The Penny Hoarder’s 2021 Survey on Child Care Costs

“Working families across the country pay a significant percentage of their annual earnings to cover the price of child care,” said Mario Cardona, Chief of Policy and Practice for Child Care Aware of America, a national child care advocacy organization.
About 35% say they’ve had to choose between paying for child care or paying a credit card bill on time.
“We’ve used this benchmark to say that no family should pay more than 7% of income towards child care, whether they receive child care subsidies or not,” he said.
Half the parents we surveyed reported spending at least 25% of their income on child care. That’s a significant increase from when The Penny Hoarder surveyed parents about the cost of child care in 2018. Back then, the median percentage of income parents said they spent on child care was 15%.
Nicole Dow is a senior writer at The Penny Hoarder. Chris Zuppa, The Penny Hoarder’s multimedia content creator, contributed to this report.

The Financial Toll of Child Care

This graphic breaks down how many parents feel overwhelmed by the cost of childcare.

This financial assistance, however, is temporary. About 1 in 5 parents receiving child tax credits reported that once the monthly payments end in December, they don’t believe they’ll be able to continue paying for care.
For working parents, child care is a necessity. Yet, it’s often challenging to secure and afford quality care.
Following these guidelines, a family earning ,000 a month should be paying no more than 0 a month for child care. Having to pay a child care provider makes it tough to meet other financial responsibilities. Almost 28% of parents say they’ve had to choose between paying for child care or paying their rent or mortgage on time.
Not paying a bill on time often results in late fees, but for some families, an extra fee is better than losing a coveted spot at a child care center and facing the challenge of finding other arrangements.
When you have a baby, you understand your life is going to change significantly.

The Sacrifices Parents Make

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63 percent of people consider childcare costs in whether or not they'll have another child. You’re responsible for another human being. You’ll lose tons of sleep. And, of course, you’ll have a bunch of new expenses.
Diapers. Formula. Clothing. Toys. But one of the biggest expenses that hit parents is child care.
The Penny Hoarder’s survey on child care costs survey found that financial support during the pandemic has helped parents pay for child care.
Four out of 10 parents say they’ve gone into debt due to the cost of child care. Over a quarter of parents have had to move to a different home to afford child care. Almost 38% of parents have had to take on a second job or side hustle.
Ready to stop worrying about money?
Leaving the workforce has ripple effects beyond a loss of income. Many stay-at-home parents find it difficult to return to work due to gaps in their employment history. They lose out on opportunities for career advancement. Not having access to an employer-sponsored 401(k) plan means stay-at-home parents miss out on the ability to grow their retirement savings.

Help Needed

Child Care Aware of America uses an affordability benchmark from the U.S. Department of Health and Human Services, which states that families who are receiving child care subsidies should not pay more than 7% of their income toward co-payments.
For many parents, it costs more to send their kids to day care than to put a roof over their heads.
Other parents figure that it makes more sense to leave the workforce than to spend so much of their income paying for child care. Nearly 1 out of 5 parents say they’ve had to quit a job due to the costs of child care. Seventy percent of parents said stimulus check money helped with the cost of child care during the pandemic. Over 83% of those receiving monthly child tax credit payments said that money has helped with child care expenses this year.
Methodology: The Penny Hoarder used Pollfish to conduct a national survey about the cost of child care with 2,000 people completing the survey Sept. 8-10, 2021. Survey responses are weighted so that each response is representative of the U.S. population. <!–


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10 Least Tax-Friendly States for Retirees

Whether you plan to retire at the beach, near the mountains, or to some other dream destination, make sure you check out the local tax situation before packing your bags and hiring a moving van. If you don’t, you might be unpleasantly surprised by a hefty state and local tax bill in your new hometown.

State and local taxes can vary greatly from one place to another. The difference can easily exceed $10,000 or more per year for some people, which is enough to break the bank for a lot of retirees. So, to avoid this kind of bombshell, make sure you do some research before settling on a new location. You can start with Kiplinger’s State-by-State Guide to Taxes on Retirees. This tool maps out the tax landscape for each state and the District of Columbia, and allows you to do a side-by-side comparison for up to five states at a time.

We also identified the 10 states that impose the highest taxes on retirees, which are listed below (we saved the worst state for last). Our results are based on the estimated state and local tax burden in each state for two hypothetical retired couples with a mixture of income from wages, Social Security, 401(k) plans, traditional and Roth IRAs, private pensions, interest, dividends, and capital gains. One couple had $50,000 in total income and a $250,000 home, while the other had $100,000 of income and a $350,000 home. Take a look to see if your state—or the state you’ve been dreaming about for retirement—made our “least tax-friendly” list for retirees (we hope it didn’t).

See the final slide for a complete description of our ranking methodology and sources of information.

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10. Texas

picture of Texas flag in coinspicture of Texas flag in coins
  • State Income Tax Range: None
  • Average Combined State and Local Sales Tax Rate: 8.19%
  • Median Property Tax Rate: $1,692 per $100,000 of assessed home value
  • Estate Tax or Inheritance Tax: None

You might be surprised to see the Lone Star State on the list of least tax-friendly states for retirees. Afterall, isn’t Texas one of the handful of states with no income tax? Well, yes, it’s true that there are no income taxes in Texas…which means no taxes on Social Security benefits, pensions, 401(k)s, IRAs, or any other type of retirement income. But a lot of states don’t tax these types of retirement income anyway (or at least partially exempt them), so states without any income tax don’t necessarily have an advantage over other states when it comes to taxes on seniors.

Texas’ main problem is with its property taxes. The state’s median property tax rate is tied for the seventh-highest in the country (the tie is with New York). For our hypothetical retired couples, that means an estimated annual property tax bill of $4,230 for the couple with the $250,000 home and $5,922 for the couple with the $350,000 home. Seniors may be able to get a $10,000 property tax exemption, have their tax bill “frozen,” or delay payment of taxes.

Sales taxes are on the high end in Texas, too. The state imposes a 6.25% tax, but local governments can tack on up to 2% more. When combined, the average state and local sales tax rate in Texas is 8.19%, which is the 14th-highest combined rate in the country.

For more information, see the Texas State Tax Guide for Retirees.

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9. New York

picture of New York flag in coinspicture of New York flag in coins
  • State Income Tax Range: 4% (on taxable income up to $8,500 for single filers; up to $17,150 for joint filers) to 10.9% (on taxable income over $25 million)
  • Average Combined State and Local Sales Tax Rate: 8.52%
  • Median Property Tax Rate: $1,692 per $100,000 of assessed home value
  • Estate Tax or Inheritance Tax: Estate tax

Unfortunately, the Empire State’s heavy tax burden for middle-class families carries over into retirement—especially when it comes to property taxes. Based on New York’s statewide median tax rate, our first hypothetical retired couple would pay about $4,230 each year in property taxes on their $250,000 home in New York. For our second couple, the annual estimated tax bill is $5,922 for their $350,000 home. Those figures are tied (with Texas) for the seventh-highest amounts in the country for those home values. There are some property tax breaks for seniors, though. Local governments and public-school districts can reduce the assessed value of their home by 50%. Under another program, part of a senior’s home value can be exempt from school property taxes.

New York has high sales taxes, too. There’s a 4% state tax, and localities can add as much as 4.875% in additional taxes on purchases in the state. At 8.52%, New York’s average combined (state and local) sales tax rate is the 10th-highest in the nation.

When it comes to income taxes, New York’s tax bite is less severe for ordinary retirees when compared to other states. Social Security benefits, federal and New York government pensions, and military retirement pay are exempt. However, anything over $20,000 from a private retirement plan (including pensions, IRAs and 401(k) plans) or an out-of-state government plan is taxed. Also, for ultra-wealthy retirees, New York income tax rates were always steep, but they’re even higher now — starting in 2021, the highest rate jumps from 8.82% to 10.9%.

New York also has an estate tax—with an unusual “cliff tax” kicker. Generally, the tax is only imposed on that portion of an estate over the $5.93 million (for 2021) exemption. However, if the value of the estate is more than 105% of the exemption amount, the exemption won’t be available and the entire estate will be subject to New York estate tax. Ouch!

For more information, see the New York State Tax Guide for Retirees.

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8. Iowa

picture of Iowa flag in coinspicture of Iowa flag in coins
  • State Income Tax Range: 0.33% (on taxable income up to $1,676) to 8.53% (on taxable income over $75,420) [For 2022, 0.33% on taxable income up to $1,743 and 8.53% on taxable income over $78,435.]
  • Average Combined State and Local Sales Tax Rate: 6.94%
  • Median Property Tax Rate: $1,529 per $100,000 of assessed home value
  • Estate Tax or Inheritance Tax: Inheritance tax

The Hawkeye State’s spot on our list of the least tax-friendly states for retirees is primarily based on high property taxes. The statewide median property tax rate in Iowa is the 11th-highest in the U.S. Our imaginary couple with a $250,000 home in the state would fork out about $3,823 per year in real property taxes. The couple with a $350,000 home can expect to pay about $5,352 annually. A property tax credit of up to $1,000 is available to lower-income seniors. (Beginning in 2022, special rules will allow residents who are at least 70 years old with an annual household income of not more than 250% of the federal poverty level to offset increases in property taxes.)

On the income tax front, Social Security benefits are tax-free. There’s also a $6,000 exclusion ($12,000 for joint filers) for most types of federally-taxed retirement income. However, when compared to some ot the tax breaks for retirement income available in other states, the Iowa exclusion doesn’t look all that generous. As a result, income taxes for retirees in the state can be a little on the high end, especially for wealthier residents. (Beginning in 2023, the lowest Iowa personal income tax rate will be 4.4%, while the highest rate will be 6.5%.)

Sales taxes in Iowa are middle-of-the-road. The state rate is 6%, and localities can add as much as 1%. The average combined state and local rate is 6.94%. That puts Iowa in the middle of the pack when it comes to overall sales tax rates.

The Iowa inheritance tax is another thing retirees need to worry about –  at least for the time being. Beginning in 2021, Iowa is phasing out it’s inheritance tax over a five-year period by reducing the rate of tax by 20% each year (the base rates range from 5% to 15%). Therefore, for 2021, Iowa’s inheritance tax ranges from 4% to 12%, depending on the amount of the inheritance and the relationship of the recipient to the decedent. The tax will be completely repealed on January 1, 2025.

For more information, see the Iowa State Tax Guide for Retirees.

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7. Wisconsin

picture of Wisconsin flag in coinspicture of Wisconsin flag in coins
  • State Income Tax Range: 3.54% (on taxable income up to $12,120 for single filers; up to $16,160 for joint filers) to 7.65% (on taxable income over $266,930 for single filers; over $355,910 for joint filers)
  • Average Combined State and Local Sales Tax Rate: 5.43%
  • Median Property Tax Rate: $1,684 per $100,000 of assessed home value
  • Estate Tax or Inheritance Tax: None

The Badger State suffers from weak income tax breaks for retirement income and high property taxes. While Social Security benefits aren’t subject to Wisconsin’s income taxes, income from pensions and annuities, along with distributions from IRAs and 401(k) plans, are generally taxable. Seniors can subtract up to $5,000 of retirement income (including distributions from IRAs) from Wisconsin taxable income if their federal adjusted gross income is less than $15,000 ($30,000 for a married couple filing jointly). But that exclusion is comparatively small and is only available to retirees with a relatively low income.

Property taxes are the eighth-highest in the U.S. For our hypothetical couple with a $250,000 home in Wisconsin, estimated property taxes would be about $4,210 per year. The make-believe couple with a $350,000 home would have to cough up about $5,894 each year for taxes. Plus, there are limited property tax breaks for retirees. For instance, unlike younger taxpayers, residents age 62 or older don’t need earned income to claim an income tax credit for property taxes paid. Property tax deferral loans are also available for seniors with incomes under $20,000.

There are some bright spots for retirees, though. For example, sales taxes are actually low in Wisconsin. It has the ninth-lowest combined average state and local tax rate in the nation. There are no estate or inheritance taxes, either.

For more information, see the Wisconsin State Tax Guide for Retirees.

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6. Vermont

picture of Vermont flag in coinspicture of Vermont flag in coins
  • State Income Tax Range: 3.35% (on taxable income up to $40,350 for single filers; up to $67,450 for joint filers) to 8.75% (on taxable income over $204,000 for single filers; over $248,350 for joint filers)
  • Average Combined State and Local Sales Tax Rate: 6.24%
  • Median Property Tax Rate: $1,861 per $100,000 of assessed home value
  • Estate Tax or Inheritance Tax: Estate tax

The Green Mountain State offers cold comfort on the tax front to retirees. It has a steep top income tax rate, and most retirement income is taxed. Vermont also taxes all or part of Social Security benefits for single residents with federal adjusted gross income over $45,000 (over $60,000 for married couples filing a joint return).

Vermonters also pay a lot in property taxes. If our first made-up couple owned a $250,000 home in Vermont, they’d pay about $4,653 in property taxes each year. Our second couple, with a $350,000 home, would pay around $6,514 annually. These property tax amounts are the fifth-highest in the U.S. for those home values. Homeowners age 65 and older may qualify for a tax credit worth up to $8,000 if their household income does not exceed a certain level.

Vermont also taxes estates that exceed $5 million in value (for 2021). The tax is imposed at a flat 16% rate.

Sales taxes aren’t too bad in Vermont, though. Local jurisdictions can add 1% to the state’s 6% sales tax, which results in an average combined state and local sales tax rate of 6.24%. That’s below the national average.

For more information, see the Vermont State Tax Guide for Retirees.

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5. Nebraska

picture of Nebraska flag in coinspicture of Nebraska flag in coins
  • State Income Tax Range: 2.46% (on taxable income up to $3,290 for single filers; up to $6,570 for joint filers) to 6.84% (on taxable income over $31,750 for single filers; over $63,500 for joint filers)
  • Average Combined State and Local Sales Tax Rate: 6.94%
  • Median Property Tax Rate: $1,614 per $100,000 of assessed home value
  • Estate Tax or Inheritance Tax: Inheritance tax

Nebraska is one of the least tax-friendly state in the nation for retirees primarily because of steep income and property taxes. With regard to the state’s income tax system, the Cornhusker State taxes some Social Security benefits and most other retirement income, including IRA withdrawals, 401(k) funds, and public and private pensions. Plus, the top income tax rate kicks in pretty quickly: It applies to taxable income above $31,750 for single filers and $63,500 for married couples filing jointly. (Note that the state is reducing taxes on Social Security benefits starting in 2021 and eliminating taxes on military retirement pay beginning in 2022.)

Nebraska’s inheritance tax ranges from 1% to 18%. The tax on heirs who are immediate relatives is only 1% and does not apply to property that is worth less than $40,000. For remote relatives, the tax rate is 13% and the exemption amount is $15,000. For all other heirs, the tax is imposed at an 18% rate on property worth $10,000 or more.

The median property tax rate in Nebraska is pretty high. For a $250,000 home, the statewide average tax in the state is $4,035 per year. It’s $5,649 for a $350,000 residence. Those totals are the ninth-highest property tax amounts in country for homes at those price points. People over age 65 with income less than a certain amount may qualify for a homestead exemption that exempts all or a portion of their property’s value from taxation.

The state sales tax rate is 5.5%, but local jurisdictions can add an additional 2.5% to the state rate. The average combined state and local sales tax rate is 6.94%, which is in the middle of the pack when compared to other states.

For more information, see the Nebraska State Tax Guide for Retirees.

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4. Kansas

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  • State Income Tax Range: 3.1% (on taxable income from $2,501 to $15,000 for single filers; from $5,001 to $30,000 for joint filers) to 5.7% (on taxable income over $30,000 for single filers; over $60,000 for joint filers)
  • Average Combined State and Local Sales Tax Rate: 8.7%
  • Median Property Tax Rate: $1,369 per $100,000 of assessed home value
  • Estate Tax or Inheritance Tax: None

While there’s no place like home, I wouldn’t be surprised to hear that Dorothy (and ToTo, too) fled Kansas when she retired to avoid the state’s high taxes. Looking at the state’s income tax system, distributions from private retirement plans (including IRAs and 401(k) plans) and out-of-state public pensions are fully taxed. Kansas also taxes Social Security benefits received by residents with a federal adjusted gross income of $75,000 or more. Military, federal government and in-state public pensions are exempt from state income taxes, though.

Shopping in Kansas can be expensive, too. The Sunflower State’s average combined state and local sales tax rate is the ninth-highest in the U.S. at 8.7%. Groceries, clothing, and even prescription drugs are subject to state and local sales taxes in Kansas, too.

Property taxes are above the national average as well. The statewide average property tax bill for our first hypothetical retired couple with a $250,000 home in Kansas comes to about $3,423. The bill for our second imaginary couple, with a $350,000 home, is estimated to be $4,792. Those amounts are the 15th-highest in the U.S. Homeowners who satisfy certain age and income requirements may qualify for a property tax refund, though.

The good news is that Kansas does not impose estate or inheritance taxes.

For more information, see the Kansas State Tax Guide for Retirees.

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3. Connecticut

picture of Connecticut flag in coinspicture of Connecticut flag in coins
  • State Income Tax Range: 3% (on taxable income up to $10,000 for single filers; up to $20,000 for joint filers) to 6.99% (on taxable income over $500,000 for single filers; over $1 million for joint filers)
  • Average Combined State and Local Sales Tax Rate: 6.35%
  • Median Property Tax Rate: $2,139 per $100,000 of assessed home value
  • Estate Tax or Inheritance Tax: Estate tax

The Constitution State is a tax nightmare for many retirees…but at least things are improving on the income tax front. For residents with federal adjusted gross income over $75,000 ($100,000 for joint filers), 25% of Social Security benefits taxed at the federal level are taxed by Connecticut. (Social Security payments are exempt for taxpayers below those income levels.) Plus, for 2020, only 28% of income from a pension or annuity is exempt for taxpayers with less than $75,000 of federal AGI (less than $100,000 for joint filers). But the exemption percentage will increase by 14% each year until it reaches 100% for the 2025 tax year. Military pensions are also excluded from state taxes.

Connecticut has the third-highest property taxes in the U.S., so the $10,000 cap on the federal tax deduction for state and local taxes stings a bit more here. For our two make-believe retired couples, the statewide estimated property tax for a $250,000 home in Connecticut is $5,348 per year, and the estimated annual tax for a $350,000 home in the state is $7,487. The state des offers property tax credits to homeowners who are at least 65 years old and meet income restrictions. Income ceilings are $45,100 for married couples (with a maximum benefit of $1,250) and $37,000 for singles (with a maximum benefit of $1,000).

Connecticut imposes an estate tax on estates valued at $7.1 million or more (for 2021) at progressive rates ranging from 10.8% to 12%. Connecticut is also the only state with a gift tax, which applies to real and tangible personal property in Connecticut and intangible personal property anywhere for permanent residents. Only the amount given since 2005 and over $7.1 million is taxed. Gift tax rates start at 10.8% and go up to 12%.

There are no local sales taxes in Connecticut, so you’ll pay only the statewide sales tax rate of 6.35% on your purchases (slightly below average). Clothing, footwear and accessories priced at more than $1,000; jewelry worth more than $5,000; and most motor vehicles costing $50,000 or more are taxed at 7.75%.

For more information, see the Connecticut State Tax Guide for Retirees.

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2. Illinois

picture of Illinois flag in coinspicture of Illinois flag in coins
  • State Income Tax Range:4.95% (flat rate)
  • Average Combined State and Local Sales Tax Rate: 8.83%
  • Median Property Tax Rate: $2,165 per $100,000 of assessed home value
  • Estate Tax or Inheritance Tax: Estate tax

There’s a bit of good tax news for retirees in Illinois: Social Security benefits and income from most retirement plans are exempt. Plus, the state’s 4.95% flat income tax rate is relatively low.

Now for the bad news: Property taxes hit retirees hard in Illinois. The statewide median property tax rate in Illinois is the second-highest in the nation—a staggering $5,413 per year on a $250,000 home and a whopping $7,578 on a $350,000 home. Fortunately, there is some relief for qualifying seniors in the form of a homestead exemption of up to $5,000 ($8,000 in Cook County), the ability to “freeze” a home’s assessed value, and a tax deferral program.

Sales tax rates are high in Illinois, too. The state has the seventh-highest average combined state and local sales tax rate at 8.83%. In some locations, the rate can be as high as 11%! And groceries (1% state rate; additional local taxes may apply) and clothing are taxable.

Illinois also has an estate tax that applies to estates worth $4 million or more. That can be bad news for your heirs.

For more information, see the Illinois State Tax Guide for Retirees.

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1. New Jersey

picture of New Jersey flag in coinspicture of New Jersey flag in coins
  • State Income Tax Range: 1.4% (on taxable income up to $20,000) to 10.75% (on taxable income over $1 million)
  • Average Combined State and Local Sales Tax Rate: 6.6%
  • Median Property Tax Rate: $2,417 per $100,000 of assessed home value
  • Estate Tax or Inheritance Tax: Inheritance tax

Sorry, New Jersey, but you’re the least tax-friendly state in the country for retirees. And, once again, it’s the property taxes that are crushing retirees. The Garden State has the highest median property tax rate in the country. If our first make-believe couple bought a $250,000 home in the state, they would pay an eye-popping $6,043 in property taxes each year based on our estimates. Our second couple would pay a sky-high $8,460 on their $350,000 New Jersey home. The state does offer some property tax relief for seniors, though. Homeowners age 65 or older may qualify for a property tax credit of up to $1,000. There’s also a program (the “senior freeze”) that reimburses eligible seniors for property tax increases. And a $250 property tax deduction is available for senior citizens with an annual household income of $10,000 or less.

Income taxes are comparatively low for retirees in New Jersey, thanks in large part to a generous exemption for retirement income. For example, married seniors filing a joint return can exclude up to $100,000 of income from a pension, annuity, IRA, or other retirement plan if their New Jersey income is $100,000 or less. Single taxpayers and married taxpayers filing a separate return can exclude up to $75,000 and $50,000, respectively. We should also point out that Social Security benefits are not taxed in New Jersey, either.

Sales taxes are reasonable in New Jersey, too. The state sales tax rate is 6.625%, but because some areas charge only half the state rate on certain sales, New Jersey’s average state and local combined sales tax rate is only 6.6%, which is a little below average.

Although New Jersey recently eliminated its estate tax, the state still imposes an inheritance tax. The tax rates range from 11% to 16% on inherited property with a value of $500 or more. The amount of tax due is based on who specifically receives the property and how much the property is worth.

For more information, see the New Jersey State Tax Guide for Retirees.

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About Our Methodology

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Our tax maps and related tax content include data from a wide range of sources. To generate our rankings, we created a metric to compare the tax burden in all 50 states and the District of Columbia.

Data Sources:

Income tax – Our income tax information comes from each state’s tax agency. Income tax forms and instructions were also used. See more about how we calculated the income tax for our hypothetical retired couples below under “Ranking method.”

Property tax – The median property tax rate is based on the median property taxes paid and the median home value in each state for 2019 (the most recent year available). The data comes from the U.S. Census Bureau.

Sales tax – State sales tax rates are from each state’s tax agency. We also cite the Tax Foundation’s figure for average combined sales tax, which is a population-weighted average of state and local sales taxes. In states that let local governments add sales taxes, this gives an estimate of what most people in a given state actually pay, as those rates can vary widely.

Ranking Method:

The “tax-friendliness” of a state depends on the sum of income, sales and property tax paid by our two hypothetical retired couples.

To determine income taxes due, we prepared returns for both couples. The first couple had $15,000 of earned income (wages), $20,500 of Social Security benefits, $4,500 of 401(k) plan distributions, $4,000 of traditional IRA withdrawals, $3,000 of Roth IRA withdrawals, $200 of taxable interest, $1,000 of dividend income, and $1,800 of long-term capital gains for a total income of $50,000 for the year. They also had $10,000 of medical expenses, paid $2,500 in real estate taxes, paid $1,200 in mortgage interest, and donated $1,900 (cash and property) to charity.

The second couple had $37,500 of Social Security benefits, $26,100 of 401(k) plan distributions, $18,200 of private pension money, $4,000 of traditional IRA withdrawals, $2,000 of Roth IRA withdrawals, $2,000 of tax-exempt municipal bond interest (from the state of residence), $2,000 of taxable interest, $4,000 of dividend income, and $4,200 of long-term capital gains for a total income of $100,000 for the year. They also had $10,000 of medical expenses, paid $3,200 in real estate taxes, paid $1,500 in mortgage interest, and donated $4,300 (cash and property) to charity.

Since some states have local income taxes, we domiciled both our couples in each state’s capital, from Juneau to Cheyenne. We calculated their 2019 income tax returns using software from

How much they paid in sales taxes was calculated using the IRS’ Sales Tax Calculator, which is localized to zip code. To determine those, we used Zillow to determine zip codes with housing inventory close to our sample assessed value.

How much each hypothetical family paid (and deducted on their income tax return, if allowed) in property taxes was calculated by assuming a residence with a $250,000 assessed value for the first couple and a $350,000 assessed value for the second couple. We then applied each state’s median property tax rate to that appropriate amount.


11 Factors that Make the Price of Bitcoin Go Up

In 2009, the Bitcoin network went live and the world changed forever. The first cryptocurrency started out with a value of $0, and it took years before bitcoins gained value in terms of any national fiat currency. But at the time of writing in late September 2021, the value of Bitcoin had risen to over $47,000, after beginning at $0 just twelve years earlier.

There are a number of factors that drive Bitcoin’s prices — including its soaring highs and lows. Here are 11 factors.

1. Supply and Demand

Part of what determines Bitcoin price is supply and demand. The Bitcoin protocol is designed to limit the supply of new coins. A new block of transactions is mined about every 10 minutes, and miners receive a set reward of new bitcoins for finding each block.

This reward amount is steadily reduced overtime and there are only 21 million bitcoins that can ever be mined. As of June 2021, about 18.74 million bitcoins had been mined, leaving 2.26 million bitcoins remaining. It’s estimated that the final bitcoin will be mined sometime around the year 2140.

On the other hand, the fiat currencies that prices are measured in have no supply cap and are always being created in ever-increasing amounts. This can result in more fiat currencies chasing fewer bitcoins, which can lead to higher Bitcoin prices.

2. Bitcoin Halving

Halving is part of the Bitcoin protocol that contributes to the supply and demand dynamics. Rather than new bitcoins being created at a steady or ever-increasing rate, the reward that miners receive for mining new blocks gets cut by 50% every 4 years or so.

In 2009, the block reward was 50 bitcoins. Over the next 11 years, the reward was “halved” three times, or reduced as follows:

•   2012: 25 bitcoins

•   2016: 12.5 bitcoins

•   2020: 6.25 bitcoins

In this way, Bitcoin remains a deflationary currency thanks to the process of Bitcoin mining. Fiat currencies, being inflationary, work in the opposite manner. Their supply increases each year with no limit on how many currency units can be created.

3. Monetary Policy

Because Bitcoin has a fixed supply limit, the price tends to correlate with the supply of new fiat currency being created. An increase in the money supply can be part of what drives up Bitcoin’s price. However, this isn’t a hard and fast rule — and past performance doesn’t always indicate future results.

It is worth noting that throughout 2020 and early 2021, the money supply in the U.S. saw massive increases to the tune of trillions and trillions of new dollars being created. During this same period, the price of Bitcoin rose from under $4,000 in March 2020 to over $60,000 in April 2021. When it comes to questions of what affects the Bitcoin price, monetary policy is thought to be a key factor.

4. Regulatory Factors

Regulatory news can also affect Bitcoin price. Some people believe that national governments will one day create such strict crypto regulations around Bitcoin and companies that use it that the technology will not survive. Because of this fear, sometimes it only takes a simple statement from a regulatory agency to cause prices to tank.

At the same time, some regulation can also be seen as a positive sign. It signals that the technology is seeing increased adoption and becoming more and more accepted. So, when regulatory agencies respond favorably to Bitcoin or announce new regulations that seem benevolent, this can be part of what makes Bitcoin go up.

5. Memes and Social Media

While technical matters and serious issues can contribute to what drives the Bitcoin price, more light-hearted factors can also influence what makes Bitcoin go up or down. Memes circulating on social media can sway sentiment toward crypto markets and possibly impact prices.

This could create a feedback loop where positive meme sharing leads to a bump in prices, which leads to more memes, leading to prices rising more, and the cycle continues. Some of the most popular Bitcoin memes involve phrases like “going to the moon” and references to sports cars like Lamborghinis.

Recommended: How to Use Social Media for Investing Tips: The Smart Way

6. Mainstream Media

In addition to social media, the regular news cycle can also influence Bitcoin price. Almost every time Bitcoin suffers a price correction, numerous mainstream media outlets begin publishing negative news.

Some of these can be so pessimistic that they fall into the category of what’s become known as “Bitcoin obituaries,” where a media outlet proclaims that Bitcoin has died. Sometimes influential politicians, bankers, or bureaucrats make negative statements about Bitcoin too, leading to similar effects on price.

On the other hand, when overall media coverage is positive, this can make the price of Bitcoin go up. In 2020 and 2021, news about famous influential investors making bullish bets on Bitcoin and large corporations adding Bitcoin to their balance sheets were seen as significant factors with regard to what makes Bitcoin go up.

7. Miners

In Bitcoin mining, powerful computers process transactions for the network, keeping Bitcoin running in a decentralized way. Mining operations continue running, at least in part, with funding from the bitcoins that they mine.

But miners have to be very careful about what they do with their new bitcoins. If miners believe the price of Bitcoin will go up in the future, they are likely to hold their coins for some time. If miners believe prices will go down soon, they might sell their coins immediately.

Miners refusing to sell new coins can be part of what makes Bitcoin go up, as new supply never makes it to crypto exchanges where it could drive prices down.

Recommended: What are Bitcoin Mining Pools? Should You Join One?

8. Hash Rate

The Bitcoin hash rate is one of the most important metrics in Bitcoin. The hash rate indicates how hard miners are working to solve the mathematical problems needed to process transactions. The more miners that are contributing computing power, the higher the hash rate.

While there’s disagreement about whether or not hash rate is part of what affects the price of Bitcoin, there does appear to at least be some correlation. If nothing else, a higher hash rate makes the network more secure and signals confidence in the near-term.

Recommended: What is a Good Hash Rate?

9. Network Adoption

Bitcoin is the world’s first decentralized monetary network. The more people using the network, the more valuable it tends to become. (This same principle holds true for things like social media networks, too.)

When it comes to the Bitcoin network, one of the main metrics used to measure adoption is the number of new crypto wallets being created. New wallets indicate that more people are using Bitcoin, some of them presumably for the first time. Sometimes when a lot of new wallets are coming online, this can be a sign of confidence in the technology and be part of what makes Bitcoin go up.

10. Risk Appetite

General sentiment in financial markets can be part of what makes Bitcoin go up. When investors feel comfortable taking on more risk than usual, they could be more likely to put money into Bitcoin.

On the other hand, some Bitcoin proponents believe Bitcoin to be more of a safe haven asset (the opposite of a risk asset). Bitcoin has a limited supply.

11. Technical Analysis

Crypto technical analysis can influence the price action of almost any tradeable asset. TA involves patterns identified by computer-generated data and from human eyes identifying patterns on charts. When a certain pattern emerges, it’s thought that prices could be about to move upward or downward, depending on the type of technical setup.

The Takeaway

When it comes to what makes Bitcoin go up, there are at least a dozen potential factors. Many of them are related to market sentiment, the status of the Bitcoin network, and supply-and-demand dynamics.

For individuals who want to invest in Bitcoin, SoFi Invest® may be a good place to start. With SoFi, you can trade cryptocurrency like Bitcoin, Solana, Enjin Coin, Cardano, Litecoin, and more.

Find out how to get started with SoFi Invest.

Photo credit: iStock/cokada

SoFi Invest®
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Crypto: Bitcoin and other cryptocurrencies aren’t endorsed or guaranteed by any government, are volatile, and involve a high degree of risk. Consumer protection and securities laws don’t regulate cryptocurrencies to the same degree as traditional brokerage and investment products. Research and knowledge are essential prerequisites before engaging with any cryptocurrency. US regulators, including FINRA , the SEC , and the CFPB , have issued public advisories concerning digital asset risk. Cryptocurrency purchases should not be made with funds drawn from financial products including student loans, personal loans, mortgage refinancing, savings, retirement funds or traditional investments. Limitations apply to trading certain crypto assets and may not be available to residents of all states.
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Student Loan Deferment vs Forbearance – Differences Between Them

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Dig Deeper

Additional Resources

The federal government has put federal student loan repayment on hold until Jan. 31, 2022, due to the ongoing coronavirus pandemic. But the current administration has announced that will be the final extension. Moreover, if you’ve got private student loan debt, your payments haven’t been on hold. 

Whether you’re dreading the impending deadline on your federal loans or are living paycheck to paycheck and can’t pay your private loans, you may be wondering how to postpone your payments. That’s especially true if you’re facing a period of unemployment or reduced income and can’t find a way to lower your monthly student loan payment.

If you only need to pause your monthly payment temporarily, you have two primary options: deferment and forbearance. While people often use the terms interchangeably, there are some key differences. And knowing what these are could impact how costly your student loan becomes.

What Is Student Loan Deferment?

A deferment allows you to temporarily suspend making payments on your student loans for reasons specified by your lender. Exactly how it works differs based on whether your loans are federal or private student loans. 

Federal Student Loans

Deferment is available on all federal student loans, which are loans from the United States Department of Education (ED). In addition to allowing you to suspend making payments, interest doesn’t accrue on any of your direct subsidized loans, the subsidized portion of direct consolidated loans, subsidized federal direct Stafford loans, the subsidized portion of FFEL (Federal Family Education Loan program) consolidation loans, and federal Perkins loans. 

All your unsubsidized loans continue to accrue interest. And any unpaid interest that accumulated during the deferment may be capitalized (added to the principal balance) at the end of the deferment period. Loan servicers (the companies who manage your loans for the government) only capitalize unpaid interest on direct loans and FFEL loans, never on Perkins loans. You can pay the interest during deferment to prevent capitalization.

You can defer federal student loans for a variety of reasons. The length of allowable deferment varies, depending on the reason for the deferment.

Deferment options include:

  • In-School Deferment. You can defer making payments for an unlimited amount of time as long as you’re enrolled at least half-time at an eligible college or career school. And if you’re a graduate or professional student who borrowed a PLUS loan, you qualify for an additional six months of deferment after you graduate or drop below half-time enrollment. In-school deferment is typically automatic. If it doesn’t happen automatically, complete an in-school deferment request form.
  • Parent PLUS Borrower Deferment. If you’re a parent and took out loans for your child’s education, you can defer those loans while they’re attending school at least half-time. As with in-school deferment, there’s no limit on the length of deferment as long as the student remains enrolled.
  • Graduate Fellowship Deferment. You can defer payments for the total amount of time you’re enrolled in a graduate fellowship program. To qualify, you must be enrolled in an approved fellowship program. There’s no limit on the length of deferment as long as you remain in the fellowship.
  • Economic Hardship Deferment. You can only receive this deferment for up to three years if you’re experiencing financial hardship. To qualify, you must work full time but earn income below 150% of the poverty guidelines for a family of your size in your state of residence. Or you must be receiving a means-tested benefit like welfare.
  • Unemployment Deferment. You can defer making payments up to three years if you’re unemployed, receiving unemployment benefits, or looking for full-time employment.
  • Active-Duty Military Service Deferment. You can use military deferment as many times as applicable. You must be on active duty in connection with a war, military operation, or national emergency. The military deferment ends when you resume enrollment in school at least half-time after active duty (but it switches to in-school deferment). Or it ends 13 months after active duty and any applicable grace period.  
  • Cancer Treatment Deferment. You can defer making payments for the total amount of time you’re in treatment and up to six months after treatment.
  • Rehabilitation Training Deferment. You can defer making payments for the total amount of time you’re enrolled in a rehabilitation training program for alcohol or drug abuse or for a program intended to provide mental health or vocational treatment.

Unlike private loans, federal loans let you use as many deferment conditions as you qualify for. For example, you could defer making payments for four years while in college, another three years for economic hardship, an additional two years to get a master’s degree, and another year for cancer treatment. And then you could go back to school to get a doctorate and defer again for another four to eight years. 

Private Student Loans

Deferment with private lenders is substantially different from the ED’s offerings. While deferment does suspend payments, most private lenders don’t suspend interest.

As with federal student loans, the conditions for deferment could include school enrollment, participation in a medical residency, military deployment, or economic hardship. But there are often fewer conditions for deferment with private lenders, and the conditions vary by lender.  

Additionally, private lenders typically have less generous caps on the amount of time you can defer payments over the life of your loan. For example, your loan might specify a cap of 12 months of total allowable deferment, including in-school deferment. 

Generally, the deferments for private lenders are also aggregate — meaning if you defer your loan for 12 months while in school, you use up all your allotted deferment time. You can’t later defer for another three months if you experience economic hardship. 

But private lenders’ terms vary. Some of the better private student loan companies have deferment conditions that aren’t aggregate. Always read the fine print before you accept any period of deferment so you know what you’re agreeing to.   

What Is Student Loan Forbearance?

As with deferment, forbearance allows you to suspend making payments for a set period. But there are some slight differences between the two. One particular difference makes deferment the better option if you can qualify for it: the way the options handle interest.

Federal Student Loans

Both deferment and forbearance allow you to stop making payments on your federal student loans temporarily. But only deferment suspends the interest on your subsidized student loans. 

Thus, even though you don’t have to make payments during a forbearance, interest continues to accrue on all your federal loans, both subsidized and unsubsidized. And the loan servicer will capitalize it on all direct loans and FFEL loans (not Perkins loans) at the end of the forbearance period. That means you end up owing a higher balance after the forbearance.

You can prevent that by making interest payments during the forbearance, although it’s not required.

There are two types of forbearance: general forbearance and mandatory forbearance. General forbearance is at the discretion of your loan servicer, but your servicer must grant mandatory forbearance. 

If you don’t qualify for a deferment but need to suspend your monthly student loan payments temporarily, you can request a general forbearance under the following circumstances:

  • You’re experiencing financial hardship
  • You have excessive medical expenses
  • You’ve experienced a change in employment
  • You’re experiencing any other circumstance that makes it temporarily difficult to repay your loan, which your servicer accepts as a reason to grant the forbearance

Because a general forbearance is at the discretion of your loan servicer, it’s ultimately up to them whether to grant it. However, it also provides the servicer with a lot of leeway, meaning they can grant you a temporary suspension of payments for nearly any reason as long as it seems reasonable.

You can only receive a general forbearance for 12 months at a time. At the end of 12 months, if you’re still experiencing financial hardship, you can request another forbearance. However, you can’t forbear your loans under a general forbearance for more than three years in total.

Your servicer must grant mandatory forbearance under the following conditions:

  • AmeriCorps. You’re serving in an AmeriCorps volunteer position for which you’ve received a national service award. Visit AmeriCorps for more information.
  • Student Loan Debt Burden. You have such an excessive amount of student loan debt that the total amount you owe each month on all your federal student loans exceeds 20% of your monthly gross income. Apply using the student loan debt burden forbearance request form.
  • Medical or Dental Residency. You’re serving in a medical or dental residency. Apply using the service-based forbearance request form.
  • National Guard Duty. You’re a member of the National Guard and have been activated by the governor but don’t qualify for military service deferment. Apply using the service-based forbearance request form.
  • Department of Defense Loan Repayment Assistance Program. You qualify for partial repayment of your student loans through the U.S. Department of Defense’s student loan repayment program. Apply using the service-based forbearance request form.
  • Teacher Loan Forgiveness. If you’re working toward qualifying for teacher loan forgiveness, you can forbear your loans during that time. Apply using the teacher loan forgiveness forbearance form.

Like general forbearances, you can only receive mandatory forbearances for up to 12 months at a time. At the end of 12 months, you can request another forbearance as long as you continue to meet the eligibility requirements. Unlike general forbearance, there’s no cumulative limit on most mandatory forbearances. The exception is the student loan debt burden forbearance, which you can only receive up to a cumulative maximum of three years.

Private Student Loans

A private student loan forbearance operates similarly to a deferment. Since few private lenders suspend interest on student loans for deferments, the difference with forbearance is primarily in the name. But it’s worthwhile to check your lender’s fine print to see if there are any differences in terms.

Occasionally, lenders have different qualification conditions for deferments versus forbearances or different mandatory term lengths. For example, a lender might specify that your loan provides 12 months of deferment, but forbearance is available upon request. So if you use up all your allotted deferment, you may still be able to request forbearance if you experience financial hardship.

Should You Postpone Your Student Loan Payments?

If you’re experiencing temporary financial hardship, deferment or forbearance is a quick and convenient solution. But if your situation is long term, deferment and forbearance aren’t ideal solutions. In fact, sometimes, they’re not ideal even in temporary circumstances.

That’s because the longer you defer or forbear, the more interest accrues on certain loan types. Then, when the loan servicer capitalizes the interest, your balance is even higher and you start racking up interest on the higher balance, meaning you’re now paying interest on top of interest.

Additionally, with the exception of economic hardship deferment, any time your federal student loans spend in deferment or forbearance, they aren’t earning credit toward forgiveness. 

So multiple years of deferments and forbearances could easily cause a manageable amount of student loan debt to spiral into an overwhelming debt burden.

Thus, you’re better off looking for an alternative that better suits your individual needs in most situations. That could include:

For more information on these options, read our article on your options for paying back federal student loans. 

Final Word

Many lenders, from the ED to private institutions, give you a lot of discretion when it comes to postponing repaying your loans. But that doesn’t mean you always should. Deferring or forbearing your loans can be costly due to the accumulation of interest.

However, sometimes unexpected financial emergencies occur that make it difficult or impossible to make your monthly payments. Always contact your student loan servicer immediately if you’re having trouble paying your student loans. Never just stop making payments, as there’s almost always a solution to help you avoid defaulting on your student loans. 

Default comes with serious consequences, including wage garnishment. The federal government can garnish your wages and capture your taxes or Social Security to repay your student loans, interest, and fees without having to sue you first.

Additionally, you generally won’t be able to defer or forbear your loans if you’ve defaulted on previous payments. 

Be aware that you must continue to make payments on your student loans until your servicer notifies you it has granted the deferment or forbearance, which could take 30 days. If you stop paying, your loans could become delinquent. And you may go into default. 

For federal student loans, you’re in default if you haven’t paid on your loans for more than nine months. But private student loans could go into default if you miss as few as one payment.

So to avoid negative consequences, reach out to your loan servicer as soon as you need to miss a payment.

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Stock Market Today: Stocks Zip Higher on Robust Retail Sales, Earnings

Most investors will be walking into this weekend with a spring in their step. They can thank booming retail sales and continued earnings momentum, which set up a fine Friday finish for the equity markets.

Headline retail sales unexpectedly grew for the second consecutive month, with September’s figure up 0.7% month-over-month to exceed expectations for a 0.2% decline. And similarly to August, September’s sales were boosted in categories including clothing, groceries, general merchandise, non-store retail and miscellaneous.

“Households also received a boost to incomes from government benefits in mid-August and September, by way of the advance Child Tax credit payments under the American Rescue Plan Act,” says Barclays economist Pooja Sriram. “As we have pointed out previously, retail sales have tended to fare well in the months households received pandemic-relief stimulus.”

Also impressing the pros was Goldman Sachs (GS, +3.8%), which announced 63% profit growth and 26% revenue growth to top Q3 estimates and cap a week of encouraging reports from Wells Fargo (WFC, +6.8%), Bank of America (BAC, +2.9%), Citigroup (C, +2.1%) and others.

“Goldman Sachs is executing at a high level outpacing other large banks and is gaining wallet share in investment banking, trading, and consumer and wealth management,” says CFRA analyst Kenneth Leon, who reiterated his Strong Buy rating on GS stock, and raised his 12-month price target to $260 per share from $245.

Sign up for Kiplinger’s FREE Investing Weekly e-letter for stock, ETF and mutual fund recommendations, and other investing advice.

The Dow Jones Industrial Average led the major indexes with a 1.1% surge to 35,294, securing a 1.6% weekly gain. The S&P 500 (+0.8% to 4,471) was up 1.8% for the week, and the Nasdaq Composite (+0.5% to 14,897) climbed 2.2% over the past five days.

Other news in the stock market today:

  • The small-cap Russell 2000 followed the same path as its larger-cap brethren for most of the day, but turned red in the late afternoon, slipping 0.4% to 2,265.
  • Johnson & Johnson (JNJ, +0.7%) got a lift today after a Food and Drug Administration (FDA) advisory committee unanimously agreed the federal agency should authorize boosters of the pharma giant’s single-dose COVID-19 vaccine to the roughly 15 million people in the U.S. who received a shot. This follows Thursday’s news that the same panel recommended boosters for Moderna’s (MRNA, -2.3%) COVID-19 vaccine to high-risk individuals and those 65 and older, and is considered a key step in getting regulatory approval for additional doses. Looking ahead, Johnson & Johnson is one of the highlights of next week’s earnings lineup.
  • J.B. Hunt Transport Services (JBHT) stock surged 8.7% after the freight operator reported higher-than-expected third-quarter earnings of $1.88 per share – up 59.3% from the year prior – and revenues of $3.1 billion, a 27.2% improvement from Q3 2020. “JBHT delivered on profits in the third quarter and the outlook for 2022 is excellent as capacity return,” says Susquehanna Financial Group analyst Bascome Majors. But he maintained a Neutral (Hold) rating on the stock. “We just can’t get there on valuation, with JBHT trading near long-term averages versus other more cyclical trucking and logistics-related businesses deeply below,” he wrote in a note.
  • U.S. crude futures jumped 1.2% to settle at $82.28 per barrel.
  • Gold futures fell 1.7% to finish at $1,768.30 an ounce.
  • The CBOE Volatility Index (VIX) finished off 3.4% to 16.29.
  • As discussed today in our free A Step Ahead newsletter, the SEC is reportedly nearing its first approval of a futures-based Bitcoin ETF. That seemed to light a fire under Bitcoin, which shot 6.2% higher to $61,436.15. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m. each trading day.)
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Will the American Consumer Power U.S. Markets?

The latest retail-sales beat might be more than just a short-term boon for the stock market.

“The U.S. economy is 70% reliant on the consumer, and the doom-and-gloom forecasters who believed stagnant economic growth (especially in terms of the stagflation narrative) was ahead for the U.S. … are going to be surprised at the resilience of the U.S. economy, and we see higher equity prices ahead for this year and next year,” says Chris Zaccarelli, chief investment officer for Independent Advisor Alliance.

“We believe that being long equities is the best course of action, and that cyclical stocks such as financials, industrials, energy and materials are positioned for further gains,” he adds.

Of course, if you believe more market buoyancy is ahead, you can tap into that potential in more ways than just sector plays. You could consider values such as these cheap 13 Dividend Aristocrats or these five overly punished equities. You can also take the advice of the jet-set, following billionaires into their highest-conviction picks.

However, if you want to get yourself as close to the source as possible, check to see whether corporate insiders are eating their own cooking. The following are seven stocks that have seen noteworthy buying from at least one corporate insider of late – often a bullish signal that demonstrates high confidence that the company’s fortunes are about to improve.


Savvy Saturday: This trick makes the Amex Platinum digital entertainment credit even less valuable – The Points Guy

A library card makes the Amex Platinum digital entertainment credit less valuable – The Points Guy

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American Express Business Platinum Changes: $695 Annual Fee, $400 Dell Credit, $120 Wireless Credit & More

As rumored American Express has added new benefits to the Business Platinum card and increased the annual fee to $695. Changes are as follows:

  • Annual fee increasing to $695 (from $595). New annual fee applies on applications received after 1/13/2022 (same applies to existing cardholders)
  • $150 Adobe Creative Solutions credit
  • $400 Dell credit
  • $360 Indeed credit
  • $120 Wireless credit
  • Card earns 1.5x points per $1 spent on construction/hardware stores, electronic goods, and shipping

Seems like the landing pages are still being updated, but I’ll have more to say about each benefit once all of the details are clear. We are also supposed to see increased offers on both the personal platinum and business platinum cards.