Trump recently imposed new tariffs on Canada, Mexico and China, escalating trade tensions and contributing to market uncertainty. After a 30-day pause, he implemented 25% duties on Canadian and Mexican imports, along with a second round of 10% duties on Chinese goods, bringing total tariffs on China to 20%. (Then, just two days after, Trump issued some exemptions for Mexico and Canada goods. The situation is highly fluid.)

The media often frames this as a “trade war” or even an “act of war,” but we urge you not to get caught up in the rhetoric.

FACTS: Clarifying Misconceptions & Highlighting Opportunity

Tariffs existed well before income taxes in the U.S.

In fact, they were the primary source of federal revenue for much of U.S. history before the income tax was introduced in 1913.

While tariffs continue to generate revenue today, they’re a very small portion of the federal budget compared to income taxes. (To learn just how small, read our post: The Economy, Tariffs & Consumer Sentiment.)

This historical perspective can help put recent tariff activity in context, i.e., rather than viewing them as unprecedented or catastrophic, it’s helpful to remember that tariffs have long been an economic policy tool.

Tariff activity may cause short-term market fluctuations. However, it’s not inherently a signal of economic collapse—despite media hype.

Finally, past volatility—whatever the cause (e.g., inflation, pandemic, tariffs, war, etc.)—has been an opportunity to buy great companies at a discount.

#2—Broad Economic Uncertainty

There’s a general sense of economic uncertainty driven by multiple factors, including geopolitical tensions, inflation concerns, interest rate policies and the new administration’s actions.

In just the last few weeks, Trump has signed nearly 100 executive orders targeting key areas, e.g., immigration, energy, federal workforce policies, trade, etc.

This activity and uncertainty fuels market fluctuations as investors react to shifting economic conditions. Markets tend to be sensitive to uncertainty, and volatility often follows when investors struggle to predict how these factors will play out.

Our Recommendations

Keeping a long-term perspective can help ease concerns about volatility and uncertainty.

In fact, staying invested through the ups and downs is key to long-term success.

Keep in mind:

-Each day, we rebalance 20 to 30 client portfolios to help maintain diversification and manage volatility. We also ensure your portfolio has the right mix of cash and bonds to navigate market fluctuations. Every decision is tailored to your unique risk tolerance and retirement timeline.

-Market swings often present opportunities, and have historically been an opportunity to buy good companies on sale.

Maintain Your Long-Term Financial Plan (Chart)

As we mentioned earlier, it’s natural to feel the urge to move to cash when markets drop. But doing so could mean missing out on some of the best market rebounds.

Consider these market facts from the below chart covering 1/3/05-12/31/24:

  • Seven of the 10 best days occurred within two weeks of the 10 worst days.
  • Six of the seven best days happened right after the worst days.
  • The second-worst day of 2020 (March 12) was immediately followed by the second-best day of the year.

Market downturns are often followed by strong recoveries. Staying invested helps ensure you don’t miss those critical days.

Of course, no one knows the future—but history offers a clear lesson.

Reach out with any questions.

–David Bunker, Financial Advisor & Licensed Fiduciary

Before You Go

Get help optimizing your retirement income. Download our FREE “Prolonging Retirement Income” checklist.

Also, receive help retiring to the life you want, schedule a complimentary financial planning consultation.

This communication was prepared with financial writer Sharron Senter’s assistance, based on interviews with David Bunker, a financial advisor and licensed fiduciary.

S&P 500 Shifts From Home Runs to Singles and Doubles

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For the past few years, the Magnificent 7 have dominated market earnings growth, at one point soaring nearly 60%. (see chart)

However, this pace is unsustainable.

As expected, the Mag 7’s (Apple, Microsoft, Amazon, Nvidia, Tesla, Alphabet and Meta) earnings growth is slowing. It’s now projected around 20%, still a strong gain.

Meanwhile, the rest of the S&P 500 is growing steadily.

This is a welcome sign, since diversification helps manage risk, (i.e., instead of home runs, the market’s delivering singles and doubles—small, steady gains that add up over time).

Let’s face it, home runs are great.

But, a well-rounded team—built on singles, doubles and solid defense—wins more games.

The same goes for diversification in investing.

What’s causing the shift?

Steady economic growth is helping drive the broader earnings, including a GDP around 2.5-2.7% and low unemployment. AI also remains a key growth driver.

It’s encouraging to see more companies contributing to earnings growth.

Granted, the right side of the chart (gray shaded area) is an estimate, but if these trends hold, we’re likely looking at a more balanced market in the coming months.

PS: If you missed it, we previously shared a detailed update on the economy: The Economy, Tariffs & Consumer Sentiment.

–David Bunker, Financial Advisor & Licensed Fiduciary

Before You Go

Get help optimizing your retirement income. Download our FREE “Prolonging Retirement Income” checklist.

Also, receive help retiring to the life you want, schedule a complimentary financial planning consultation.

This communication was prepared with financial writer Sharron Senter’s assistance, based on interviews with David Bunker, a financial advisor and licensed fiduciary.

2025 Tax Planning Resources & Key Financial Data Spreadsheet

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Happy New Year!

As we kick off a new year, it’s time to turn our attention to the upcoming tax season.

This post is intended as a year-long resource, so keep it handy.

2025-Tax-Planning-Resources

2025 Tax Planning Resources

Today, we discuss:

  • 2025 key financial data, including tax brackets, retirement plan distribution limits, Medicare premiums, standard deductions, child tax credit, and more. (Summarized in an organized spreadsheet.)
  • Changes in the IRS 2025 retirement contribution limits and a new “super” catch-up contribution for those aged 60-63.
  • Using QCDs earlier in the year.
  • The HSA’s triple tax benefits.
  • Why income taxes “may” increase in 2026.

2025 Key Financial Data (Useful Spreadsheet)

Keep this spreadsheet (links to our website) handy throughout the year. (Updated post President Trump signing the One Big Beautiful Bill Act (OBBBA) on July 4, 2025.)

Within it, you’ll find 2025 tax brackets, retirement plan distribution limits, Medicare premiums, standard deductions, child tax and education credits, tax rates for long-term capital gains and qualified dividends, tax on Social Security benefits, and much more.

If you’d like a quality hard copy, let us know. We’re happy to mail one to you or feel free to stop in.

IRS 2025 Contribution Limit Changes & New “Super” Catch-Up Contribution

We encourage maximizing your retirement savings contributions. If you’re unsure how, reach out. Let’s explore strategies to increase your savings.

401(k), 403(b), 457, TSP & SIMPLE IRAs Limits:

General Limit: $23,500 (401(k), etc.)

General Limit SIMPLE IRA: $17,600 (< 26 employees) or $16,500 (> 26 employees)

Age 50+ Catch-Up: $7,500 most plans; $3,500 (SIMPLE IRAs)

Ages 60-63 “Super” Catch-Up: $11,250 most plans; $5,250 (SIMPLE IRAs)

Traditional & Roth IRAs:

General Limit: $7,000

Age 50+ Catch-Up: $1,000

Key Change: The “super” catch-up contribution allows individuals aged 60-63 to increase their retirement savings by contributing more (generally $11,250) to their employer-sponsored retirement plans.

Use QCDs Earlier in the Year

With a Qualified Charitable Distribution (QCD), you can transfer up to $100,000 directly from your IRA to a charity tax-free. It’s often beneficial to take your QCDs before your Required Minimum Distributions (RMDs), since it can lower your taxable income.

Here’s how it works:

RMD: Let’s say your RMD is $20,000.

Donation: You donate $3,000 to charities directly from your IRA.

Deduction: This $3,000 is deducted from your $20,000 RMD.

Taxable Amount: You only pay taxes on the remaining $17,000.

There are other benefits to using QCDs earlier in the year, including avoiding potential delays that can sometimes occur during the busy year-end season.

Also, if you have a charity in mind, making your QCD early in the year provides the charity with the funds sooner, putting your donation to work faster.

Important Note: When using Fidelity for a QCD, you won’t receive a tax form. To claim the tax deduction, you’ll need to inform your tax advisor.

At Windsor Wealth Management, we regularly facilitate QCDs for our clients, and we’re happy to engage with your accountant.

HSA: Triple Tax Benefits

Health Savings Accounts (HSAs), offer several tax benefits to help you save money on health care costs.

Keep in mind, HSAs are only available to individuals enrolled in a high-deductible health plan, have no other health care coverage, and are not enrolled in Medicare or claimed as a dependent.

Here are the triple tax benefits:

#1—Tax-Deductible Contributions: The money you contribute to an HSA is tax-deductible, meaning it reduces your taxable income, which can lead to tax savings in the present.

#2—Tax-Free Growth: Any investment earnings your HSA accumulates grow tax-free, allowing your savings to potentially build up more quickly over time.

#3—Tax-Free Withdrawals: When you use your HSA funds to pay for qualified medical expenses, such as doctor’s visits, prescription drugs or hospital stays, the withdrawals are tax-free.

Also, HSAs have no “use it or lose it” rule. The funds can roll over indefinitely from year to year. (Whereas, unused funds in a Flexible Spending Account (FSA) are typically forfeited at the end of the plan year.)

For 2025, HSA contribution limits are:

Self-only: $4,300

Family: $8,550

Individuals aged 55 and older can make an additional $1,000 catch-up contribution.

Income Taxes May Increase in 2026

The Tax Cuts and Jobs Act (TCJA) is a tax law passed in 2017 that made significant changes to the US tax code.

Many of the individual tax cuts under the TCJA are set to expire at the end of 2025. If Congress doesn’t extend these provisions, income tax rates for many Americans could increase starting in 2026.

Under the TCJA, marginal tax rates are 10%, 12%, 22%, 24%, 32%, 35% and 37%.

If the TCJA expires on 12/31/25, then marginal tax rates will revert to their permanent pre-TCJA levels of 10%, 15%, 25%, 28%, 33%, 35% and 39.6%, according to a Congressional Research Service report.

Want to see how the potential expiration of the TCJA might affect your taxes?

Our software can illustrate the potential tax implications of different income levels.

Contact us if you’d like to see how your tax burden could change under various circumstances.

Quick Look: 2024 Market Performance

In short, 2024 was a great year for the stock market, with the S&P 500 finishing up 25.02% for the year, and 3% in the last quarter.

Communication services and big tech led the way, consistently outperforming the rest of the market, largely due to the rise of artificial intelligence. Compared to 2023, there was broader market participation in 2024, with sectors beyond communication services and big tech contributing more evenly to the market’s growth.

Looking ahead to 2025, company valuations are high, so we may not see as strong a year.

Fidelity does a nice job recapping 2024 in their article, 2024 Stock Market Report. It’s an easy read too.

–David Bunker, Financial Advisor & Licensed Fiduciary

Before You Go

Get help optimizing your retirement income. Download our FREE “Prolonging Retirement Income” checklist.

Also, receive help retiring to the life you want, schedule a complimentary financial planning consultation.

This communication was prepared with financial writer Sharron Senter’s assistance, based on interviews with David Bunker, a financial advisor and licensed fiduciary.

Bay Colony Advisors, DBA Windsor Wealth Management, is not a Certified Public Accountant and does not provide tax, legal, or accounting advice. Any tax-related information provided is for general informational purposes only and should not be construed as legal or tax advice. Each individual’s tax situation is unique, and you should consult with your own tax, financial, or legal advisors before making any decisions. We strongly recommend seeking the advice of a qualified CPA or other professional for personalized tax advice.

What’s the Santa Claus rally phenomenon? 5 Potential Factors

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Ho, Ho, Ho.

The year just isn’t complete without mentioning the Santa Claus rally.

Santa Claus Rally
Photo by Microsoft’s AI Image Creator

Santa Claus Rally

The Santa Claus rally is a stock market seasonal trend; specifically, stocks tend to rise during the last five trading days of December and the first two days of January.

The Santa Claus rally phenomenon is often attributed to several factors, including:

Increased Optimism: Investors are feeling festive.

Vacations: Many institutional investors are on vacation, (i.e., fewer large trades reduce market volatility).

Less Tax Activity: Tax-loss harvesting typically slows down in late December, compared to early December.

Window Dressing: Financial firms may make strategic buys in December to improve the appearance of their portfolios.

Year-End Bonuses: Many individual investors use their year-end bonuses to buy stocks, which can boost market activity and prices.

Will it be a jolly good December for stocks?

Only time will tell!

While we’re waiting, here’s a quick look at the last 26 years:

Santa Claus Rally
Source: Investor’s Business Daily

Related: For more stock market seasonal trends, check out our blog post, Stock Market Seasonality and the September Effect.

Happy Holidays

As the year winds down, I hope you find time to relax and recharge. Reach out anytime.

With gratitude,

–David Bunker, Financial Advisor & Licensed Fiduciary

Before You Go

Get help optimizing your retirement income. Download our FREE “Prolonging Retirement Income” checklist.

Also, receive help retiring to the life you want, schedule a complimentary financial planning consultation.

This communication was prepared with financial writer Sharron Senter’s assistance, based on interviews with David Bunker, a financial advisor and licensed fiduciary.