ELLEVEST INSIGHTS

Like Mr. Toad’s Wild Ride, the markets treated investors to a bumpy ride in November, with plenty of swerves, U-turns, and sharp drops, only to end up close to where they started. Early declines across all major indices were followed by a late-month rally that erased most losses and left investors cautiously optimistic. The S&P 500 ended November with a 0.1% gain, the DJIA rose 0.3%, and the NASDAQ finished with a 1.5% loss.

These swings were driven by shifting sentiment … concerns over mega-cap tech valuations and Federal Reserve caution early in the month gave way to excitement around Alphabet’s TPU chips and growing confidence in a December rate cut.

If November reminds us of anything, it’s this: narratives change fast, and markets often reverse when we least expect it. The same concerns that triggered the drawdown — rates, valuations, macro uncertainty — can reverse quickly if expectations change. It’s also another reminder that we can’t predict or control the markets. But, we can plan for change and uncertainty, and as we approach year end, we believe the time for preparation and action is now.

An Ounce of Prevention …

I just spent a great Thanksgiving week with my mom. If you’ve read my monthly commentaries in the past, you’ll know that she’s 92 years young and legally blind, but still living independently in a wonderful senior community. She recently had her over-the-range microwave oven replaced, and the first morning we were there, my husband and I watched her step onto a small plastic footstool to reheat her coffee in her new microwave. Because of her eyesight, she needed to be close to the panel – and without the footstool, she isn’t tall enough to reach into the microwave safely.

It wasn’t hard to imagine how this could go terribly wrong: pressing four minutes instead of one, over-heated coffee, a burned hand, or a serious fall. We decided then and there to get her a small countertop microwave she can reach easily without climbing on anything. A simple fix that eliminated a lot of risk (and worry for me). And as the saying goes, “An ounce of prevention is worth a pound of cure.”

For my mom, that meant a counter top microwave. And for investors heading into 2026, prevention means preparing for not only volatility but for major tax-law changes while you still can. 

Taxes, Not AI: Your Key Year-End Considerations

While many investors are focused on AI, earnings, and the Federal Reserve, one of the most consequential developments for individual investors is the newly enacted One Big Beautiful Bill Act (OBBBA) — bringing sweeping, permanent changes to wealth transfer, charitable giving, and estate planning. Understanding these now, in 2025, may save you taxes (and regret) come 2026. 

State and Local Tax (SALT) deduction

One of the biggest changes from the One Big Beautiful Bill Act (OBBBA) is the increased SALT deduction cap to $40,000 from $10,000, effective for tax years 2025 to 2029. For those who are married filing separately, the cap is $20,000. The cap will phase out for those with Modified Adjusted Gross Income (MAGI) greater than $500,000 and those with MAGI of $600,000 or more will be limited to the original $10,000 cap. 

Taxpayers in high-tax states like New York and California should project their 2026 tax exposure to review whether itemizing under the new SALT deduction caps or claiming the standard deduction at $15,750 for single filers and $31,500 for married couples ceiling jointly is more beneficial. Taxpayers who may be close to the $500,000 threshold should work with a tax advisor to determine if there are additional deductions or pre-payments that can be accelerated into 2025 or losses that can be realized to lower income to receive the higher $40,000 SALT cap. 

Charitable giving

For taxpayers who itemize, there will be a new “floor” on charitable contributions. Only contributions exceeding 0.5% of income will be deductible, which reduces the benefit of more modest giving. Moreover, you will only be able to claim up to 35% of the tax benefit from those itemized deductions, even if you are in the 37% tax bracket. If you itemize and donate regularly, 2025 may be the last year your charitable giving receives full preferential treatment. Taxpayers may want to consider front loading multiple years of charitable giving into 2025. An effective way to do this is through the donation of highly appreciated stock to a donor-advised fund. 

Estate and gift planning

The lifetime estate and gift tax exemption increases to $15 million per individual (i.e. $30 million per married couple), indexed for inflation starting in 2026. With the $15 million exemption now permanent and inflation-indexed, 2026 onward becomes a strategic window for wealth transfer. If you were considering lifetime gifts, dynasty trusts, or other legacy structures — doing so before year-end could give you maximum flexibility and certainty.

Alternative MInimium Tax (AMT) exposure and investment planning

The OBBBA increases exposure to the AMT for taxpayers. If you have substantial income from capital gains and other sources, including municipal bonds, and/or have exercised incentive stock options, you may have increased risk of paying AMT. Work with your tax advisor to check if you can minimize or avoid the AMT by postponing capital gains or employing other tax strategies to reduce your taxable and AMT income. 

What should investors do now?

The confluence of market volatility, macro uncertainty, and fundamental tax-law shifts underscores a few core principles for long-term investors:

• Diversification matters more than ever. November showed just how quickly sentiment (and market performance) can shift. In our opinion, a well-diversified portfolio is your best cure for the unpredictable.
  
  
• Don’t ignore taxes. Successful long term investing isn’t all about picking winners and avoiding losers. Tax planning is and should be a critical component of investing and financial planning. Investors need to actively manage when and how they realize gains, make gifts, or undertake charitable giving, especially around major tax-law changes. 

As you think about the year ahead, remember that the most impactful financial decisions often happen before the headlines and before the risks show up. 

The Ellevest team can help you understand what matters most for you before year-end. We’re proud that The Wall Street Journal recently named Ellevest among the top wealth management firms* — and we’re here to help you make confident, informed decisions in the months ahead.